September 22, 2025

Hi, everyone. My name is Taylor St. Germain with ITR Economics. Thanks so much for joining me on this episode of TrendsTalk. We at ITR are your apolitical and unbiased source of economic intelligence.

And today I wanted to discuss a longer term idea, a longer term topic that we’re calling profitless prosperity. Now, for those of you that have listened to TrendsTalk or follow ITR, you likely know that we’re very optimistic as it pertains to economic growth as we look at the second half of this decade leading up to the 2030s. I’ll just remind you all that our GDP forecast suggests that GDP will expand in 25, 26, 27, even into 2028. And so we’re very optimistic on our longer term view. But the term profitless prosperity comes in because we’re worried about the fact that along with this GDP growth we’re going to continue to see higher costs come our way. And that’s where we get this term from.

You know, most forecasts that our ITR team is producing for our clients right now show rising sales or revenue, rising top line figures over the course of the next 12 quarters. I always reference the next 12 quarters because that’s usually the window in which we’re providing forecasts. So most of our clients are preparing for top line growth, sales and revenue growth through the remainder of this year, but especially in 26, 27, and 28. The challenge is that we are going to face higher costs throughout that time. I know inflation is a little bit lower today. I know folks are expecting the Fed to be cutting interest rates through the end of this year. But as we move into 26, 27, 28, we do expect higher inflation to become more prominent.

And that’s where the idea of profitless prosperity comes in. It’s a very real possibility that businesses can run into a situation where, yes, their sales and revenue are growing, but their margins are actually being eroded throughout this time. So as we’re preparing our clients for what we see as three plus years of economic growth, of sales and revenue growth, we’re highlighting that, yes, we have to watch costs closely and price increases are likely going to become more abundant, but we also really need to focus on the other side of that equation, which is productivity and efficiency. If businesses want to see their margins expand, as I imagine every business does, price increases likely aren’t going to be enough during these three plus years of growth. It’s the businesses that are going to, yes, protect their margin through price, but also protect their margins by investing in productivity and efficiency.

The businesses that can do both are likely the businesses that will avoid this idea of profitless prosperity. It’s great to know that your sales and revenue will grow, but if our margins aren’t expanding at the same time, I think that creates a lot more challenging situation. At the end of the day, profits are really what drive us forward. As you sit here today, you need to think of a plan. You need to determine what your cost environment is going to look like over the course of the next three years. We need to have a significant focus on automation, on innovation, on adopting technology to drive productivity and efficiency in our businesses. Your margins depend on it.

So it’s an important exercise to run. Look out three years, look at your forecast, look at what costs are going to be, and make sure you have a plan in place so that you can drive, not just revenue growth, but margin growth as well. We’re certainly here to help you with that at ITR. That’s what I, when I’m not presenting or hosting podcasts, am doing that type of consulting work for businesses. Please let us know how we can help. Again, there’s still a lot to look forward to. There’s a lot of growth. It’s just growth comes with challenges and higher costs are going to be those challenges as we move forward over the next few years.

Thanks so much for joining me on this episode of TrendsTalk. Please like and subscribe to TrendsTalk wherever you listen to your podcasts. And I look forward to seeing you all in the next one. Thanks so much. Take care for now.