Achieving Economic Stability in 2026

Why is the economy still uncertain?

The U.S. economy continues to face several challenges that affect businesses of every size, including:

• Inflation above the Federal Reserve's target
• Geopolitical conflicts and global trade tensions
• Higher borrowing costs
• Supply chain disruptions
• Labor shortages
• Shifting consumer demand

The Russia-Ukraine war, conflict in the Middle East, and ongoing tariff uncertainty continue to influence energy prices, transportation costs, and global supply chains. The Federal Reserve noted that geopolitical developments remain a significant source of economic uncertainty and continue to influence monetary policy decisions.2

What are the biggest economic challenges businesses are facing?

A shifting economic environment requires careful planning and flexibility. Two critical factors continue to shape business decisions: inflation and the cost of capital.

• Inflation remains elevated.
  Although inflation declined significantly from its 2022 peak, the rate remains above the Federal Reserve's long-term goal of 2%. In March 2026, the Consumer Price Index rose 3.3% over the prior 12 months. Core inflation, which excludes food and energy, rose 2.6% over the same period.3
  
  Higher prices continue to increase operating expenses for many businesses, from labor and raw materials to transportation and financing costs.
  
  
• Higher interest rates increase borrowing costs.
  Under new Chairman, Kevin Warsh, the Federal Reserve maintained the federal funds rate between 3.5% and 3.75% in July 2026 despite inflation. Higher interest rates affect equipment financing, commercial real estate, expansion projects, working capital and business loans.
  
  Warsh says the Fed “is determined to bring inflation down and will “deliver price stability.”4 Businesses considering major investments should evaluate liquidity and financing scenarios before making long-term commitments.

How does inflation affect businesses?

Inflation influences nearly every aspect of business operations, as higher costs reduce profit margins and increase pressure to raise prices. As a result, businesses may delay expansion, freeze hiring, reduce discretionary spending and look for ways to improve productivity.

Business leaders should evaluate how inflation specifically affects their industry since pricing pressure varies significantly between sectors. For example, healthcare organizations generally experience different inflation drivers than manufacturers or retailers.

Businesses should ask key questions during economic uncertainty.

Answering key questions about the enterprise can help leadership teams identify risks, make informed decisions and strengthen their response to market volatility.

• How vulnerable is your industry?
  Inflation doesn’t affect all industries in the same way. Monitor industry-specific inflation trends, customer demand, and competitive pricing rather than relying solely on national economic indicators.
  
  
• Does your technology provide actionable insights?
  Using the right technology to run “what if?” scenarios and analyze data can help with decision-making. Planning and performance tools can forecast potential outcomes. These tools can also improve decision-making related to pricing, sourcing and procurement, labor costs and compensation. Improved insights can also support decisions about inventory, supply chain management and customer demand.
  
  
• How will you address inflation-driven issues with stakeholders?
  Transparent communication with customers, employees, vendors, investors and financial partners helps reduce uncertainty. Early conversations often reveal new opportunities to reduce costs or improve collaboration.

Practice seven proven strategies to combat inflation.

In Q1 2026, 71% of CEOs said tariff increases raised their costs.5 Some are still deciding how much cost pressure they can absorb. Corporate decision makers must act to reduce costs that weaken profit margins, disrupt cash flow and make it harder to plan for growth.

A proactive approach helps leaders manage pricing, control expenses, strengthen supply chains and make informed decisions as market conditions change. These seven strategies can help businesses reduce inflation-related cost pressure, protect profit margins and build a stronger foundation for growth.

1. Optimize pricing.

   Pricing decisions directly affect profitability. While 27% of CEOs who participated in The Conference Board’s survey said they absorbed tariff costs, 44% said they either passed or intended to pass those costs on to customers.6
   
   Short-term pricing strategies are worth considering. These might include product bundling, installment payment plans, dynamic pricing and subscription models that automatically adjust to either demand — think rideshares or airline travel — or to core cost inputs as they fluctuate. In addition, consider adding inflation-adjusted contract terms.
   
   Other options help businesses protect margins while giving customers flexible choices that align pricing with added value, purchase size and perceived benefit.
   • Value-added services
     Include faster delivery, extended support, customization or convenience features to justify pricing.
     
     
   • Good-better-best pricing
     Offer tiered options so customers can choose based on budget and value, while higher tiers protect margins.
     
     
   • Volume discounts
     Reward larger purchases without pricing individual products below cost.
   
   Even small improvements in the product mix can significantly improve profitability during inflationary periods.

2. Focus on high-margin products and services.

   Some companies use loss leader strategies to drive pricing higher on more desirable items. This strategy involves analyzing profitability across every product and service to identify and prioritize higher-margin offerings, faster-moving inventory, premium services and customers with greater lifetime value.

3. Respond quickly with scenario planning and business forecasting.

   Organizations that regularly evaluate multiple economic scenarios could make timely, more informed decisions. Scenario planning enables executives to weigh risks, assess possible outcomes and set effective strategies. Enterprises can prepare for supply disruptions, inflation hikes, labor shortages and reduced consumer spending. Data analysis and business forecasting enable executives to identify patterns or spot trends that indicate opportunities for growth.

4. Improve supply chain resilience.

   Supply chain disruptions continue to challenge manufacturers and distributors. The Institute for Supply Management reported slower supplier deliveries for the fifth consecutive month in April 2026 while raw material prices continued to rise.7
   
   To improve supply chain resilience, business leaders should evaluate supplier diversification, inventory strategies, nearshoring opportunities, production flexibility and alternative sourcing.
   
   Building resilience today reduces future operational risk.

5. Conduct cash flow stress testing.

   Stress testing helps businesses prepare for unexpected economic changes. Synovus Market Executive Kevin Gillen believes cash flow projection with stress testing is a critical process that can help businesses identify and address key weaknesses in fluctuating markets. There are some common missteps to be aware of, however.
   
   “Some businesses think stress testing is revenue-based only,” says Gillen. But stress testing should account for both fixed and variable expenses to accurately model business performance under duress. You should also update cash flow projections monthly and compare them against budget.”
   
   The goal is to understand how adverse conditions will impact cash flow. Some examples include:
   • 20% higher labor costs
   • 50% increases in raw material prices
   • Declining customer demand
   • Delayed customer payments
   • Supply chain interruptions

6. Improve operational efficiency.

   Lowering costs is certainly an effective way to better manage capital. However, cost-cutting isn’t the only way to make improvements.  Workflow automation reduces manual processes, improves accuracy and frees employees to focus on higher-value work, delivering greater long-term value than cost cutting alone.
   
   Synovus’s Director of Treasury Payment Solutions, Laura McGortey, suggests streamlining payables. She notes that modern payment automation solutions can support broader improvements beyond reducing manual work.
   
   “When it comes to technology infrastructure, consider the big picture,” says McGortey. “For example, cash management services can help streamline accounts payable, accounts receivable processing and reconciliations. Some options enable users to consolidate all payees into one workflow. Other unique solutions include ‘payee choice’ and ‘hands-free’ services that eliminate check printing and mailing, as well as the need to manage positive pay exceptions.” Such services reduce payment and receivables cycle time, as well as eliminating late fees on payables, thereby improving collections and cash flow.

7. Continue to invest in growth initiatives.

   In Q2 2026, the Business Roundtable’s CEO Economic Outlook Index rose to 91, reflecting leaders’ expectations for the next six months, while the U.S. capital spending index climbed to 93.8 These readings mark the strongest level of CEO confidence in four years among this group.
   
   To capture growth opportunities, business leaders should evaluate new geographic markets, assess strategic acquisitions, prioritize product development and target high-potential customer segments.
   
   Organizations that continue investing in business growth strategies during uncertain periods often emerge stronger when economic conditions improve.

Prepare your business for risks and growth opportunities.

No one can predict exactly how the economy will evolve. However, proactive planning, disciplined financial management and strategic investment can help business leaders prepare for risks and opportunities ahead, strengthening their organizations for sustainable growth regardless of market conditions.

As a trusted advisor to successful businesses in a variety of industries, Synovus can help corporations evaluate opportunities and assess liquidity during uncertain economic conditions. Contact a Synovus Commercial Banker for more details or stop by one of our local branches.