The mid-2026 economic outlook: Growth, risk and the gap in between

At the TrueNorth Summit in May, Dr. Anirban Basu, chairman and CEO of Sage Policy Group and chief economist for several national organizations, gave attendees an unfiltered and engaging update on where the U.S. economy stands at the midpoint of 2026. His assessment was equal parts encouraging and sobering. We’ve broken down the top highlights from his presentation.

Consumer sentiment is at historic lows

Before diving into the data, Dr. Basu made it clear that the gap between economic performance and how Americans feel about the economy is wider than it has been in decades. This divide can most simply be explained by current prices.

According to Dr. Basu, citing the Bureau of Labor Statistics Consumer Price Index (CPI),  the U.S. has generated 29.1% cumulative inflation since May 2020. Energy prices are up 74.4%, shelter costs have risen 30% and food prices are up 29%. For many American households, wages haven’t kept up with rising costs, and the most recent inflation data suggests the pressure isn’t easing.  

Not everyone is experiencing the same economy

One of the most useful frameworks Dr. Basu offered was what economists call the K-shaped recovery — two groups moving in opposite directions at the same those.

Those who entered the pandemic owning assets, such as homes, stocks and retirement accounts, have benefited significantly from appreciation across all three. For this group, spending has remained strong and the economic outlook feels relatively bright.

For households without those assets, the picture is different. They’re carrying the full weight of inflation without the cushion of asset gains, and rising credit card delinquency rates reflect it.

Understanding which side of the K your workforce and your customers are on should impact on how you plan.  

Digging beneath the headline numbers

Dr. Basu was clear that recession is not the baseline scenario. GDP grew nearly 2% in the first quarter of 2026, and projections for the second quarter were tracking well above that at the time of his presentation. AI investment, corporate earnings and consumer spending on services have all remained strong.

However, housing, commercial real estate, municipal finance and the labor market are all areas of building stress, and the picture could shift quickly if a few specific indicators move in the wrong direction.

He closed with four specific things he’s watching to determine whether the U.S. economy stays on track or tips toward contraction. That part of the conversation is worth hearing in full.

Watch the full session

If you want the complete picture, including detailed data, a regional breakdown of where jobs are growing and where they aren’t, and the forecast for the rest of 2026, request access to the full session recording.

Dr. Anirban Basu presented at the TrueNorth Summit on May 12, 2026. This post summarizes select themes from his presentation and does not constitute economic or financial advice.