Discover our economic outlook for 2027, 2028, and 2029 and how businesses can align budgets, market strategies, and capital priorities while preparing for the 2030s.
Planning for 2027 requires more precision than a single national forecast can provide. ITR Economics expects the US economy to expand through at least the end of 2028, but growth is likely to slow in 2027 and vary sharply by industry, region, and customer base.
Business leaders should use the remaining growth of the 2020s to protect margins, improve productivity, and strengthen their financial position before the projected 2030–2036 downturn.
Economic Growth Will Continue at a Slower Pace
Industrial activity, business-to-business spending, and AI-related data center investment are supporting the current expansion. At the same time, elevated interest rates, persistent inflation, and affordability pressures will constrain growth.
ITR Economics forecasts consumer inflation of 2.7% in 2027, down from 3.4% in 2026, before it rises to 3.9% in 2028. Slower inflation means that prices increase at a more moderate rate; it does not mean business costs or consumer prices return to earlier levels.
Market-Specific Forecasts Matter More Than Headlines
The economy is K-shaped. Technology, electrical equipment, communications, and electronics connected to data center investment are outperforming, while automotive, recreational vehicles, marine, and other interest-rate-sensitive markets face weaker conditions.
Most nonresidential construction segments are expected to grow in 2027, because projects started during the 2026 expansion will continue generating spending. Multifamily starts, however, are forecast to decline 11.5%. Manufacturing is also mixed: aerospace is forecast to grow 8.6%, heavy truck production is expected to rebound 16.7% from depressed levels, and chemicals are projected to finish the year nearly flat.
Separate Revenue Growth From Volume Growth
Nominal growth can overstate the strength of demand. Retail sales were up 4.5% year over year, while inflation adjusted retail volume increased only 1.3%. Consumers are also directing more spending toward fuel and food, leaving less room for discretionary and deferrable purchases.
Businesses that treat price-driven revenue as volume growth risk adding too much labor, inventory, equipment, software, or facility capacity. Use a budget that tracks revenue and units separately and specify what management will do if demand comes in above or below plan.
Protect Margins Through Productivity and Cost Control
Margin pressure is likely to increase as economic growth cools and input costs remain high. Copper, aluminum, steel, oil, and diesel may provide some relief later in 2027, but they are expected to remain expensive overall. Labor is also scarce, especially in blue-collar roles, where wage growth is holding near 4% year over year.
Investments in retention, training, automation, process improvement, and AI may improve output per employee, but each investment should have a measurable return rather than relying on an assumed productivity benefit.
Evaluate Capital and Acquisitions Against Long Range Risk
Capital allocation should support three priorities: margins, recession resistance, and debt reduction. The mergers and acquisitions market remains active, with transaction value at $3.1 trillion, but deal quality matters more than market momentum. Prospective buyers should test whether an acquisition lowers costs, enters a resilient market, produces cash before the 2030s, and leaves the balance sheet flexible.
Profitability also varies widely. High tech margins were cited at 19.7%, compared with 10.8% overall and 2.7% for motor vehicles and parts, which means high-growth assets may carry substantial premiums and longer payback risk.
Prepare Now for the 2030s
ITR Economics forecasts a prolonged downturn from 2030 to 2036, driven by demographic constraints, persistent inflation, elevated interest rates, and fiscal pressure. Preparation should extend beyond the annual budget. Leaders should favor shorter payback periods, reduce leverage, build liquidity, and assess whether their markets and regions have historically resisted recessions.
Nebraska and South Dakota were highlighted as comparatively resilient, while highly cyclical or manufacturing-dependent locations may face greater risk. The goal for the next several years is to capture available growth without weakening the organization for the conditions expected in the 2030s.
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