2026 Outlook: Opportunity on the Horizon

by | Dec 30, 2025 | Client Communication, Our Insights

Happy New Year! The flip of the calendar brings excitement as we toast the new year and say goodbye to the old. A new year is also a great demarcation to ponder what’s ahead. Let me tell you, economic positives abound.

Below are seven items that are expected to influence the business climate and economic growth for 2026 and beyond. The economic backdrop is a single, but important, factor in financial market performance. Economic dynamics are in a constant state of flux, requiring vigilance and awareness.

    1. Lower interest rates should benefit consumers and businesses with the lower cost of capital on loans and financing options. Though interest rate reductions started in September 2025, interest rate effects typically take 4-6 months to impact the economy. Hence, such a monetary shot in the arm will primarily be felt in 2026.
    2. Trillions of Foreign Direct Investment (FDI) dollars will assist with factory/manufacturing facility and infrastructure construction/refurbishment. Such projects are often long-term projects spreading economic benefits across multiple years.
    3. Massive depreciation allowances are expected to springboard business spending. Some line items will be allowed 100% depreciation write-offs in a single year as opposed to being spread over multiple years. Further, there are special depreciation carve-outs for technology development and manufacturing, encouraging technology companies to reshore their factories. The special technology depreciation, FDI (see #2), and lower interest rates (see #1) deliver a stimulative triple play.
    4. Significant tax changes include new tax deductions (such as tax-free tips and overtime, as well as car loan interest deductions and a bonus deduction for seniors), along with higher standard and state/local tax (SALT) deductions, all of which put extra cash in consumers’ pockets.
    5. The clearer tariff picture (which ended up being lower than initially feared) should free up businesses to make capital allocation decisions, like investing in reshoring supply chains or undertaking business projects. A paved roadway is easier to navigate than a fluid waterway.
    6. An accommodative regulatory environment should translate to lessened red tape and lower overhead business costs.
    7. Productivity increases should materialize from the acceleration of the implementation of AI and robotics. The flip side of AI/robotics is possible strain on labor markets… something to monitor in 2026.

We know… this summary is a lot to take in. A white paper can be written on each item. Yet, these seven fiscal and monetary bullet points are enough to establish 2026’s trajectory. Admittedly, the future is unknown, and financial markets are influenced by more than just economics. We will monitor these themes as the year transpires. Wishing you a healthy and prosperous 2026!