Q1 2026 Economic Update & Outlook

In this Q1 2026 Economic Update & Outlook episode of Money Sense, host Karen Ellenbecker welcomes longtime friend and industry expert Mike Roth, founder of Stark Investments, to unpack the turbulent market conditions shaping early 2026. The conversation begins with a reflective look at their 25-year partnership, setting a tone of trust and experience. Roth explains how the market’s initial optimism—driven by a structural bull market, falling inflation, anticipated Fed rate cuts, and AI-driven growth—has been derailed by three major shocks: a dramatic shift in AI sentiment, a surprise uptick in producer price inflation, and a geopolitical oil shock triggered by Israeli strikes on Iran and the resulting disruption in the Strait of Hormuz. These events have collectively pulled the S&P 500 down 4–5% by late March, though the downturn has been orderly rather than catastrophic. Roth emphasizes that while the market remains fundamentally bullish, it’s now more volatile, narrow, and focused on winners—particularly companies that can monetize AI and withstand macro uncertainty. He also highlights the growing risks in private credit, where software company defaults and redemption pressures are exposing structural vulnerabilities in an otherwise illiquid asset class. Despite these headwinds, Roth remains cautiously optimistic, predicting a de-escalation in the Middle East conflict and a return to more stable conditions by mid-year. The episode concludes with practical takeaways for investors: expect a bumpier but still positive market, prioritize high-quality, AI-adopting companies, and remain vigilant about inflation and geopolitical risks. Roth stresses that while everyday consumers may feel the pinch through higher energy and food costs, the U.S. economy is better insulated than Europe or Asia. The dollar is strengthening as a safe haven, and the U.S. may benefit from global economic dislocation. For listeners, the key message is to stay disciplined, focus on long-term goals, and use AI as a powerful tool for informed decision-making. The episode ends on a note of resilience, reinforcing the show’s mission to help people build wealth aligned with their values.