![\"\"](\"https://content.ibisworld.com/media/komdehhc/shutterstock_2535979537.jpg?rmode=max&width=720\")
The US economy is entering 2026 in a state of divergence. Capital is concentrating in areas tied to productivity gains and long-term strategic investment, while other parts of the economy remain weighed down by overcapacity, elevated costs and structurally weaker demand. Rather than moving in lockstep, sectors are increasingly responding to distinct economic signals and constraints.
\n\n
To explore how these shifts are reshaping performance across the economy, three IBISWorld analysts examine where growth is proving durable, where risks are intensifying and which macro forces will matter most in the year ahead.
\nTogether, their perspectives reveal an economy being reshaped by uneven investment, evolving cost pressures and a narrowing set of growth engines as 2026 approaches.
\n\n
Alexander Petridis: Cloud infrastructure providers, web hosting and Infrastructure‑as‑a‑Service (IaaS) platforms underpin generative AI and data‑intensive applications. Output for this industry has risen steadily in recent years, with the Federal Reserve’s industrial production index for data processing and hosting climbing from 113 in 2020 to about 156 in 2024, signaling strong real growth. Bloomberg estimates that the data-center infrastructure market alone was approximately USD 46 billion in 2024 and could grow by roughly 25% in 2025 as hyperscalers race to add AI-capable capacity, setting up continued tight supply into 2026.
\n\n
From an economic framework perspective, the AI wave acts as a capital-deepening shock, raising demand for specialized computing infrastructure faster than that of general IT labor or traditional software. This dynamic gives large 518210 providers (e.g., hyperscale cloud platforms) economies of scale and bargaining power over customers whose models and data are “sticky” once migrated, supporting above‑trend revenue growth and profit into 2026.
\n\n
Matthew Pigott: Data center construction, which is included in the Commercial Building Construction report (23622a). While skyrocketing investment in data centers, and AI infrastructure as a whole, isn’t a new trend heading into 2026, the space isn’t showing signs of slowing down. AI investments accounted for 40% of US GDP growth in 2025; a huge part of this investment has been building data centers. As investors continue to double down on AI bets, even as much of the rest of the US economy cools, the expanding AI bubble will continue to become more important in propping up overall economic growth.
\n\n
Jullian Guirguis: I'm placing my chips on packaging machinery automation. The industry's poised for impressive growth as US manufacturers double down on efficiency and made-in-America supply chains. This tailwind comes from broad-based corporate demand for labor-saving technologies and a surge in reshoring efforts, as confirmed by public disclosures from American manufacturers and trends tracked by the Department of Commerce. On the materials side, concrete and cement producers may see a rebound: the American Cement Association projects modest consumption growth returning in 2026 as infrastructure spending ramps up and recession fears recede, especially if interest rates continue to soften.
\n\n
Aluminum for automotive applications is another bright spot. Lightweighting remains a secular trend as automakers chase fuel efficiency and EV range improvements. Deloitte's 2026 manufacturing outlook highlights continued substitution of steel with aluminum in vehicle structures and domestic producers stand to benefit from both reshoring and USMCA content requirements that favor North American metal sourcing.
\n\n
AP: Traditional publishing industries, including newspapers, magazines and periodicals, look especially vulnerable going into 2026, despite pockets of digital growth. Industry employment has fallen to about 99,000 workers as of May 2023, down sharply from prior decades, underscoring a long‑running contraction in the core cost base. Federal Reserve data show that newspaper-publisher employment indices have been sliding steadily through 2020–2023, reflecting persistent downsizing rather than cyclical trimming. Only 9% of US adults report turning to print publications “often” for news, a demand shock that erodes pricing power for both subscriptions and print advertising.
\n\n
A Pew survey in 2024 found that just 63% of Americans think their local outlets are doing well financially, down from 71% in 2018, highlighting fragile consumer confidence in the business model. High fixed costs for printing and distribution meet structurally declining volumes, which is a classic case of negative operating leverage as every lost reader spreads overhead across fewer units. Local news deserts continue to spread, with hundreds of US counties at risk of losing local news entirely, limiting scale and network effects just as platforms and streaming pull ad dollars away.
\n\n
MP: Office building construction, also included in the Commercial Building Construction report (23622a) is moving in the opposite direction as data center construction. Demand for office space was permanently shifted by the pandemic and the increased popularity of working from home. Since then, office construction has been heading strictly downward. Increasingly less office space is being completed or started, and commercial-to-residential conversions are on the rise. Still, some markets are stronger than others; Manhattan, Boston and other metropolian areas’ office space markets are outpacing the US as a whole.
\n\n
JG: Steel and chemical manufacturing could be in the hot seat next year. Steel faces oversupply anxieties driven by Chinese exports, hitting US mills hardest through pricing pressure and potential trade frictions described in recent intergovernmental testimony and industry briefings. Chemical makers are navigating persistent cost inflation, uneven demand and regulatory uncertainty, with the Bureau of Labor Statistics noting subdued employment growth projections and heightened energy volatility.
\n\n
![\"\"](\"https://content.ibisworld.com/media/q5dh1oc1/shutterstock_2427631087.jpg?rmode=max&width=720\")
Structural metal fabrication for commercial construction also raises red flags. With commercial real estate still struggling and office vacancy rates elevated, demand for structural beams, framing and architectural metals is expected to remain weak through mid-2026. Fabricators are caught between soft order books and rising input costs – a profit squeeze that's already forcing consolidation in the industry.
\n\n
AP: Corporate profit sits at the intersection of growth, inflation and policy expectations, so it’s an indicator to watch as we enter 2026. S&P 500 earnings are forecast to rise about 13–14% in 2026, implying another leg of multiple‑supported equity gains if profit holds. Major Wall Street houses now tie double‑digit index targets for 2026 directly to this earnings trajectory, assuming only modest Fed easing and no profit‑crushing recession. Profit growth reflects nominal GDP, labor costs and interest expenses; with global growth slowing toward roughly 3.1% by 2026, a sustained double‑digit earnings expansion would require either ballooning profit or continuing tech‑led outperformance.
\n\n
The key question is not just how fast earnings accelerate, but how they are earned. Profit growth driven by genuine productivity gains and pricing power tends to be durable, whereas growth driven by cost-cutting, underinvestment or financial engineering (such as buybacks or leverage) is fragile. In 2026, a large share of expected earnings growth is concentrated in capital-light, platform businesses and AI-adjacent tech, which can mask weaker profitability in more cyclical, rate-sensitive sectors. That concentration increases the risk that a shock to a narrow leadership group will cascade through indices, credit markets and sentiment.
\n\n
![\"\"](\"https://content.ibisworld.com/media/pvpjb4ic/shutterstock_2620573353.jpg?rmode=max&width=720\")
MP: Energy prices are an indicator to keep an eye on. After rising 0.1% between 2005 and 2020, US energy consumption is set to rise 1.7% between 2020 and 2026. This rising demand has been driven by growth in data centers and manufacturing establishments, and has come along with a rise in energy prices. Increasing prices have been spread unevenly throughout the country and have been caused by factors other than increased demand, including wildfires, natural gas prices and local energy prices. Still, if energy production cannot keep up with rising demand in the near future, consumers will bear the brunt of higher energy costs, leaving less in their pockets to spread to other areas of the economy.
\n\n
JG: Wage and employment data, as well asleading activity indicators (like ISM's manufacturing PMI), top the list as these signal the health of industrial sectors and the broader US economy. Housing starts remain a bellwether for building materials demand and economic sentiment. Infrastructure spending trends, especially those reflected in Census Bureau reports, are also critical for heavy manufacturing.
\n\n
I'm also watching industrial capacity utilization from the Federal Reserve closely. When utilization dips below 75% in chemicals or primary metals, it historically signals margin compression and delayed capital expenditure – both bad news for equipment suppliers and construction material demand. Right now, we're hovering near those threshold levels, so any sustained decline would confirm broader industrial weakness heading into 2026.
\n\n
AP: Slower, more fragmented trade is one of the clearest macro headwinds for industry performance in 2026. The IMF warns that global trade growth is likely to remain persistently below its pre-2008 average, as governments lean into industrial policy, export controls and security-driven supply chain shifts. The World Bank reports that while trade has been surprisingly resilient post‑pandemic, a “sharp slowdown” is underway, tied to weaker goods demand and rising barriers between major blocs. For trade-intensive sectors, such as autos, electronics, machinery and bulk commodities, slower trade means weaker operating leverage: fixed logistics and plant costs are spread over fewer units, with less room to absorb price shocks.
\n\n
At the same time, near‑shoring and “friend‑shoring” open opportunities for countries and firms that can credibly offer political alignment, logistics reliability and energy security, particularly in North America, parts of Europe and selected emerging markets. Executives are responding by diversifying suppliers, duplicating critical capacity and holding more inventory, which raises structural costs but buys resilience. Industries that can pass those costs through, such as those specializing in niche components, branded capital goods and logistics networks, may be able to defend their profit. In contrast, undifferentiated manufacturers and export-reliant SMEs face margin compression and more volatile demand as trade patterns continue to splinter.
\n\n
MP: One factor that has the potential to impact the construction sector, perhaps on a longer-term basis than just into the next year, is permitting reform. Construction timelines and costs are regularly driven up by overcomplicated regulatory and permitting processes; recent years have seen efforts to reform permitting under both the Biden and Trump administrations. More comprehensive reform could help along much-needed new construction, including housing, clean energy infrastructure and transportation infrastructure.
\n\n
![\"\"](\"https://content.ibisworld.com/media/523lp5x2/shutterstock_2492762449.jpg?rmode=max&width=720\")
JG: Global supply chain restructuring, especially nearshoring and US reshoring, is still transforming industrial demand patterns. Companies are proactively adapting to persistent geopolitical and trade uncertainty, which is evident in Federal Reserve commentary and the Commerce Department's monitoring of capital flows. Regulatory shifts, whether climate or trade, are front and center, especially with infrastructure- and emissions-focused policy reforms now gaining traction at the federal level.
\nBut Chinese overcapacity in chemicals and steel is the dark cloud hanging over everything. Global steel overcapacity could exceed 680 million tons, with China driving record levels while dumping excess production into global markets at depressed prices. This isn't cyclical – it is structural oversupply driven by subsidized capacity that won't slow down. US producers can't compete on price when Chinese steel exports circumvent trade restrictions through semi-finished products. It's creating a ceiling on domestic pricing power that'll persist well into 2026.
\n\n
On the flip side, energy transition investments, particularly in battery materials, green hydrogen infrastructure and industrial decarbonization, are creating surprising pockets of demand for specialized chemical producers and metals fabricators. DOE funding and private capital are flowing into these segments, offering a hedge against weakness in legacy industrial end markets.
\n\n
AP: One underappreciated signal for 2026 is where investment is headed. Specifically, the quiet shift from physical capital expenditure to intangible capital, such as software, data and organizational capabilities. Global business investment has appeared sluggish for years, but intangible investment has grown several times faster than spending on plants and equipment since the late 2000s, driving almost all real investment growth between 2020 and 2024. That means traditional indicators, such as factory orders, construction and machinery capital expenditures, understate how aggressively firms in software, AI, design and branding are pulling ahead in productivity and pricing power.
\n\n
The risk is that companies and policymakers, still geared toward tangible-heavy models, misread this shift, overinvesting in low-return physical assets while underinvesting in data, R&D and process redesign, thereby locking in weaker productivity. There’s opportunity for businesses that treat intangibles as core balance-sheet assets, systematically funding software, AI, data infrastructure and organizational capital, to gain durable competitive advantages even in a low-growth, higher-rate world.
\n\n
MP: One interesting market signal that could be overlooked is the price of gold, which has been skyrocketing over the past two years, reaching all-time highs. Investors have been turning to gold and other precious metals as safe-haven assets to hedge against inflation and to diversify from another safe-haven asset, the US dollar, as faith in the dollar has weakened. Unusually, even as the price of gold has been rising, presumably as investors have been losing confidence, equity markets have also been on the rise, riding the AI bubble. Whether this relationship continues or diverges in the coming years will be worth keeping an eye on.
\n\n
JG: A widely ignored risk is the potential lag in skilled labor growth for US-based automation and advanced manufacturing. While spending surges on equipment and new facilities seem promising, Bureau of Labor Statistics occupational employment projections suggest worker supply won't keep pace with demand, posing a drag on industrial output just as supply chains localize. Firms prepared to train or recruit aggressively could seize real share.
\n\n
![\"\"](\"https://content.ibisworld.com/media/ouhj252l/shutterstock_2581046587.jpg?rmode=max&width=720\")
Here's the opportunity everyone's missing: secondary aluminum markets are quietly tightening as scrap availability lags recycling ambitions. Automotive and packaging industries seek recycled content to achieve their sustainability goals, but domestic scrap collection infrastructure hasn't caught up. Fabricators that secure reliable scrap supply chains now, whether through captive collection or strategic partnerships, will have a competitive moat as regulatory pressure and corporate commitments intensify in 2026 and beyond.
","TimeToRead":11,"FinalWord":null,"KeyTakeaways":null,"DatePublished":"2025-12-17T00:00:00Z","DatePublishedTimestamp":0,"DateFormatted":"December 17, 2025","UrlSlug":"/2026-us-roundtable/","SeoTitle":"Roundtable: Where the US Economy Is Headed in 2026","SeoDescription":"Heading into 2026, IBISWorld analysts discuss where pressure is building and which macro forces will shape performance across the US economy.","SeoImageUrl":"/media/cozh5p0k/socialmedia-logo.png","Tags":["Macroeconomic","Outlook","AI","Artificial Intelligence","Industry","Manufacturing","Construction"],"Sectors":null,"Toc":null,"Culture":"en","IsFeatured":false,"IsHidden":false},"Item2": {"Id":8040,"Key":"850934d0-9cf6-4fbe-9362-14e70c2580c8","Title":"Roundtable: Where the US Economy Is Headed in 2026","Country":"United States","CountryId":1,"AuthorId":1205,"AuthorName":"IBISWorld","AuthorTitle":"Industry research you can trust","AuthorPhoto":"/media/cozh5p0k/socialmedia-logo.png","AuthorBio":"IBISWorld is the world's largest independent publisher of industry reports.","Image":null,"CategoryId":1126,"CategoryName":"Analyst Insights","Persona":null,"Content":"The US economy is entering 2026 in a state of divergence. Capital is concentrating in areas tied to productivity gains and long-term strategic investment, while other parts of the economy remain weighed down by overcapacity, elevated costs and structurally weaker demand. Rather than moving in lockstep, sectors are increasingly responding to distinct economic signals and constraints.
\n\n
To explore how these shifts are reshaping performance across the economy, three IBISWorld analysts examine where growth is proving durable, where risks are intensifying and which macro forces will matter most in the year ahead.
\nTogether, their perspectives reveal an economy being reshaped by uneven investment, evolving cost pressures and a narrowing set of growth engines as 2026 approaches.
\n\n
Alexander Petridis: Cloud infrastructure providers, web hosting and Infrastructure‑as‑a‑Service (IaaS) platforms underpin generative AI and data‑intensive applications. Output for this industry has risen steadily in recent years, with the Federal Reserve’s industrial production index for data processing and hosting climbing from 113 in 2020 to about 156 in 2024, signaling strong real growth. Bloomberg estimates that the data-center infrastructure market alone was approximately USD 46 billion in 2024 and could grow by roughly 25% in 2025 as hyperscalers race to add AI-capable capacity, setting up continued tight supply into 2026.
\n\n
From an economic framework perspective, the AI wave acts as a capital-deepening shock, raising demand for specialized computing infrastructure faster than that of general IT labor or traditional software. This dynamic gives large 518210 providers (e.g., hyperscale cloud platforms) economies of scale and bargaining power over customers whose models and data are “sticky” once migrated, supporting above‑trend revenue growth and profit into 2026.
\n\n
Matthew Pigott: Data center construction, which is included in the Commercial Building Construction report (23622a). While skyrocketing investment in data centers, and AI infrastructure as a whole, isn’t a new trend heading into 2026, the space isn’t showing signs of slowing down. AI investments accounted for 40% of US GDP growth in 2025; a huge part of this investment has been building data centers. As investors continue to double down on AI bets, even as much of the rest of the US economy cools, the expanding AI bubble will continue to become more important in propping up overall economic growth.
\n\n
Jullian Guirguis: I'm placing my chips on packaging machinery automation. The industry's poised for impressive growth as US manufacturers double down on efficiency and made-in-America supply chains. This tailwind comes from broad-based corporate demand for labor-saving technologies and a surge in reshoring efforts, as confirmed by public disclosures from American manufacturers and trends tracked by the Department of Commerce. On the materials side, concrete and cement producers may see a rebound: the American Cement Association projects modest consumption growth returning in 2026 as infrastructure spending ramps up and recession fears recede, especially if interest rates continue to soften.
\n\n
Aluminum for automotive applications is another bright spot. Lightweighting remains a secular trend as automakers chase fuel efficiency and EV range improvements. Deloitte's 2026 manufacturing outlook highlights continued substitution of steel with aluminum in vehicle structures and domestic producers stand to benefit from both reshoring and USMCA content requirements that favor North American metal sourcing.
\n\n
AP: Traditional publishing industries, including newspapers, magazines and periodicals, look especially vulnerable going into 2026, despite pockets of digital growth. Industry employment has fallen to about 99,000 workers as of May 2023, down sharply from prior decades, underscoring a long‑running contraction in the core cost base. Federal Reserve data show that newspaper-publisher employment indices have been sliding steadily through 2020–2023, reflecting persistent downsizing rather than cyclical trimming. Only 9% of US adults report turning to print publications “often” for news, a demand shock that erodes pricing power for both subscriptions and print advertising.
\n\n
A Pew survey in 2024 found that just 63% of Americans think their local outlets are doing well financially, down from 71% in 2018, highlighting fragile consumer confidence in the business model. High fixed costs for printing and distribution meet structurally declining volumes, which is a classic case of negative operating leverage as every lost reader spreads overhead across fewer units. Local news deserts continue to spread, with hundreds of US counties at risk of losing local news entirely, limiting scale and network effects just as platforms and streaming pull ad dollars away.
\n\n
MP: Office building construction, also included in the Commercial Building Construction report (23622a) is moving in the opposite direction as data center construction. Demand for office space was permanently shifted by the pandemic and the increased popularity of working from home. Since then, office construction has been heading strictly downward. Increasingly less office space is being completed or started, and commercial-to-residential conversions are on the rise. Still, some markets are stronger than others; Manhattan, Boston and other metropolian areas’ office space markets are outpacing the US as a whole.
\n\n
JG: Steel and chemical manufacturing could be in the hot seat next year. Steel faces oversupply anxieties driven by Chinese exports, hitting US mills hardest through pricing pressure and potential trade frictions described in recent intergovernmental testimony and industry briefings. Chemical makers are navigating persistent cost inflation, uneven demand and regulatory uncertainty, with the Bureau of Labor Statistics noting subdued employment growth projections and heightened energy volatility.
\n\n
Structural metal fabrication for commercial construction also raises red flags. With commercial real estate still struggling and office vacancy rates elevated, demand for structural beams, framing and architectural metals is expected to remain weak through mid-2026. Fabricators are caught between soft order books and rising input costs – a profit squeeze that's already forcing consolidation in the industry.
\n\n
AP: Corporate profit sits at the intersection of growth, inflation and policy expectations, so it’s an indicator to watch as we enter 2026. S&P 500 earnings are forecast to rise about 13–14% in 2026, implying another leg of multiple‑supported equity gains if profit holds. Major Wall Street houses now tie double‑digit index targets for 2026 directly to this earnings trajectory, assuming only modest Fed easing and no profit‑crushing recession. Profit growth reflects nominal GDP, labor costs and interest expenses; with global growth slowing toward roughly 3.1% by 2026, a sustained double‑digit earnings expansion would require either ballooning profit or continuing tech‑led outperformance.
\n\n
The key question is not just how fast earnings accelerate, but how they are earned. Profit growth driven by genuine productivity gains and pricing power tends to be durable, whereas growth driven by cost-cutting, underinvestment or financial engineering (such as buybacks or leverage) is fragile. In 2026, a large share of expected earnings growth is concentrated in capital-light, platform businesses and AI-adjacent tech, which can mask weaker profitability in more cyclical, rate-sensitive sectors. That concentration increases the risk that a shock to a narrow leadership group will cascade through indices, credit markets and sentiment.
\n\n
MP: Energy prices are an indicator to keep an eye on. After rising 0.1% between 2005 and 2020, US energy consumption is set to rise 1.7% between 2020 and 2026. This rising demand has been driven by growth in data centers and manufacturing establishments, and has come along with a rise in energy prices. Increasing prices have been spread unevenly throughout the country and have been caused by factors other than increased demand, including wildfires, natural gas prices and local energy prices. Still, if energy production cannot keep up with rising demand in the near future, consumers will bear the brunt of higher energy costs, leaving less in their pockets to spread to other areas of the economy.
\n\n
JG: Wage and employment data, as well asleading activity indicators (like ISM's manufacturing PMI), top the list as these signal the health of industrial sectors and the broader US economy. Housing starts remain a bellwether for building materials demand and economic sentiment. Infrastructure spending trends, especially those reflected in Census Bureau reports, are also critical for heavy manufacturing.
\n\n
I'm also watching industrial capacity utilization from the Federal Reserve closely. When utilization dips below 75% in chemicals or primary metals, it historically signals margin compression and delayed capital expenditure – both bad news for equipment suppliers and construction material demand. Right now, we're hovering near those threshold levels, so any sustained decline would confirm broader industrial weakness heading into 2026.
\n\n
AP: Slower, more fragmented trade is one of the clearest macro headwinds for industry performance in 2026. The IMF warns that global trade growth is likely to remain persistently below its pre-2008 average, as governments lean into industrial policy, export controls and security-driven supply chain shifts. The World Bank reports that while trade has been surprisingly resilient post‑pandemic, a “sharp slowdown” is underway, tied to weaker goods demand and rising barriers between major blocs. For trade-intensive sectors, such as autos, electronics, machinery and bulk commodities, slower trade means weaker operating leverage: fixed logistics and plant costs are spread over fewer units, with less room to absorb price shocks.
\n\n
At the same time, near‑shoring and “friend‑shoring” open opportunities for countries and firms that can credibly offer political alignment, logistics reliability and energy security, particularly in North America, parts of Europe and selected emerging markets. Executives are responding by diversifying suppliers, duplicating critical capacity and holding more inventory, which raises structural costs but buys resilience. Industries that can pass those costs through, such as those specializing in niche components, branded capital goods and logistics networks, may be able to defend their profit. In contrast, undifferentiated manufacturers and export-reliant SMEs face margin compression and more volatile demand as trade patterns continue to splinter.
\n\n
MP: One factor that has the potential to impact the construction sector, perhaps on a longer-term basis than just into the next year, is permitting reform. Construction timelines and costs are regularly driven up by overcomplicated regulatory and permitting processes; recent years have seen efforts to reform permitting under both the Biden and Trump administrations. More comprehensive reform could help along much-needed new construction, including housing, clean energy infrastructure and transportation infrastructure.
\n\n
JG: Global supply chain restructuring, especially nearshoring and US reshoring, is still transforming industrial demand patterns. Companies are proactively adapting to persistent geopolitical and trade uncertainty, which is evident in Federal Reserve commentary and the Commerce Department's monitoring of capital flows. Regulatory shifts, whether climate or trade, are front and center, especially with infrastructure- and emissions-focused policy reforms now gaining traction at the federal level.
\nBut Chinese overcapacity in chemicals and steel is the dark cloud hanging over everything. Global steel overcapacity could exceed 680 million tons, with China driving record levels while dumping excess production into global markets at depressed prices. This isn't cyclical – it is structural oversupply driven by subsidized capacity that won't slow down. US producers can't compete on price when Chinese steel exports circumvent trade restrictions through semi-finished products. It's creating a ceiling on domestic pricing power that'll persist well into 2026.
\n\n
On the flip side, energy transition investments, particularly in battery materials, green hydrogen infrastructure and industrial decarbonization, are creating surprising pockets of demand for specialized chemical producers and metals fabricators. DOE funding and private capital are flowing into these segments, offering a hedge against weakness in legacy industrial end markets.
\n\n
AP: One underappreciated signal for 2026 is where investment is headed. Specifically, the quiet shift from physical capital expenditure to intangible capital, such as software, data and organizational capabilities. Global business investment has appeared sluggish for years, but intangible investment has grown several times faster than spending on plants and equipment since the late 2000s, driving almost all real investment growth between 2020 and 2024. That means traditional indicators, such as factory orders, construction and machinery capital expenditures, understate how aggressively firms in software, AI, design and branding are pulling ahead in productivity and pricing power.
\n\n
The risk is that companies and policymakers, still geared toward tangible-heavy models, misread this shift, overinvesting in low-return physical assets while underinvesting in data, R&D and process redesign, thereby locking in weaker productivity. There’s opportunity for businesses that treat intangibles as core balance-sheet assets, systematically funding software, AI, data infrastructure and organizational capital, to gain durable competitive advantages even in a low-growth, higher-rate world.
\n\n
MP: One interesting market signal that could be overlooked is the price of gold, which has been skyrocketing over the past two years, reaching all-time highs. Investors have been turning to gold and other precious metals as safe-haven assets to hedge against inflation and to diversify from another safe-haven asset, the US dollar, as faith in the dollar has weakened. Unusually, even as the price of gold has been rising, presumably as investors have been losing confidence, equity markets have also been on the rise, riding the AI bubble. Whether this relationship continues or diverges in the coming years will be worth keeping an eye on.
\n\n
JG: A widely ignored risk is the potential lag in skilled labor growth for US-based automation and advanced manufacturing. While spending surges on equipment and new facilities seem promising, Bureau of Labor Statistics occupational employment projections suggest worker supply won't keep pace with demand, posing a drag on industrial output just as supply chains localize. Firms prepared to train or recruit aggressively could seize real share.
\n\n
Here's the opportunity everyone's missing: secondary aluminum markets are quietly tightening as scrap availability lags recycling ambitions. Automotive and packaging industries seek recycled content to achieve their sustainability goals, but domestic scrap collection infrastructure hasn't caught up. Fabricators that secure reliable scrap supply chains now, whether through captive collection or strategic partnerships, will have a competitive moat as regulatory pressure and corporate commitments intensify in 2026 and beyond.
","TimeToRead":11,"FinalWord":null,"KeyTakeaways":null,"DatePublished":"2025-12-17T00:00:00Z","DatePublishedTimestamp":0,"DateFormatted":"December 17, 2025","UrlSlug":"/2026-us-roundtable/","SeoTitle":"Roundtable: Where the US Economy Is Headed in 2026","SeoDescription":"Heading into 2026, IBISWorld analysts discuss where pressure is building and which macro forces will shape performance across the US economy.","SeoImageUrl":"/media/cozh5p0k/socialmedia-logo.png","Tags":["Macroeconomic","Outlook","AI","Artificial Intelligence","Industry","Manufacturing","Construction"],"Sectors":null,"Toc":null,"Culture":"en","IsFeatured":false,"IsHidden":false},"Item3": {"Id":8040,"Key":"850934d0-9cf6-4fbe-9362-14e70c2580c8","Title":"Roundtable: Where the US Economy Is Headed in 2026","Country":"United States","CountryId":1,"AuthorId":1205,"AuthorName":"IBISWorld","AuthorTitle":"Industry research you can trust","AuthorPhoto":"/media/cozh5p0k/socialmedia-logo.png","AuthorBio":"IBISWorld is the world's largest independent publisher of industry reports.","Image":null,"CategoryId":1126,"CategoryName":"Analyst Insights","Persona":null,"Content":"The US economy is entering 2026 in a state of divergence. Capital is concentrating in areas tied to productivity gains and long-term strategic investment, while other parts of the economy remain weighed down by overcapacity, elevated costs and structurally weaker demand. Rather than moving in lockstep, sectors are increasingly responding to distinct economic signals and constraints.
\n\n
To explore how these shifts are reshaping performance across the economy, three IBISWorld analysts examine where growth is proving durable, where risks are intensifying and which macro forces will matter most in the year ahead.
\nTogether, their perspectives reveal an economy being reshaped by uneven investment, evolving cost pressures and a narrowing set of growth engines as 2026 approaches.
\n\n
Alexander Petridis: Cloud infrastructure providers, web hosting and Infrastructure‑as‑a‑Service (IaaS) platforms underpin generative AI and data‑intensive applications. Output for this industry has risen steadily in recent years, with the Federal Reserve’s industrial production index for data processing and hosting climbing from 113 in 2020 to about 156 in 2024, signaling strong real growth. Bloomberg estimates that the data-center infrastructure market alone was approximately USD 46 billion in 2024 and could grow by roughly 25% in 2025 as hyperscalers race to add AI-capable capacity, setting up continued tight supply into 2026.
\n\n
From an economic framework perspective, the AI wave acts as a capital-deepening shock, raising demand for specialized computing infrastructure faster than that of general IT labor or traditional software. This dynamic gives large 518210 providers (e.g., hyperscale cloud platforms) economies of scale and bargaining power over customers whose models and data are “sticky” once migrated, supporting above‑trend revenue growth and profit into 2026.
\n\n
Matthew Pigott: Data center construction, which is included in the Commercial Building Construction report (23622a). While skyrocketing investment in data centers, and AI infrastructure as a whole, isn’t a new trend heading into 2026, the space isn’t showing signs of slowing down. AI investments accounted for 40% of US GDP growth in 2025; a huge part of this investment has been building data centers. As investors continue to double down on AI bets, even as much of the rest of the US economy cools, the expanding AI bubble will continue to become more important in propping up overall economic growth.
\n\n
Jullian Guirguis: I'm placing my chips on packaging machinery automation. The industry's poised for impressive growth as US manufacturers double down on efficiency and made-in-America supply chains. This tailwind comes from broad-based corporate demand for labor-saving technologies and a surge in reshoring efforts, as confirmed by public disclosures from American manufacturers and trends tracked by the Department of Commerce. On the materials side, concrete and cement producers may see a rebound: the American Cement Association projects modest consumption growth returning in 2026 as infrastructure spending ramps up and recession fears recede, especially if interest rates continue to soften.
\n\n
Aluminum for automotive applications is another bright spot. Lightweighting remains a secular trend as automakers chase fuel efficiency and EV range improvements. Deloitte's 2026 manufacturing outlook highlights continued substitution of steel with aluminum in vehicle structures and domestic producers stand to benefit from both reshoring and USMCA content requirements that favor North American metal sourcing.
\n\n
AP: Traditional publishing industries, including newspapers, magazines and periodicals, look especially vulnerable going into 2026, despite pockets of digital growth. Industry employment has fallen to about 99,000 workers as of May 2023, down sharply from prior decades, underscoring a long‑running contraction in the core cost base. Federal Reserve data show that newspaper-publisher employment indices have been sliding steadily through 2020–2023, reflecting persistent downsizing rather than cyclical trimming. Only 9% of US adults report turning to print publications “often” for news, a demand shock that erodes pricing power for both subscriptions and print advertising.
\n\n
A Pew survey in 2024 found that just 63% of Americans think their local outlets are doing well financially, down from 71% in 2018, highlighting fragile consumer confidence in the business model. High fixed costs for printing and distribution meet structurally declining volumes, which is a classic case of negative operating leverage as every lost reader spreads overhead across fewer units. Local news deserts continue to spread, with hundreds of US counties at risk of losing local news entirely, limiting scale and network effects just as platforms and streaming pull ad dollars away.
\n\n
MP: Office building construction, also included in the Commercial Building Construction report (23622a) is moving in the opposite direction as data center construction. Demand for office space was permanently shifted by the pandemic and the increased popularity of working from home. Since then, office construction has been heading strictly downward. Increasingly less office space is being completed or started, and commercial-to-residential conversions are on the rise. Still, some markets are stronger than others; Manhattan, Boston and other metropolian areas’ office space markets are outpacing the US as a whole.
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JG: Steel and chemical manufacturing could be in the hot seat next year. Steel faces oversupply anxieties driven by Chinese exports, hitting US mills hardest through pricing pressure and potential trade frictions described in recent intergovernmental testimony and industry briefings. Chemical makers are navigating persistent cost inflation, uneven demand and regulatory uncertainty, with the Bureau of Labor Statistics noting subdued employment growth projections and heightened energy volatility.
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Structural metal fabrication for commercial construction also raises red flags. With commercial real estate still struggling and office vacancy rates elevated, demand for structural beams, framing and architectural metals is expected to remain weak through mid-2026. Fabricators are caught between soft order books and rising input costs – a profit squeeze that's already forcing consolidation in the industry.
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AP: Corporate profit sits at the intersection of growth, inflation and policy expectations, so it’s an indicator to watch as we enter 2026. S&P 500 earnings are forecast to rise about 13–14% in 2026, implying another leg of multiple‑supported equity gains if profit holds. Major Wall Street houses now tie double‑digit index targets for 2026 directly to this earnings trajectory, assuming only modest Fed easing and no profit‑crushing recession. Profit growth reflects nominal GDP, labor costs and interest expenses; with global growth slowing toward roughly 3.1% by 2026, a sustained double‑digit earnings expansion would require either ballooning profit or continuing tech‑led outperformance.
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The key question is not just how fast earnings accelerate, but how they are earned. Profit growth driven by genuine productivity gains and pricing power tends to be durable, whereas growth driven by cost-cutting, underinvestment or financial engineering (such as buybacks or leverage) is fragile. In 2026, a large share of expected earnings growth is concentrated in capital-light, platform businesses and AI-adjacent tech, which can mask weaker profitability in more cyclical, rate-sensitive sectors. That concentration increases the risk that a shock to a narrow leadership group will cascade through indices, credit markets and sentiment.
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MP: Energy prices are an indicator to keep an eye on. After rising 0.1% between 2005 and 2020, US energy consumption is set to rise 1.7% between 2020 and 2026. This rising demand has been driven by growth in data centers and manufacturing establishments, and has come along with a rise in energy prices. Increasing prices have been spread unevenly throughout the country and have been caused by factors other than increased demand, including wildfires, natural gas prices and local energy prices. Still, if energy production cannot keep up with rising demand in the near future, consumers will bear the brunt of higher energy costs, leaving less in their pockets to spread to other areas of the economy.
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JG: Wage and employment data, as well asleading activity indicators (like ISM's manufacturing PMI), top the list as these signal the health of industrial sectors and the broader US economy. Housing starts remain a bellwether for building materials demand and economic sentiment. Infrastructure spending trends, especially those reflected in Census Bureau reports, are also critical for heavy manufacturing.
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I'm also watching industrial capacity utilization from the Federal Reserve closely. When utilization dips below 75% in chemicals or primary metals, it historically signals margin compression and delayed capital expenditure – both bad news for equipment suppliers and construction material demand. Right now, we're hovering near those threshold levels, so any sustained decline would confirm broader industrial weakness heading into 2026.
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AP: Slower, more fragmented trade is one of the clearest macro headwinds for industry performance in 2026. The IMF warns that global trade growth is likely to remain persistently below its pre-2008 average, as governments lean into industrial policy, export controls and security-driven supply chain shifts. The World Bank reports that while trade has been surprisingly resilient post‑pandemic, a “sharp slowdown” is underway, tied to weaker goods demand and rising barriers between major blocs. For trade-intensive sectors, such as autos, electronics, machinery and bulk commodities, slower trade means weaker operating leverage: fixed logistics and plant costs are spread over fewer units, with less room to absorb price shocks.
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At the same time, near‑shoring and “friend‑shoring” open opportunities for countries and firms that can credibly offer political alignment, logistics reliability and energy security, particularly in North America, parts of Europe and selected emerging markets. Executives are responding by diversifying suppliers, duplicating critical capacity and holding more inventory, which raises structural costs but buys resilience. Industries that can pass those costs through, such as those specializing in niche components, branded capital goods and logistics networks, may be able to defend their profit. In contrast, undifferentiated manufacturers and export-reliant SMEs face margin compression and more volatile demand as trade patterns continue to splinter.
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MP: One factor that has the potential to impact the construction sector, perhaps on a longer-term basis than just into the next year, is permitting reform. Construction timelines and costs are regularly driven up by overcomplicated regulatory and permitting processes; recent years have seen efforts to reform permitting under both the Biden and Trump administrations. More comprehensive reform could help along much-needed new construction, including housing, clean energy infrastructure and transportation infrastructure.
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JG: Global supply chain restructuring, especially nearshoring and US reshoring, is still transforming industrial demand patterns. Companies are proactively adapting to persistent geopolitical and trade uncertainty, which is evident in Federal Reserve commentary and the Commerce Department's monitoring of capital flows. Regulatory shifts, whether climate or trade, are front and center, especially with infrastructure- and emissions-focused policy reforms now gaining traction at the federal level.
\nBut Chinese overcapacity in chemicals and steel is the dark cloud hanging over everything. Global steel overcapacity could exceed 680 million tons, with China driving record levels while dumping excess production into global markets at depressed prices. This isn't cyclical – it is structural oversupply driven by subsidized capacity that won't slow down. US producers can't compete on price when Chinese steel exports circumvent trade restrictions through semi-finished products. It's creating a ceiling on domestic pricing power that'll persist well into 2026.
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On the flip side, energy transition investments, particularly in battery materials, green hydrogen infrastructure and industrial decarbonization, are creating surprising pockets of demand for specialized chemical producers and metals fabricators. DOE funding and private capital are flowing into these segments, offering a hedge against weakness in legacy industrial end markets.
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AP: One underappreciated signal for 2026 is where investment is headed. Specifically, the quiet shift from physical capital expenditure to intangible capital, such as software, data and organizational capabilities. Global business investment has appeared sluggish for years, but intangible investment has grown several times faster than spending on plants and equipment since the late 2000s, driving almost all real investment growth between 2020 and 2024. That means traditional indicators, such as factory orders, construction and machinery capital expenditures, understate how aggressively firms in software, AI, design and branding are pulling ahead in productivity and pricing power.
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The risk is that companies and policymakers, still geared toward tangible-heavy models, misread this shift, overinvesting in low-return physical assets while underinvesting in data, R&D and process redesign, thereby locking in weaker productivity. There’s opportunity for businesses that treat intangibles as core balance-sheet assets, systematically funding software, AI, data infrastructure and organizational capital, to gain durable competitive advantages even in a low-growth, higher-rate world.
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MP: One interesting market signal that could be overlooked is the price of gold, which has been skyrocketing over the past two years, reaching all-time highs. Investors have been turning to gold and other precious metals as safe-haven assets to hedge against inflation and to diversify from another safe-haven asset, the US dollar, as faith in the dollar has weakened. Unusually, even as the price of gold has been rising, presumably as investors have been losing confidence, equity markets have also been on the rise, riding the AI bubble. Whether this relationship continues or diverges in the coming years will be worth keeping an eye on.
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JG: A widely ignored risk is the potential lag in skilled labor growth for US-based automation and advanced manufacturing. While spending surges on equipment and new facilities seem promising, Bureau of Labor Statistics occupational employment projections suggest worker supply won't keep pace with demand, posing a drag on industrial output just as supply chains localize. Firms prepared to train or recruit aggressively could seize real share.
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Here's the opportunity everyone's missing: secondary aluminum markets are quietly tightening as scrap availability lags recycling ambitions. Automotive and packaging industries seek recycled content to achieve their sustainability goals, but domestic scrap collection infrastructure hasn't caught up. Fabricators that secure reliable scrap supply chains now, whether through captive collection or strategic partnerships, will have a competitive moat as regulatory pressure and corporate commitments intensify in 2026 and beyond.
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