Economic Outlook for 2026

Indiana founders are entering 2026 against a backdrop of shifting monetary policy, evolving labor dynamics, and rising national competition for innovation-led growth. To help the entrepreneurial community interpret these forces, the Predictions Workshop featured a fireside chat between Toph Day, CEO of Elevate Ventures, and economist Jim Bullard, former President of the Federal Reserve Bank of St. Louis. Their conversation offered a grounded and forward-looking perspective on the economic conditions shaping the year ahead.

Session Overview

Bullard began by addressing the question at the center of today’s economic debate: where interest rates are heading. He explained that the Federal Reserve’s approach over the past two years has been to bring inflation back toward target without destabilizing the labor market. Progress has been made, but inflation remains sticky, and the Fed is unlikely to reduce rates aggressively until underlying pressure shows clearer signs of easing. For founders, he noted, this signals a new baseline: capital will remain structurally more expensive than during the zero-rate decade.

Day pressed further on what this means for early-stage companies. Bullard emphasized that a higher-rate environment does not signal contraction, but rather a return to more historically typical conditions. It also places greater importance on business fundamentals, particularly for companies preparing for capital raises or long-term financing. He suggested that founders should build with flexibility, ensuring their strategies can withstand both delayed rate cuts and potential shifts in economic sentiment.

The conversation then turned to productivity, a recurring theme throughout the workshop. Bullard noted that the U.S. economy has historically relied on technological waves to drive long-run growth. AI, automation, robotics, and advanced digital tools may represent the next wave, and early indicators suggest they could meaningfully accelerate output across industries. If these gains materialize, they could support national economic strength even within a tighter monetary regime.

Day and Bullard also discussed the role of expectations. Markets respond not only to present conditions but to anticipated future performance. If clear productivity gains appear, investor confidence could strengthen quickly. Conversely, if inflation resurges or output stalls, more restrictive policy could return. Bullard’s guidance was straightforward: founders should plan for multiple macro scenarios rather than rely on a single forecast.

They closed by underscoring the importance of regional economic positioning. States that invest in research, talent, infrastructure, and energy reliability will be best equipped to compete. With national reshoring trends underway and physical industry becoming increasingly central to technological progress, Indiana is well positioned to benefit.

Key Takeaways

Rates may remain higher for longer.
The Federal Reserve is unlikely to cut aggressively until inflation shows sustained, stable decline.

Productivity will define the next economic cycle.
AI-driven gains across industries could support stronger economic performance even in a tighter-rate environment.

Capital costs require strategic planning.
Founders must assume more expensive capital and more selective investors as they model growth and fundraising.

Economic positioning will vary regionally.
States with strong manufacturing bases, energy capacity, and innovation assets are poised to outperform (including Indiana)

Expect multiple macro scenarios.
Adaptive planning is essential, as economic sentiment could shift quickly based on inflation and productivity data.

Why It Matters

Macroeconomic conditions shape the environments in which founders build. Bullard’s conversation with Day provided clarity in a moment when leaders are navigating mixed signals and competing forecasts. His emphasis on flexibility, productivity, and regional competitiveness aligns with what Elevate Ventures sees across early-stage companies: founders who plan for multiple outcomes and operate with financial discipline will be best positioned to capture opportunity.

For Indiana, the message is encouraging. The state’s strengths align with sectors where productivity gains could be most transformative — advanced manufacturing, logistics, applied AI, and innovation-driven industry. Bullard’s perspective reinforces the importance of building resilience while pursuing long-term opportunity.

Closing Reflection

Bullard’s fireside conversation with Day offered both realism and optimism. While the economy may present mixed signals in 2026, it also offers meaningful opportunity for founders who plan thoughtfully and build toward resilience. Indiana’s innovation ecosystem is prepared to meet this moment with clarity, discipline, and forward momentum.

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