The Economy Isn’t Tanking. But It Is Getting Weird.

The economy is still growing. Consumers are still spending. Businesses are still investing. But AI, energy prices, inflation and interest rates are now playing a very big game of economic tug-of-war.

AI May Be Doing More Than Writing Your Emails

One of the biggest bright spots in Deloitte’s forecast is business investment, especially spending connected to artificial intelligence.

Deloitte now expects fixed business investment to grow 6.1% in 2026, substantially higher than the 4% it previously forecast. The firm believes AI-related investment could continue supporting economic growth and eventually lead to stronger productivity gains across the economy.

Translation: All those data centers, chips, software platforms, automation systems and AI projects aren't just tech headlines. They are becoming a meaningful piece of the American economy.

And that could be especially important for communities positioning themselves for new investment, infrastructure and technology-related development.

But Then There's Oil...

Here's the economic party crasher.

Deloitte says the direction of oil prices could determine just how strong the economy remains.

Higher energy prices don't just hurt when you fill up your vehicle. They ripple through trucking, manufacturing, agriculture, food production, construction and eventually just about everything sitting on a store shelf.

That inflation pressure is already showing up. The Federal Reserve reported in July that inflation remained above its 2% goal, partly because of supply shocks and higher energy costs.

The latest government numbers reinforce that point: July's PCE inflation rate was 3.7% compared with a year earlier, while core inflation was 3.3%.

Consumers Are Still Spending, But Their Wallets Aren't Bottomless

Perhaps the biggest thing businesses should watch is the consumer.

Deloitte expects consumer spending to slow as inflation and higher interest rates continue eating into purchasing power.

And there's evidence of that squeeze.

The U.S. personal saving rate was just 3% in July, according to the Bureau of Economic Analysis. People are still buying. They're just becoming much more selective about what deserves their money.

That's an important distinction for small businesses.

When consumers tighten up, being merely "nice to have" gets dangerous. Businesses that clearly communicate their value, convenience, experience or uniqueness have a much better chance of staying in the shopping cart.

So...Are We Headed for a Recession?

Not according to Deloitte's baseline forecast.

Deloitte expects real GDP to grow about 2% in 2026 and 1.8% in 2027. 

Recent government data shows the economy growing more slowly but still growing. U.S. GDP increased at a 1.5% annual rate during the second quarter of 2026, after growing 2.1% in the first quarter.

The labor market is softer, too. July payroll employment declined by 23,000 while unemployment remained relatively low at 4.1%. (Bureau of Labor Statistics)

In other words:

This doesn't look like an economy falling off a cliff. It looks more like one driving through construction.

There are orange barrels everywhere, the speed limit keeps changing and Google Maps isn't entirely sure which lane we're supposed to be in.

What Should Small Towns & Small Businesses Take Away?

Don't obsess over predicting exactly what the economy will do next.

Prepare for several possibilities.

Watch your costs. Protect cash flow. Keep investing in productivity. Pay attention to AI. Make sure customers understand why you're worth their increasingly hard-earned dollar.

And for communities and economic developers, watch where capital is flowing. If Deloitte is right, AI investment, infrastructure, energy availability and productivity-enhancing technologies could shape economic development opportunities for years to come.

The economy may be complicated right now.

But boring?

Not anymore.