March 23, 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 your apolitical and unbiased source of economic intelligence. And today, I wanted to talk through a few trends, uncertainty, CapEx, and manufacturing demand. All important trends to our clients, to the economy. So I wanted to talk through where we are in the cycle and where we should see these trends going, as well as highlight the uncertainty risk that is still prevalent out there in the economy.

So let me start with the good news. The good news is that we have seen manufacturing and industrial production both increase and actually transition to a period of accelerating growth. And that’s been happening really since late last year, but those growth rates have continued to improve into this year. So let me give you some context here. US industrial production and US manufacturing production are two volume-based economic indicators that we track very closely. For those of you that subscribe to the Trends Report, you’re very familiar with US industrial production. The annual growth rate for both industrial production and manufacturing production are both at a positive 1.3%. So we are up 1.3% compared to the same time one year ago. And this is a welcome sight for many of our clients, many of the folks I’m chatting with around the country, because for the better part of the last 18 months, these indexes were negative. Back, if we go all the way back to December of 2022, that’s when we saw manufacturing production dip below zero, dip into that phase D recession. That growth rate did not turn positive until August of 2025.

So from December of 22 to August of 25, manufacturing production was below the year ago level. So the fact that we’ve seen, again, the latter part of 25 and this acceleration in manufacturing continue into 2026, we’re in a much better position than where these manufacturers have been for quite some time. And we do expect those growth rates to continue to remain positive all throughout 2026. We have the growth rates finishing at about 1.5% for industrial production, similar for manufacturing by the time we finished the end of the year. So after the end of 22, all of 23, all of 24, and even most of 25 being negative for manufacturing, we’re finally talking about an entirely positive year. That is great news. And again, I’m quoting a series that’s volume-based. So I’m taking inflation out of the equation. I’m saying volumes in manufacturing are going to increase this year, and we need that. Our manufacturers need that. That’s increasing demand. That’s a good news story.

Now, to add to the good news, if you look at our CAPEX data series, also another trends report indicator, that’s US non-defense capital goods, new orders. The quarter over quarter growth rate is up 5.2%. This is our proxy for CAPEX or for business-to-business spending. To see that growth rate not only positive, but essentially double the rate of inflation That’s great news. It means businesses aren’t investing and the investment dollars aren’t just increasing because of higher prices, though that’s part of the story. That’s not the full story. We’re actually seeing some increases overall in CapEx from a volume standpoint as well. This is great news. As far as positive economic indicators, these data sets correlate very well with most of the financial data that we receive from our clients. And it’s highlighting this positive 2026 from a path forward. I think we all needed to hear some of this good news, especially given some of the challenges geopolitically with some of the conflicts overseas, as well as the tariffs. There’s still been a lot of uncertainty, but if you look at the underlying data and if your business correlates with these data sets, then you’re planning for growth in 26 as most of the folks we work with are.

Now I do have to throw in the uncertainty caveat here. Uncertainty has a big impact on capital investment. Businesses moving forward with projects, moving forward with orders, taking some of this cash off the sidelines. And the uncertainty trend did move in the opposite direction of where I’d like it to move as of late. So we look at a data set called the US Economic Policy Uncertainty Index. It is weekly data that comes to us and it gives us a benchmark of the uncertainty we’re facing in the economy. We saw uncertainty hit a record high back in that April 2025 timeframe when President Trump announced a number of the tariffs. But then all from April 25, all the way through the end of the year, that uncertainty generally subsided. However, the most recent weekly reading is highlighting that uncertainty has resurged here a little bit. We did see the uncertainty index jump back up to a level that was commensurate with essentially May of last year. Now I’m not going to overreact to one week of data, right? We’re economists, we look at trends and one week does not make a trend. But it is something I’m going to monitor closely because if we do have this continued sustained uncertainty at this higher level similar to where we were last year, then that can certainly have an impact on how we think about the path forward.

So I wanted to share the good news, which is these economic data sets, these economic leading indicators, especially for us in the manufacturing space are holding up quite well and continuing to point to growth. But I want you to know any risks and I want you to know what’s on our mind as forecasters here at ITR. And we are watching that uncertainty index to see how it performs in the weeks to come. And that’s what I’m here for. I check in with you all every week and I’ll continue to update you if there’s any forecast changes or if uncertainty continues at this sustainable level. Again, I’m not surprised uncertainty jumped, right? I think that’s the appropriate, the human reaction from what’s happened with the situation between the US and Iran. Duration as far as this conflict goes is going to make a big difference. We talked about that last week as we discussed oil prices. The quicker this situation, I don’t want to say resolves. I don’t think that’s the right word to use, but the quicker this, we do see some progress being made towards a solution. The better off will likely be towards uncertainty.

So we are following these geopolitical events pretty closely. I hope you found this information helpful. Thanks for joining me on this episode of TrendsTalk. Please like and subscribe to TrendsTalk wherever you listen to your podcasts. And I’ll look forward to checking in with you all next week. Thanks so much. Take care for now.