For US companies heading into 2026, there appears to be a strange and unsettling paradox: the economy looks strong on paper, yet confidence on the ground remains fragile.
Growth is solid, consumer spending continues to surprise to the upside, and investment (especially in artificial intelligence) is booming. But surveys of consumers and business leaders tell a gloomier story, marked by anxiety over costs, policy uncertainty and global risks, according to Curtis Dubay (pictured), chief economist at the US Chamber of Commerce.
The disconnect was a theme during a recent Travelers Institute webinar, where Dubay noted that by traditional measures, the US economy ended 2025 in good shape.
GDP surged at a 4.3% annualized rate in the third quarter, and full-year growth likely came in around 2%. “If nothing else happens, we’ll probably get that 2% growth rate this year,” Dubay said, adding that with the right policy mix, growth could even approach 3%.
The engine of that performance remains the American consumer. Despite historically low confidence readings, households continue to spend at a steady clip. Retail sales, covering stores, online shopping, restaurants and bars, have risen month after month.
The key reason, according to Dubay, is that wages have finally been outpacing inflation. With pay growing around 4% annually and inflation closer to 3%, consumers still have real income gains, even as they complain about affordability.
Rising stock markets have added another tailwind. Record highs in equities have quietly boosted household wealth and spending power.
On the business side, investment has been unusually strong, though narrowly concentrated. Companies are pouring capital into AI-related infrastructure, particularly massive data centers. Those projects create jobs during long construction phases and support growth across supply chains, from utilities to industrial services.
If growth is solid, why does confidence remain so weak? Dubay pointed to several factors.
First is affordability. Even though wages have caught up with inflation on a cumulative basis since 2021, the damage to household budgets, especially from higher housing, food and energy costs, lingers.
Second is policy uncertainty. Businesses are contending with shifting rules on tariffs, trade, immigration and regulation. Measures of policy uncertainty are near levels last seen during the global financial crisis and the pandemic, which makes executives hesitant to commit to long-term investments, even when demand looks healthy.
Tariffs loom especially large on businesses, Dubay noted. The risk of higher tariffs still hangs over corporate boards, and while some tariffs could be overturned, other legal authorities could keep them in place.
Finally, demographics and labor trends are adding to unease. Dubay noted that hiring has slowed, and for the first time in history, the US population may have declined slightly in 2025 due to lower immigration and aging demographics. While there are now more unemployed workers than job openings, long-term labor shortages remain a concern for growth.
The gap between strong growth and weak sentiment has real consequences for the insurance sector.
Rising asset values (property, equipment and inventories) continue to push premiums higher, even as inflation headlines fade. As Dubay noted, there is often a lag between inflation and insurance pricing, leading to sticker shock when renewals arrive long after price pressures first emerged.
Businesses investing heavily in AI and data centers also face new and complex risk profiles, from cyber exposure to energy and infrastructure dependencies. Brokers will increasingly be asked to help clients understand how these concentrated investments affect property, liability and business interruption coverage.
At the same time, slower hiring and margin pressure (particularly among small and midsize firms) mean insurance buyers are more price-sensitive and less tolerant of surprises.
Looking ahead, Dubay is confident that a recession is unlikely absent a major shock. But he indicated that slower growth, or a swing toward either stronger expansion or a sharper slowdown, could hinge on policy choices around AI regulation, trade, taxes and immigration.
For now, US businesses are navigating an economy that looks better than it feels.
