Economic forecasters at RSM US LLP have outlined expectations for global and U.S. economic growth heading into 2026, particularly as it pertains to the middle market — the segment of midsize companies that employment and GDP data show constitute a substantial part of the broader “real economy.” Their forecast underscores moderate expansion, external pressures from global trade dynamics, and continuing shifts in financial conditions that will influence business planning in the year ahead.
U.S. Growth Projection and Recession Risks
RSM’s economists, led by Chief Economist Joe Brusuelas and economist Tuan Nguyen, project that the U.S. economy will expand at a modest pace of around 2.2% in 2026. This outlook reflects a combination of federal fiscal support and expectations of interest rate cuts by the Federal Reserve, which analysts believe should help sustain economic momentum. At the same time, RSM estimates the probability of a recession over the next 12 months has declined to approximately 30%, down from an earlier forecast of 40%. This adjustment suggests increasing confidence that economic expansion will persist, even as growth remains below historical peaks of past decades.
The expansion envisioned by RSM is not dramatic but indicates resilience after recent volatility. Household spending, labor markets, and business investment trends all play roles in keeping the U.S. from slipping into contraction. Persistent inflation, still above the Fed’s long-term target, coupled with external exposure to global disruptions, leaves the outlook contingent on broader macroeconomic factors.
Global Economic Unevenness
RSM’s forecast highlights a stark contrast in growth prospects among major Western economies. Canada, for instance, is expected to see restrained expansion in 2026, restricted by lingering trade tensions that could slow investment and consumer confidence. The Canadian outlook points to growth of about 1.4%, reflecting both external pressures and slower domestic demand. The United Kingdom’s recovery is anticipated to be even more constrained, with expansion near 0.8% as fiscal tightening and weak consumer sentiment weigh on economic dynamism. Australia stands out among developed economies with a projected 2% growth rate, a testament to more robust internal conditions and less pronounced headwinds.
These global forecasts underpin the variable terrain that middle market businesses must navigate. Export-oriented firms may feel shifts in demand and trade costs more acutely, while domestic-focused sectors respond primarily to internal policy changes and consumer behavior.
Federal Reserve and Financial Conditions
Another theme addressed in the RSM analysis is monetary policy. Market expectations heading into the Federal Reserve’s December policy meeting have leaned toward rate cuts, even as inflation remains above the Fed’s preferred 2% baseline. The combination of elevated inflation and interest rate moderation creates a nuanced policy challenge: central bankers seek to sustain growth without re-igniting price pressures. Such a balancing act could affect commercial lending conditions and borrowing costs for businesses, particularly midsize firms that rely on stable financing for investment and expansion.
While the official forecast emphasizes rate reductions in 2026, it also highlights uncertainty. Future shifts in inflation, global supply pressures, and labor market tightness could prompt changes in policy assumptions. Middle market executives and financial officers will need to monitor these dynamics closely, adjusting capital planning in response to evolving interest rate expectations.
Structural Drivers of Growth
Beyond headline GDP figures, RSM identifies long-term structural forces that may support economic performance. Investment in infrastructure to support emerging technologies such as artificial intelligence and a more resilient energy grid is expected to act as a growth catalyst. This emphasis suggests that sectors aligned with technological adoption and infrastructure modernization could outperform broader averages and generate new opportunities for middle market participation.
Capital markets activity also features in RSM’s commentary. Senior Analyst Marissa Schlagenhauf notes that strategic acquisitions and financial innovations like tokenization continue to influence how capital flows through the economy. As firms seek scale or diversification, acquisition-driven strategies may become more prominent, raising questions about merger valuations, regulatory scrutiny, and cross-industry convergence.
Credit Conditions and Lender Caution
The publication also touches on credit trends, describing a “K-shaped loan market” in which lending behavior diverges sharply between borrowers perceived as lower-risk and those viewed as higher-risk. Traditional banks have shown continued caution in extending credit, even as many businesses pursue expansion plans. Tight lending standards can limit growth opportunities for middle market firms, particularly in capital-intensive industries or those seeking expansion into new markets.
As a result, companies may increasingly look to alternative financing sources including private lenders, digital finance platforms, or strategic investor partnerships to support growth. This shift highlights both potential opportunity and risk: non-traditional capital sources can offer agility but often come with higher costs and complexity.
Middle Market Significance and Unresolved Data Questions
The “real economy,” refers to the middle market segment; firms that are too large to be categorized as small businesses but not large enough to command the same economic levers as multinational corporations. These companies account for around one-third of U.S. jobs and about 40% of GDP, cementing their role as drivers of employment and production. Despite this economic significance, policymakers and media coverage often overlook middle market firms in favor of larger enterprises or small business narratives.
However, RSM’s commentary also leaves some uncertainties unaddressed. The forecast does not fully quantify the potential implications of lagging labor force participation, supply chain disruptions, or the differential impact of technological adoption across sectors. These gaps suggest that the actual course of middle market performance could diverge meaningfully from baseline projections, especially if inflation, global instability, or credit tightening intensifies.
Implications for Business Planning
For middle market leaders, the RSM forecast offers both reassurance and caution. Growth projections that modestly exceed long-term trends provide a basis for investment, hiring, and product development. Yet, persistent inflation, uneven global performance, and cautious lending underscore the importance of strategic risk management and financial discipline.
Executives should also consider how sector-specific challenges, such as sustainability regulations and talent shortages intersect with macroeconomic trends. Tailored insights from industry outlooks and the RSM US Middle Market Business Index can supplement broad forecasts by highlighting unique pressures within manufacturing, technology, services, and other key domains.
Looking Toward 2026
As 2026 unfolds, middle market firms will operate in an environment shaped by moderate national growth, cautious monetary policy shifts, and global economic variability. The forecast presented by RSM suggests a measured expansion with embedded risks that will stretch financial planning and strategic execution.
The ability of mid-sized businesses to adapt — leveraging capital markets, managing credit access, and aligning with emerging technological and infrastructure trends — will determine whether the “real economy” can sustain and amplify its role as an economic backbone. Changes in trade dynamics, regulatory pressures, and labor market conditions remain key variables that could tip projections in either direction as the year progresses.
