Morgan Stanley Analysts See Price Hikes as Layoff Prevention Strategy

Continuing Price Momentum into 2026

Morgan Stanley analysts, led by Head of US Economics Michael T. Gapen, have identified a potential strategy for US companies to avoid mass layoffs in 2026. Their analysis suggests that maintaining the price increases that have characterized 2025 could be key to preventing a potential layoff wave that has been worrying economists.

Economic Rationale Behind Price Strategy

The economists at Morgan Stanley believe that companies can maintain their current workforce levels by continuing to adjust their pricing strategies. This approach, which has been successful throughout 2025, could be crucial in maintaining economic stability as companies navigate potential economic challenges in 2026.

Market Implications of Continued Price Increases

If companies can successfully maintain their pricing power through 2026, it could have significant implications for the broader US economy. The strategy would not only help prevent mass layoffs but also potentially maintain consumer spending patterns, despite ongoing economic concerns.