September 14, 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 are and unbiased source of economic intelligence. And today I wanted to return to our roots and give you an update on the industrial economy, not just for ’26 but as we move into ’27 and also discuss which vertical markets are going to offer more opportunity. As we look at ’27 I know many of us, ITR included, and many of our clients are moving into planning season for 2027 usually starts around the September time frame and a lot of the keynote presentations and consulting work we’re doing are really centered around next year.

And so I wanted to give you all an update on how we’re thinking about the economy, especially in the manufacturing and industrial side. As many of you know, we look at data sets such as the US Industrial Production Index, we look at US manufacturing production, both of which are in accelerating growth. As we sit here in the back half of 2026. However, we would expect an inflection point to form as we move here later into the year, meaning we do expect the growth rates for manufacturing and industrial production to peak and start to slow as we move into the first half of 2027, which is an important reminder to everyone and why we need to be looking at your data in terms of rates of change, so you can understand where these inflection points are and what it’s going to mean for your planning as we move into next year. We are forecasting the industrial economy to be essentially flat in twenty twenty seven.

Now there’s some drivers behind this. Of course, we have a number of leading indicators. I’ll point to in our Trends Report for you Trends Report subscribers. But also, you know, as we see higher inflation continuing to build here in twenty six, as we hear the prospect for the fed to likely be lifting rates as we move into the fourth quarter. And you can head over to Fed Watch and hear what Connor has to say on that, that all of these factors contribute to this concept, that we would expect the economy to slow a bit in twenty twenty seven again, especially in terms of industrials and manufacturing. Now that doesn’t mean there still won’t be opportunities. There’s always opportunities regardless of where we are in the cycle. But I don’t want you to make the mistake of what we call linear budgeting, which is assuming the growth that we are experiencing here today is simply going to continue into twenty twenty seven, because you’ll likely be making a mistake as we see the broader industrial economy flattening out next year.

I remind all of our clients that we’re not forecasting a recession. It’s just a essentially a bump in the road of flat growth. That means you’ll have to look internally for those growth initiatives in twenty seven more than looking externally to the markets. Now, I do want to cover the external piece though, because there are absolutely a number of markets that we would expect to grow in twenty seven. But there’s some we’d want you to be wary of as well. So we I’ll give you some of the high growth industries, heavy duty truck production. We have growing almost eighteen percent in twenty twenty seven, which is a nice rebound from the negative numbers we saw this year. We have air aircraft, the aerospace market growing at almost nine percent year over year in twenty twenty seven. And then we have other industries like food and chemicals, which are right around that one percent growth in twenty seven. So there’s still absolutely positive opportunities, but we’re a little bit less bullish on things like mining, which we have down four percent in twenty twenty seven.

Oil and gas, which is essentially flat next year. So it just goes to show that you need to approach your twenty seven planning with a level of granularity, looking at some of these individual markets. And this is something that I covered a few trends talks ago when we discussed the K-shaped economy. We would expect this k-shaped economy to continue as we move into twenty twenty seven. And of course, all of us here at ETR are happy to help you out with that. Our trends report is a great place to go and really understand what these growth expectations are for twenty twenty seven, but you need to make sure you understand how you lead or lag that market. And of course, please reach out to me, reach out to the IT team. We’re happy to help you there. Overall, what I want you to take away from this is there’s an inflection point coming in twenty twenty six. You need to be developing your rates of change.

So you understand if you are going to be moving through that inflection point. And we need to start thinking of ways to drive growth internally to capture growth in a year where we expect the industrial economy to be essentially flat in twenty twenty seven. I’ll continue to update you on markets of opportunity as I unpack these trends with my colleagues. But for now, I sure hope you found this information helpful. Head over to our website. Take a look at the trends report. It’s where a lot of the information I shared with you came today. Uh, but other than that, please like and subscribe to trend stock 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.