If you want to gain a competitive advantage with economic insights for early 2026 and 2027, you won’t want to miss Leaders Forum, presented by NALP and powered by Aspire.
This NALP member-exclusive event, held on Feb. 4-7, 2026, in Santa Barbara, California, features a presentation from Taylor St. Germain, an economist with ITR Economics, on the complex economic landscape that lies ahead.
Economic Shifts and Growth Projections for 2026 and 2027
St. Germain says the uncertainty experienced in ’24 and ’25, due to tariffs and geopolitics, caused a number of data sets to go through periods of negativity.
“The good news I have for 2026 and ‘27 is we have a return to positive growth rates,” St. Germain says. “We do expect some pretty substantial growth. We have record-high GDP growth in 2026 and 2027. We have the housing market going back to positive growth rates.”
He says this will be driven by personal income levels rising and as the uncertainty fades, CapEx investment will accelerate as well.
“I’d say the two biggest factors are really the strength and resilience of our consumers that are going to drive positive growth rates, especially for the housing market, and then the investment that we’re seeing in manufacturing and in overall capital investment accelerating,” St. Germain says.
St. Germain says that while inflation is a factor in higher personal income, retail sales are growing at 3.7% currently, which is above the rate of inflation. This is why ITR is still optimistic for 2026 and 2027.
“Over the next five years, we expect personal income to increase 28%,” St. Germain says. “We expect inflation to increase 22%. Yes, inflation is part of it, but it’s not that we’re only growing because of inflation. We are growing above the rate of inflation.”
He does expect inflation to grow in 2026, jumping up to 4.1% by the end of next year. It will slow slightly in 2027 but still stay above 2%.
“If you need to take advantage of lower interest rates, if you need to lock in, if you need to invest through borrowing, think about doing that now because with the higher inflation numbers for ‘26 and ’27, we expect higher interest rates to follow,” he says.
St. Germain says for the housing market forecast, it is predicted to be above a million units in both 2026 and 2027, while in 2025, the market was only expected to build 959,000 units.
At the regional level, St. Germain says only seven states in the country are currently not growing in population. These states are Hawaii, California, New York, Illinois, Louisiana, Mississippi and West Virginia.
“When you think about expansion opportunities, look to those states that have positives,” St. Germain says. “That’s one of the charts I’ll actually share for my presentation.”
Navigating a Weaker Business Cycle
St. Germain says that while there will be growth in this upcoming business cycle, it might not be at the levels experienced in recent years.
“That’s one of our biggest concerns,” St. Germain says. “Yes, we still have growth, but it’s not the growth that we saw coming out of the pandemic. It’s not a question for us will companies’ sales and revenue grow? It’s a question: Can you grow margins during this period? That’s a characteristic of a weaker business cycle, which is a lot harder to be profitable when you don’t have this substantial acceleration in the growth rates.”
He calls this type of struggle ‘profitless prosperity’ where sales and revenue grow, but margins decline.
St. Germain says owners will have to protect their margins through pricing, but they also need to find ways to drive productivity and efficiency.
“We can’t just sit back and ride the wave of the market,” he says. “The market’s not going to give us enough growth to really get all the benefits we normally would out of a very strong business cycle. That’s why we’re really encouraging folks right now as we start to see the momentum building to invest now.”
He says the businesses that protect their margins through price, drive productivity and efficiency, and find a way to offset the labor shortage are the ones who will win this business cycle.
With the cost of labor increasing over the next five years, St. Germain says it is critical to invest in technologies that allow for automation and provide additional productivity with your existing workforce rather than relying on hiring new employees to handle growth.
Setting Your Business Up for Success
When monitoring the economy, St. Germain recommends tracking metrics like the Purchasing Managers Index and the U.S. Economic Policy Uncertainty Index. The PMI provides a manufacturing insight while the uncertainty index can help businesses know when to spend with confidence.
“As I see that index come down, that gives me more confidence that, first of all, businesses are more confident, but we’re going to spend, we’re going to invest,” St. Germain says.
St. Germain says another group of indicators to track is capacity utilization rates.
“We’re looking at each industry,” he says. “If capacity utilization leading indicators are increasing, it means there’s more demand and we’re utilizing more capacity that tells us we’re getting busier.”
Another topic St. Germain will delve into during his presentation is how businesses can determine if they will be impacted by and prepare for the predicted Great Depression in the 2030s.
“There’s a lot of excitement over this second half of the decade, but we need to use that growth to put our balance sheet in a healthy position going into 2030, and what I mean by that is low levels of debt going into 2030,” St. Germain says. “Have a lot of cash to deploy, so we can take advantage of that downturn, rather than be reactive to it.”
For those looking to exit their businesses, he recommends timing the sale of your company before 2030.
“For all of us that are going to be staying in business, there’s going to be a real opportunity in the 2030s for you to acquire and buy businesses at a discount because there’s going to be a lot of folks that aren’t prepared for 2030 to come our way,” St. Germain says.
If you want economic insights regularly, don’t forget to access NALP’s Quarterly Economic Forecasts for Landscape Industry Businesses provided by ITR Economics. This is a member-exclusive benefit.
Register for Leaders Forum today!
