Estate, Gift & Trust Conference-Boyle

Boyle - Economic Outlook
Pdf Summary
Northern Trust’s May 2026 outlook argues that the global economy faces multiple overlapping disruptions, with geopolitical conflict, trade uncertainty, and structural financial risks all weighing on growth.<br /><br />The biggest near-term shock is the Iran-Israel conflict and the tenuous ceasefire. Northern Trust says the Strait of Hormuz disruption has severely affected global energy and commodity flows, including crude oil, LNG, fertilizer, and shipping. The firm highlights that the conflict could push oil prices sharply higher if the ceasefire collapses, while even a partial resolution would still leave markets strained. The economic damage is likely to be especially severe for Europe and Asia, given their dependence on imported energy. Higher energy prices are described as a tax on households and businesses, reducing consumption and investment while raising inflation and interest rates.<br /><br />Northern Trust also expects inflation to rise, though mostly in headline measures rather than core inflation. U.S. CPI is being lifted by fuel, heating oil, and airfares, but longer-term inflation expectations remain anchored. Central banks, especially the ECB, may stay cautious and could even hike if inflation risks broaden.<br /><br />Trade policy is another source of uncertainty. A U.S. Supreme Court ruling has weakened the legal basis for some tariffs, creating a reset in tariff strategy and renewing concerns about trade negotiations, revenue, and growth.<br /><br />The labor market remains relatively stable, with low hiring and firing, while unemployment stays contained partly because labor force participation is low. However, private credit is emerging as a concern due to opaque structures, fund gating, redemption pressure, and possible systemic spillovers.<br /><br />The report also emphasizes both the promise and risks of AI. AI could boost productivity substantially, but it may also displace some jobs, especially for recent graduates, and it poses heavy power, water, cybersecurity, and regulatory challenges.<br /><br />Northern Trust’s forecasts show modest global growth in 2026 and 2027, with China outperforming developed economies but overall conditions remaining fragile.
Keywords
global economy
Iran-Israel conflict
Strait of Hormuz
energy prices
inflation
trade uncertainty
tariff strategy
private credit risk
artificial intelligence
global growth