Finding Confidence in the Forecast: Navigating Growth Amid Global Uncertainty

With headlines heralding economic upheaval, geopolitical tensions rising, and rapid market shifts — it is entirely understandable that people are asking us how we can feel confident in our forecast. With so many unpredictable events unfolding globally, trusting any forecast might seem like a leap of faith.

But at ITR Economics, our approach is not rooted in guesswork or mere optimism. Instead, it is built on rigorous analysis, continuous data updates, and a deep understanding of leading economic indicators. Let’s take you behind the scenes of our latest forecast, share the reasoning guiding our expectations through 2026, and explain why, even amidst anxiety and ambiguity, we remain confident in our outlook.

Parsing the Noise: Why Comps Can Raise Concerns

It is important to acknowledge the drivers of anxiety. When looking at the leading indicators, it is easy to see why some are nervous: there is not an overwhelming set of the common leading indicators pointing decisively in either direction. This is not a failure of analysis, but a reflection of the ambiguous signals characterizing the present cycle.

In some periods, leading indicators will flash clear signals: booms or busts written in bold. Today, however, the story is more nuanced, with some indicators flickering rather than shining. This ambiguity can breed hesitation and doubt.

Why Confidence Endures: The Indicators Behind the Forecast

Despite these uncertainties, there are specific leading indicators and economic signals that reinforce our confidence. Let’s walk through some of the ones we are watching closely:

• Chicago Fed National Financial Conditions Index: This index remains supportive of growth, signaling that financial conditions are not tightening to choke off expansion.
• P. Morgan Global Purchasing Managers Index: Global manufacturing activity is on the rise, suggesting underlying strength in production and demand.
• ITR Leading Indicator & ITR Retail Sales Leading Indicator: Both have moved higher in recent months, offering a sign of improving conditions, especially for consumer-facing sectors.
• Money Supply & US Government Bond Yields: These financial metrics are behaving in ways that support further growth in 2026.
• US Purchasing Managers Index: Admittedly, this one is volatile right now, and the tentative monthly rate-of-change peak coming early is a legitimate concern for some. However, the fact that the PMI is bouncing around, rather than dropping straight back down, is actually encouraging. It signals a market that is adjusting, not collapsing. This further aligns with our expectations that not every market will be booming, even as the overall economy grows.
• US Personal Savings Balance Index (deflated with US Consumer Price Index): This metric shows that overall consumers are in a relatively healthy position and will provide additional support for a sustained period of growth.

Pulling these threads together, the indicators collectively support our forecast calling for overall expansion through at least 2026, albeit with a slowing rate of growth in the second half.

Positive Signals Beyond the Indicators

Beyond the technical analysis, there are other reasons for optimism:

• Rising incomes: Wage growth is providing consumers with greater purchasing power, supporting demand across sectors.
• Manageable debt levels: Households and businesses, for the most part, are not overleveraged. This creates a cushion against shocks and enables spending and investment.
• Tax refunds surge: Looking ahead to the second and third quarters of 2026, we anticipate a double-digit increase in tax refunds compared to 2025, providing another boost to consumer liquidity and confidence.

These forces, while perhaps more subtle than major headlines, play a role in sustaining growth and smoothing out bumps in the road.

Balancing Concerns With Opportunity

Let’s be candid: there are risks to the outlook. The global landscape is filled with variables that could disrupt even the best-laid forecasts. Trade wars, sudden tariff spikes, and geopolitical conflict have the capacity to derail progress. We do not discount these risks. But the larger truth is that businesses are demonstrating remarkable adaptability. While uncertainty reigns in headlines, companies are quietly discovering that they can still grow and generate profits — even amid confusion and turmoil. The hesitation of the past months is giving way to action, as leaders realize that waiting for clarity can mean missing out on opportunity.

Navigating Uncertainty Together

While the world remains unpredictable in many social and political arenas and the headlines can be daunting, our data-driven approach gives us confidence in the forecast through 2026 and beyond. Concerns are legitimate, but so is the evidence pointing to opportunity and growth.

As always, we invite you to engage with us, challenge our assumptions, and join in the dialogue. Together, we can move forward with confidence, eyes open to risk but optimistic about the potential for prosperous outcomes. The path ahead may be winding, but with careful analysis and adaptive strategies, growth is not only possible, it’s probable.

Let’s navigate this future, informed and empowered.