Forecast 2026: Rising Costs, Sluggish Consumers BY PHILLIP M. PERRY
Manufacturers can look forward to a gradually improv- ing, if challenging, operating environment in 2026. “The US economy is holding up admirably well despite a major
trade shock caused by tariffs,” said Bernard Yaros Jr., Lead U.S. Econo- mist at Oxford Economics (oxforde- conomics.com). “We look for an acceleration in growth in 2026 as stimulus from the One Big Beautiful Bill gets underway.” Oxford Economics expects real
GDP to grow by 2 percent in 2026, up a bit from the 1.7 percent expected when 2025 numbers are finally tallied. Both years, among the most sluggish growth environ- ments of the past decade, are underperforming the 2.8 percent increase of 2024. Gross Domestic Product, the total value of the nation’s goods and services, is the most commonly utilized mea- sure of economic growth. “Real” GDP subtracts the effects of inflation. Higher Profits The nation’s economic growth depends largely on the launch of new business initiatives. Unfortunately, manufac- turers are holding back for a number of reasons. Interest rates, while declining, are still at the highest levels since 2022. Costs for materials and supplies are increasing. There is uncertainty about the nation’s future trade poli- cy. Lower and middle income consumers, nervous about inflation, are tapped out and closing their wallets. Against such headwinds, a host of otherwise attractive projects can look less promising. One might also expect business profitability to suffer. Yet Oxford Economics expects it to follow the same gener- al pattern as the GDP. “We look for corporate profits to rise by 4.9 percent in 2026,” said Yaros. “That’s up substantial- ly from the 0.5 percent expected when 2025 numbers are finalized.” Even so, the 2026 pace remains slower than the 7.9 percent clocked in 2024. The expected 2026 rebound in profitability stems from a belief that stimulus from Washington will lift all boats. “We believe the passage of the One Big Beautiful Bill, with its tax cuts for businesses and households, should help the economy regather some steam in early 2026,” said Anir- ban Basu, Chairman & CEO of Sage Policy Group (sage- policy.com). The legislation’s 100 percent bonus deprecia- tion should help fuel business investment, while large tax refunds should invigorate consumer spending. Both activi- ties are important drivers of the nation’s economy. This stimulus from Washington is arriving at the same time manufacturers are getting a more solid footing on the nation’s shifting trade policy. “There has been a bit of a CONTINUED ON PAGE 32
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Len Prazych at 518-366-9017 lprazych@nvpublications.com
www.boardconvertingnews.com
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October 20, 2025
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