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Kiplinger Business Costs Special Report 2026

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Business Outlook: Economic impacts

To help plan budgets for 2027 amid lots of uncertainty, here’s our take on where a range of key costs are headed.

The U.S. economy will grow moderately next year. Expect 2.2% GDP growth, versus 2.1% growth in 2026. A recession isn’t happening, unless oil tanker traffic in the Persian Gulf stays blocked for many more months. The Federal Reserve will raise its short-term interest rate from 3.5% to 4.0% between October 2026 and the end of 2027. Chairman Kevin Warsh will want to cut rates a bit in 2027, but it’s unclear if other Fed members will agree.

Short-term consumer lending and interest on CDs will edge up with rate hikes.
Auto loans will continue at about 7% on new cars.
Home equity lines of credit will be about 7.25%.
The 10-year Treasury note will fluctuate around 4.5%, the same as in 2026.
30-year mortgage rates will stay bouncing around 6.5%.

Brace for another year of stubbornly high inflation, only getting down to 3.0% by the end of 2027, after registering 3.6% at the end of this year.

Corporate profits are poised to jump 17% for large companies, a bit less than the 25% rise in 2026. Double-digit earnings growth is likely for most industries, except consumer staples, materials and real estate. Energy-sector profits will decline. Wages/salaries will be up 3.0%, after 2026’s 3.0% rise. Total benefit compensation will rise 4.0%, similar to 2026, boosted by a 6.7% rise in health insurance premiums per employee, up from 6.0% in 2026. Prescription drug costs will be up 3-4%, depending on the type. Companies will try to control weight-loss drug spending.

Business Outlook: Energy costs

Energy prices in 2027 depend heavily on the Middle East situation calming. Assuming it does, oil and the fuels made from it should decline modestly next year. Prior to the Iran war, global oil markets were well-supplied. Production was threatening to outrun demand growth. If oil shipments from the Persian Gulf can get back to near normal, abundant supplies should again push down prices.

Figure on gasoline averaging $3.25-$3.50 per gallon (for regular-grade)… more than the $3.10 average from 2025, but less than the $3.70 so far this year. Diesel should also slip, but not by as much as gas. Global diesel supplies are expected to remain tight due to constrained refinery capacity. After averaging $3.66 per gallon in 2025 and $4.75 so far this year, budget for $4.25-$4.50 in 2027.

Natural gas prices seem bound to rise next year after this year’s drop took the benchmark gas futures contract to $2.64 per million British thermal units in recent trading. Much of the world is short of natural gas, but the U.S. has plenty and can export only so much to overseas markets. That has weighed on prices here. But the combination of soaring U.S. power usage and tight supplies abroad should give U.S. natural gas prices a lift. How much depends heavily on factors like next year’s weather, which can’t be known now. But to be safe, price in a rise of 5% vs. what you currently pay for natural gas to account for rising consumption.

Another year of painful electric cost increases lies ahead, as soaring usage outruns utilities’ ability to keep pace. Commercial and industrial power customers should pencil in 6-7% higher rates, similar to the increases they are seeing this year. Residential customers can expect even steeper increases vs. their current rates.

Business Outlook: Payroll costs

We see payroll taxes rising, as the Social Security wage base goes to about $190,200. For firms that pay pension premiums to the Pension Benefit Guaranty Corporation, no change in rates for 2027. The exception is inflation-related indexing for flat-rate premiums, which will hover around $115 per plan participant in 2027. Variable-rate premiums for underfunded pension plans will be $52 per $1,000 of unfunded vested benefits (subject to a $781 or so per-participant ceiling).

Business Outlook: Insurance costs

A mixed bag for insurance.

Rates for commercial property insurance figure to decline for well-managed, low-hazard properties. Facilities that are exposed to natural catastrophes face increases of up to 5%. For policies with recent losses expect increases of up to 10%.

Primary general liability and umbrella or excess liability will rise between 5% and 20%.

For cyber insurance, rate declines or coverage enhancements at no cost can be obtained by companies with robust security controls in place. For those with recent claims or elevated threat profiles the rate increases up to 10%.

Rates for directors and officers insurance: Public companies should see a rate drop of up to 5%, while rates for private firms and nonprofits will be flat to up to 5% higher. Hourly rates paid to law firms, up around 6-7%, about the same as in 2026. Accounting fees for a typical business rising by 5-8%. As routine work gets automated, there’s a shift from hourly billing to fixed-fee and other pricing.

Business Outlook: Travel and transportation costs

Airfares will be up slightly, versus this year’s sharp increase. However, war-induced jet fuel price hikes, aircraft shortages, labor expenses and other factors could push up prices. Note that airlines are cutting flights and routes to cut costs.

Hotel room rates, up just a bit, about 1.5% more than in 2026 in the U.S. Globally, rates will inch up more. Group rates aren’t expected to increase much, but ancillary costs for hotel meetings and conferences are likely to cost more.

Car rental rates, flat. At most, costs could be 1% higher than this year. But there could be fewer vehicle options, and don’t expect to find many bargains.

Only a bit of relief is on tap for shipping costs. Truck spot shipping rates (excluding fuel charges) will decline 7% during 2027. After the 41% rise this year, that still puts them 31% higher than in 2025. Contract rates that rose 27% in 2026 will rise a further 6% to mid-2027, then level off. For the peak season next year, ocean shipping rates will likely be less, if the Persian Gulf situation stays stable. Overcapacity will likely become a problem again, depressing rates. Air cargo rates will remain high, but will return partway to pre-Iran war rates as fuel costs decline.

Business Outlook: Property costs

Prime office rent, up 3-5%, while nonprime properties are flat or lower. Retail space, up 3-4% for asking rents, as a scarcity of supply continues. Warehouse rents will pick up 2% to 4%, as demand remains firm.

Business Outlook: Technology costs

Brace for higher tech hardware costs, as costlier memory and components continue to boost prices of smartphones, PCs, tablets, etc.

Apple is set to raise prices on new iPhones by up to hundreds of dollars this fall. Device prices will be up 10% or more from other vendors, too.

Buy IT this year or early next year, if you can. Expect fewer deals on wireless service as competition cools a bit. Carriers are still battling it out, so keep an eye out for new plans and money-saving bundles. Ditto for wired broadband, where premium high-speed plans could cost a bit more.

The very best artificial intelligence services will cost more, such as Anthropic and OpenAI. But other AI models from xAI and Meta will offer cheaper plan options.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming and make the most of your investments and money. Subscribe to The Kiplinger Letter.