October 5, 2026

The below transcript is a translation of the podcast audio that has been machine generated by Notta.

Hi, everyone. This is Taylor St. Germain with ITR Economics. Thanks so much for joining me on this episode of TrendsTalk. We at ITR are you’re apolitical and unbiased source of economic intelligence. And today I wanted to talk 2027. I know we’re in planning season for next year. And given that, I wanted to highlight some important things that I hope businesses keep in mind as they are planning for next year. You know, the overall topic one we’ve discussed on TrendsTalk in the past is that we are expecting to see a slowdown in a number of economic benchmarks as we move into next year. This is a really dangerous part of the economic cycle when it comes to planning. We’ve been in a period of accelerating growth, really for the majority of 2026 when you look across a number of industries.

But the dangerous part is assuming that that growth in 2026 is simply going to continue in a straight line as we move into 2027. It’s really one of our management objectives that we say avoid straight line budgeting. Because we all know industries, the economy, businesses even are cyclical. And I want you to be keeping that in mind for next year, because we see an inflection point in number of these major macroeconomic benchmarks. And that inflection point, again, folks, I’m not saying we’re headed for a recession in ‘27. That’s not the message that I want you to take away from this. But we are moving from a period of accelerating growth to slowing growth. So if you assume in 2027, you’re going to see the same growth rate that you saw in 2026, I certainly hope some of you will be able to achieve that. But it’s not the reality that we’re looking at from a macroeconomic level.

So let me give you some examples here. In the core section of our Trends Report, we identify some of the most important macroeconomic benchmarks. These are things like GDP, industrial production, employment CapEx, retail sales, wholesale trade indicators that many of our clients correlate with. And while a number of them are in accelerating growth here today, as we move into 2027, the growth rates change. So let me give you some examples of that. ITR Economics is projecting that industrial production will finish 2026 with a growth rate of about 1.5%. Our growth rate year-over-year for 2027 is minus 0.3%. So again, you can see really where we’re changing from this, this period of mild growth to essentially flat in ‘27. And you can see that across a number of data sets.

Take CapEx for example, we use nondefense capital goods new orders as our business-to-business proxy, we expect that index to finish 2026 at 10.6%. And then the year-over-year growth rate in 2027 slows down to 1.3%. So, these are some pretty big changes that we’re seeing across the board. Wholesale trade is another great example, all of our distributors out there that correlate with an index like this, we have wholesale trade finishing 2026 at 15.8%, but the annual growth rate slowing down to 1.7% for 2027. You need to take your businesses data, whether it’s your sales data, your revenue, data, profits, whatever metric you’re using, and correlate that data to these macroeconomic indicators to understand if you’re going to be susceptible to this type of slowdown that we’re looking at into 2027.

A lot of the concentration in terms of planning that we’re doing with our clients and the businesses we work with, are what markets are going to provide some opportunities in 2027 during this period of slowing? You know, a great example of that is some of the commercial construction industries that have been going through a lot of pain over the last 12 to 18 months will actually be accelerating in ‘27. So opposite of in manufacturing and industrial, so you might be able to look to some of those industries.

Of course, we look at things like data centers, AI, some of these high technology industries to offset the slowdown in 2027. Those are the types of conversations I hope you’re having as you’re planning for next year. Again, number one, understanding, are you going to see the slowdown that many of these macroeconomic benchmarks are? And if you are, how are you going to look internally to offset that slowdown that we see into next year? Are you going to be making acquisitions? Are you going to be developing new products, looking at industries that are countercyclical to your business? These are the types of planning conversations that we need to have.

Now there are some slight positives for ‘27. We do expect the rate of inflation on the PPI and CPI to slow down in ‘27, which will be encouraging. But still, despite slower inflation, we’re talking slower economic growth that comes along with it. So, we still see some of the challenges on the pricing margin front that we’re dealing with today remaining relevant into next year. So, as you’re going through these planning meetings, make sure that you are discussing how you’re going to offset this slowdown in ‘27.The phrase I’ve been using lately is you are going to have to look internally to drive growth in ‘27, rather than looking externally to a number of these markets. Again, especially as these macroeconomic data sets slow down. So, take the time, develop your rates of change, understand your leading indicators and what those leading indicators are saying about 2027. We at ITR are of course happy to help you with that. Reach out to me on LinkedIn. Head over to our company website. There’s a number of ways we can get you connected to the leading indicators that matter the most to your business.

So again, the key takeaway avoid straight line budgeting into ‘27. Understand the cyclicality to your business, your industries and the economy. It’s very important that we are forecasting appropriately for next year given where we are in the cycle. So I certainly hope you found this information helpful. Thanks so much for joining me on this episode of TrendsTalk. Please like and subscribe to TrendsTalk wherever you listen to your podcasts. I look forward to seeing you all in the next one. Thanks so much and take care for now.