Additional Coverage:
- ADP chief economist warns the ‘rosy picture’ for US economy in 2026 may be hiding something grim (marketrealist.com)
Is the 2026 Economic Forecast Too Good to Be True? A Local Look at the “Rosy Picture”
While the national economic narrative for 2026 paints a largely optimistic picture, complete with anticipated rate cuts and a stable job market, one prominent economist is urging caution, suggesting that the “rosy” outlook might be obscuring some underlying realities, particularly for local businesses and new job seekers.
Nela Richardson, the chief economist at ADP, recently expressed her concerns to Fortune, indicating that while macro-level data appears robust, a deeper dive into granular payroll information reveals a more nuanced and potentially less favorable situation. “We’re tracking changes in real time-it’s as high-frequency as payroll data can get, and we have not seen this rosy picture for 2026 in the data,” Richardson stated. She emphasized that while national economic indicators might highlight positive trends like potential rate cuts, tax advantages, and the payoff of AI investments, these benefits often take longer to “trickle to mom and pop” businesses.
Indeed, ADP’s latest report paints a stark contrast to the overall positive sentiment. Last month, U.S. private employment saw a reduction of 32,000 roles, with the brunt of these losses felt by smaller enterprises.
Companies employing between one and 19 individuals shed 46,000 positions, and those with 20 to 49 workers cut 74,000 roles. In contrast, larger corporations (500+ employees) actually expanded their workforce by 39,000.
Richardson highlighted the cumulative impact of these seemingly minor adjustments by small businesses. “Tiny firms are a big chunk of employment, but the tiny firms are making tiny moves, and they’re moving all in the same direction,” she explained.
“It could be as small as not hiring two teenagers at the bakery or forgoing that delivery driver over a certain season, it doesn’t mean it’s a big, huge layoff, it’s not replacing a worker here or there, and those changes add up.” These “micro moves,” she suggests, are less likely to be influenced by broad macroeconomic factors, making the positive national outlook less representative of the struggles faced by local businesses.
Beyond the challenges for small businesses, Richardson also pointed to a shifting landscape for younger job seekers. New entrants to the labor market, particularly those from Gen Z, are encountering a “different set of hoops” to navigate.
The rise of hybrid work and the impact of the “great resignation” have expanded the hiring pool, intensifying competition as managers are no longer bound by geographical constraints. This dynamic means that the job market is evolving rapidly, even within a few years, making it significantly different for today’s graduates compared to their slightly older siblings.
While the national forecast for 2026 may appear bright on paper, Richardson’s insights urge us to look beyond the headlines and consider the intricate realities at the local level, where small businesses and new job seekers may be facing a far less “rosy” economic outlook.