U.S. Businesses Signal Growth in Early 2026
MWN-AI** Summary
U.S. businesses are signaling a robust growth trajectory as they enter early 2026, demonstrating renewed optimism amidst stabilizing macroeconomic conditions. According to the latest Principal Financial Well-Being Index, business sentiment has increased slightly to 6.65 out of 10 in January 2026, up from 6.5 in October 2025. Notably, larger firms exhibit higher optimism (56%) compared to small to medium businesses (44%). Concerns about economic pressures—including tariffs, policy unpredictability, wage inflation, and raw material costs—have eased, encouraging strategic investments.
Private sector staffing is stable, with 92% of employers either increasing or maintaining their workforce between October and December 2025. This trend reflects a "low-hire, low-fire" equilibrium as companies focus on retaining specialized talent. Amid these dynamics, there is a notable shift in the job market, with a 3.2% decline in high-income job seekers and a 10.15% increase in those seeking low-income positions.
In 2026, technology modernization is a top priority for businesses, with 81% planning upgrades in software, AI, and hardware. Larger companies lead in AI adoption, and many plan to pursue strategic borrowing to fund these initiatives. Remarkably, 53% of businesses looking to borrow intend to secure funds in the next three months for technology, automation, and talent acquisition.
While companies acknowledge high interest rates, urgency around growth initiatives often outweighs borrowing costs. The overall sentiment illustrates a shift to a resilient mindset, with many firms willing to invest amid economic uncertainties, underscoring the belief that growth cannot be delayed. This proactive approach positions U.S. businesses favorably as they capitalize on emerging opportunities in 2026.
MWN-AI** Analysis
As we look into early 2026, U.S. businesses are signaling a robust momentum for growth, driven by a more stable economic environment and a strategic focus on investment. According to the latest Principal Financial Well-Being Index, the business sentiment has seen a slight rise, now measuring 6.65 out of 10. This positivity is particularly pronounced within larger businesses, with 56% expressing optimism about the economic outlook compared to 44% of small and midsized businesses (SMBs).
The stability in staffing levels, with 92% of employers either maintaining or increasing their workforce, hints at a strategic emphasis on retaining essential talent. The marked decrease in high-income job seekers and the increase in low-income job seekers reflect a job market tilt that favors specialized labor retention. Employers are recognizing the importance of their staff in leveraging technology and operational efficiencies to fuel growth.
In 2026, technology modernization is emerging as a key priority, with 81% of businesses planning to invest in software, AI, and other upgrades. Notably, 42% of employers expect to take on debt, primarily directed toward technology enhancements and talent acquisition. While interest rates remain a concern, companies appear ready to borrow despite the costs, indicating a willingness to invest urgently in critical growth initiatives.
For investors and business leaders, the current landscape presents a clear strategy: focus on companies prioritizing technological advancements and talent retention. Businesses capable of navigating the challenges of rising interest rates while committing to long-term growth through strategic investments are likely to position themselves favorably. Ultimately, the urgency to innovate and retain skilled employees suggests a growth trajectory worth investing in.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
Employers are ready to move forward with strategic investments as staffing stabilizes and macroeconomic pressures normalize
After a year defined by cost pressures and economic uncertainty, U.S. businesses are positioned for renewed momentum and growth in 2026. The latest Principal Financial Well-Being Index ? (Index) , a quarterly measurement of business health, growth, and optimism finds sentiment among business leaders has stabilized, measuring 6.65 out of 10 in January 2026 – a slight uptick from 6.5 in October 2025.
Large businesses report higher optimism (56%) about the overall economic outlook than small to midsized businesses (SMBs) (44%). At the same time, concerns about macroeconomic conditions have eased modestly since late 2025, with business leaders reporting lower levels of concern about tariffs (-5 pts), policy unpredictability (-5 pts), wage inflation (-6 pts), and the cost of raw materials (-6 pts).
Private sector staffing remains steady with 92% of employers either increasing (47%) or maintaining (45%) staffing between October and December. This continues a “low-hire, low-fire” equilibrium as firms work to retain specialized talent. The job market also reflects a focus on retention of specialized workers: from October to January, the number of high?income job seekers decreased by 3.2%, while the number of low?income job seekers increased by 10.15% 1 . Together, these trends highlight employers’ heightened focus on retaining specialized employees.
“We’re seeing businesses continue to prioritize staffing as a key part of their overall operational strategy,” said Amy Friedrich, President, Benefits and Protection, Principal ® . “They are focused on keeping their teams intact and counting on them to leverage new technology and modernized systems to continue driving growth.”
Businesses prioritize technology modernization, plan to borrow strategically
Technology modernization is a top priority for businesses in 2026, with 81% planning upgrades in areas such as software (54%), AI (45%), and hardware (21%). Larger firms continue to lead in AI adoption. This technology push is also influencing financing strategies: 42% of employers expect to take on debt this year, led by larger businesses (53% vs. 36% of SMBs). Of those planning to borrow, 57% will direct financing toward technology, software, or automation upgrades, with more than a quarter planning to borrow for hiring and talent acquisition.
Businesses prepared to borrow are not waiting long: 53% plan to secure funds within the next three months, with investments focused on hiring and talent acquisition, technology and automation, equipment/facility upgrades and repairs and new product/service development. Those choosing to delay borrowing cite macroeconomic headwinds—high interest rates, market volatility, and policy uncertainty. Of those not planning to take on debt, the majority (55%) say they won’t borrow because they already have the cash on hand they need.
Businesses are realistic about interest rates, with urgency outweighing borrowing costs
Businesses are realistic about today’s interest rate environment, even if many look back fondly on the ultra?low rates of 2020–2021 (around 4.5% on loans). While companies still prefer lower borrowing costs, the latest Index shows urgency around key initiatives plays a larger role in borrowing decisions than rates alone.
Interest rates are three times more influential when businesses consider discretionary spending than when evaluating mission?critical growth initiatives—where many are willing to move forward even at rates as high as 12%. This pattern holds true for both SMBs and large employers.
“Interest rates are only one part of a larger financial picture,” said Friedrich. “Often, the value gained from putting capital to work sooner can quietly outpace the value of holding out for ideal conditions. Across industries, we’re seeing organizations embrace a realistic but resilient mindset: they understand today’s borrowing environment, and they’re choosing to invest anyway because growth can’t wait.”
1 Morning Consult Economic Intelligence, 2026
About Principal Financial Group ®
Principal Financial Group ® (Nasdaq: PFG) is a global financial company with approximately 19,000 employees 1 passionate about improving the wealth and well-being of people and businesses. In business for 146 years, we’re helping over 75 million customers 1 plan, insure, invest, and retire, while working to support the communities where we do business, and building an inclusive workforce. Principal ® is proud to be recognized as one of the 2025 World’s Most Ethical Companies 2 and named as a “Best Places to Work in Money Management 3 .” Learn more about Principal and our commitment to building a better future at principal.com .
1 As of December 31, 2025
2 Ethisphere, 2025
3 Pensions & Investments, 2025
About the Principal Financial Well-Being Index ??
The Principal Financial Well-Being Index ? (WBI) Wave 1 (January 15 – February 1, 2026) is recurring research used to track sentiment around repeated financial health measures and timely issues relevant to businesses. Business owners, decision makers, and business leader participants who represent companies with between 2 to 10,000 employees (n=1,000) provide information by completing a 15-minute online survey. Access to sample is provided by ROI Rocket, a third-party research panel provider.?
In 2025, the WBI added a formal index. The index number in the WBI is calculated by taking responses from 6 perceptual measures evaluating current financial health, financial comparisons year over year, and future projections for business and economic outlook. The percentages of respondents who answered positively for each measure are averaged and standardized to a 0-10 scale, with perceptions of business / company, local economic, and U.S. economic growth weighted 60%, 20%, and 20% respectively within their aggregate measure. ??
Small businesses = 2–499 employees, Large businesses = 500–10,000 employees?
Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Company®. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., member SIPC and/or independent broker/dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392.? ©2026 Principal Financial Services, Inc.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260305376674/en/
Media Contact: Lauren Peed, 515-878-0275, peed.lauren@principal.com
FAQ**
How does the outlook of large businesses differ from SMBs in the Principal Financial Well-Being Index, and what factors do you think contribute to the higher optimism of large firms compared to Principal Financial Group Inc PFG?
What specific strategies is Principal Financial Group Inc PFG using to support businesses as they prioritize staffing and retain specialized talent amidst the increasing focus on technology modernization?
How are the borrowing strategies of large businesses compared to SMBs evolving in response to interest rates, according to the Principal Financial Well-Being Index, and what implications does this have for financial planning?
In light of the recent trends reported in the Principal Financial Well-Being Index, how is Principal Financial Group Inc PFG advising its clients to balance urgency in investments with the cost of borrowing in today's economic environment?
**MWN-AI FAQ is based on asking OpenAI questions about Principal Financial Group Inc (NASDAQ: PFG).
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