Business Spending Is Still Growing in 2026: Why CFOs Shouldn’t Put Every Investment on Hold

Economists expect business spending to remain strong even as borrowing costs and inflation complicate the outlook. I think the interesting story isn’t that companies are spending money. It’s that some investments become more valuable precisely when everyone else is hesitant to make them.

Apparently, businesses have received the memo about economic uncertainty.

They’ve read it.

Discussed it.

Probably formed a committee.

And then continued spending money anyway.

I find that interesting.

On October 12, 2026, CFO Dive reported that economists surveyed by Wolters Kluwer expect business spending to grow at a 12.6% annualized rate this year before slowing to 6.2% in 2027.

Meanwhile, 59% of the economists surveyed believe recent increases in U.S. borrowing costs have been insufficient to cool inflation or economic growth.

The National Association for Business Economics also released an October outlook projecting 6.7% growth in business investment for 2026.

These aren’t identical forecasts. They come from different surveys and use different measures.

But they point toward an interesting development.

Companies are still investing despite economic uncertainty.

And I think that’s worth examining.

Because the conventional response to an uncertain economy is often to reduce spending.

Delay projects.

Freeze hiring.

Postpone equipment purchases.

And ask every department to explain why its budget contains anything more expensive than a stapler.

Sometimes those decisions are appropriate.

But uncertainty doesn’t automatically make investment a bad idea.

In fact, I would argue that companies capable of making disciplined investment decisions during uncertain periods may be better positioned when economic conditions improve.

The key is understanding which investments create value.

And which ones merely create expenses.

What the October 2026 Business Spending Forecast Actually Says

The October 12 CFO Dive article, based on a Wolters Kluwer economist survey, highlights several developments.

Business spending is expected to continue growing.

Inflation remains a concern.

Borrowing costs have increased.

And economists believe the economy may remain resilient despite tighter monetary conditions.

Separately, the October NABE Outlook Survey, based on responses from 42 professional forecasters, projects 2.1% real U.S. GDP growth in 2026, up from the June forecast of 2.0%.

It also expects business investment to grow 6.7%.

That’s an interesting combination.

The economy isn’t necessarily accelerating dramatically.

But businesses continue committing capital.

I wouldn’t interpret that as evidence that every industry is expanding.

Technology infrastructure investment may be particularly strong, while other sectors face weaker demand or higher costs.

But the broader message is that uncertainty hasn’t eliminated investment opportunities.

Companies still need equipment.

Technology.

Facilities.

Employees.

And the capacity to serve customers.

Some investments can’t wait for a perfectly predictable economic environment.

Because that environment doesn’t exist.

I’ve been in finance long enough to appreciate the appeal of waiting until all the assumptions are certain.

Unfortunately, by then the opportunity has usually moved somewhere else.

Why Companies Continue Investing When Interest Rates Are High

Higher borrowing costs should influence investment decisions.

They increase the cost of financing.

They can reduce project returns.

And they may make some investments less attractive.

But they don’t eliminate the economic value of every project.

Consider a company evaluating new manufacturing equipment.

The equipment costs $5 million.

It is expected to reduce annual operating costs by $1.2 million.

Management expects the equipment to remain productive for seven years.

The company could finance the purchase using existing cash or debt.

Higher interest rates make the investment more expensive to finance.

But the project may still generate attractive returns.

The question isn’t simply whether borrowing costs are higher than last year.

It’s whether the expected cash flows justify the investment at today’s cost of capital.

That’s a different conversation.

And a much more useful one.

I wouldn’t approve a project because interest rates might decline.

I’d evaluate it using the financing conditions available now.

If the economics work, the company can consider moving forward.

If they don’t, management can redesign the project, negotiate a better purchase price or wait for better conditions.

That’s capital allocation.

Not economic fortune-telling.

The Cost of Waiting Can Be Larger Than the Cost of Investing

This is something I think deserves more attention in FP&A.

When companies evaluate capital expenditures, they usually calculate the cost of the investment.

That’s appropriate.

But what about the cost of delaying it?

Suppose a company has equipment that limits production capacity.

Demand is strong enough to support additional sales.

Management considers purchasing a new production line.

The project requires $4 million in capital.

It would generate approximately $1 million in annual incremental operating cash flow once operational.

Management delays the purchase for one year because of economic uncertainty.

That decision preserves $4 million in immediate cash.

But it may also sacrifice $1 million in potential operating cash flow during the delay, assuming the company could otherwise have commissioned the line in time to earn it.

That’s an opportunity cost.

And it belongs in the analysis.

The company may still decide to wait.

Perhaps demand isn’t sufficiently committed.

Perhaps liquidity is constrained.

Perhaps supplier lead times make the project less attractive.

Those are legitimate considerations.

But the decision should compare the cost of investing with the cost of not investing.

Because doing nothing is still a financial decision.

It just doesn’t always arrive with a purchase order.

How FP&A Should Evaluate Capital Spending in 2027

With economists expecting business spending growth to moderate in 2027, I think companies should be selective rather than indiscriminately restrictive.

I’d divide capital spending into three broad categories.

The first is essential investment.

These are expenditures required to maintain operations, meet safety requirements or satisfy regulatory obligations.

They may not generate exciting revenue projections.

But avoiding them can create substantial operating risks.

The second is productivity investment.

These projects improve efficiency, reduce costs or increase capacity.

They may offer measurable returns even when revenue growth is modest.

The third is strategic growth investment.

These projects allow the company to enter new markets, develop products or expand operations.

They may offer significant returns but often involve greater uncertainty.

I’d evaluate the categories differently.

An essential maintenance project may be justified primarily by risk avoidance.

A productivity project may be evaluated through cost savings and operating improvements.

A strategic growth project may require scenarios covering customer demand, pricing and market share.

The mistake would be applying the same simplistic spending reduction target to all three.

Because a 10% capital expenditure cut doesn’t necessarily improve financial performance.

It may simply postpone investments that would have made the company more profitable.

A Practical Example of Capital Investment Under Higher Borrowing Costs

Let’s build an illustrative investment model.

A manufacturer is considering a $3 million equipment purchase.

The project is expected to generate $750,000 in annual net operating cash flow for six years.

Assume no residual value and that the cash flows occur at each year-end.

The company evaluates the project using different discount rates.

Discount rate	Present value of six annual cash flows	NPV after $3M investment
8%	$3.47 million	+$0.47 million
10%	$3.27 million	+$0.27 million
12%	$3.08 million	+$0.08 million
14%	$2.92 million	-$0.08 million

The project is attractive at an 8% discount rate.

It remains positive at 10% and 12%.

At 14%, the net present value becomes negative.

That’s useful information.

It tells management how sensitive the investment is to the required return.

But I’d go further.

What happens if annual cash flow is only $650,000?

What if installation takes six months longer?

What if maintenance costs increase?

What if demand is stronger than expected?

Those questions help management understand the range of possible outcomes.

A capital investment model shouldn’t simply produce a single answer.

It should explain what makes the project attractive and what could change that conclusion.

Why Productivity Investment Can Make Sense During Slow Growth

One reason companies may continue investing is that some projects improve profitability even without strong revenue growth.

Consider automation.

A manufacturer might invest in equipment that reduces production waste.

A logistics company might improve route planning.

A retailer might invest in inventory management.

A professional services business might automate routine administrative work.

These projects can reduce operating costs or increase productive capacity.

And their returns may depend less on overall economic growth than a major market expansion.

Suppose a company spends $1 million implementing a process improvement.

The project reduces annual operating expenses by $300,000.

Assuming the savings are realized and recurring, that’s a meaningful economic benefit.

But I’d want to understand the full cash flow profile.

Implementation costs.

Ongoing software or maintenance expenses.

Training.

Potential disruption.

And how long the savings are expected to last.

I’d also want to know whether the savings are actual expense reductions or simply additional employee capacity.

Those aren’t interchangeable.

A company can create valuable productivity without immediately reducing payroll.

But the investment case needs to explain how the productivity translates into economic value.

That’s what makes the financial analysis credible.

Business Spending Growth Doesn’t Mean Every Company Should Spend More

There’s a distinction between an economic forecast and a corporate spending strategy.

Economists may expect business investment to grow.

That doesn’t mean every company should increase capital expenditures.

A business with weak demand, high leverage and limited liquidity may need to preserve cash.

Another company with strong customer commitments and substantial financial flexibility may have excellent investment opportunities.

The right decision depends on the company’s circumstances.

I’d want to understand the balance sheet.

Debt maturities.

Cash reserves.

Operating cash flow.

Existing capital commitments.

And the company’s ability to absorb a downside scenario.

A financially strong company may be able to invest through uncertainty.

A highly leveraged company may need to prioritize liquidity.

Neither approach is inherently wrong.

The objective is to make decisions that fit the company’s financial position and strategic opportunities.

And that requires more than following a broad economic forecast.

Why the 2027 Spending Slowdown Could Create Opportunities

The Wolters Kluwer survey cited by CFO Dive anticipates slower business spending growth in 2027.

I don’t automatically view that as negative.

A moderation in growth can encourage companies to become more selective.

And selective investment can improve capital allocation.

When markets are expanding rapidly, organizations sometimes approve projects because everyone expects demand to continue growing.

When growth moderates, management has to examine the economics more carefully.

Which projects produce the strongest returns?

Which customers are most profitable?

Which investments improve productivity?

Which initiatives require too much capital for the expected benefit?

Those are valuable questions.

A company that develops strong capital allocation discipline during a slower period may emerge with a more efficient operating model.

And if competitors reduce investment indiscriminately, a well-capitalized business may find opportunities to gain market share.

That’s not guaranteed.

But it’s worth evaluating.

Sometimes the best investment opportunities emerge when other companies become reluctant to commit capital.

How Inflation Changes the Capital Expenditure Decision

Inflation complicates investment planning.

Equipment prices may increase.

Construction costs may rise.

Labor becomes more expensive.

And financing costs can remain elevated.

But inflation can also change the economics of delaying a project.

Suppose a piece of equipment costs $2 million today.

Management expects the price to increase 5% next year.

The same equipment would cost approximately $2.1 million.

Waiting could increase the purchase price by $100,000.

Of course, that doesn’t automatically justify buying now.

The company needs to consider the time value of money, expected project cash flows and financing costs.

But future price increases are relevant.

I’d also examine whether the investment reduces exposure to inflation.

For example, automation that lowers labor requirements may become more valuable if wages continue rising.

Energy-efficient equipment may provide larger savings when electricity prices increase.

A project that looked marginal under older assumptions may become more attractive when operating costs change.

That’s why capital models need to be updated.

Not simply rolled forward from last year’s budget.

The Most Important Question: What Happens to Cash?

One of my concerns with aggressive capital spending is that companies sometimes focus on projected earnings without fully evaluating cash requirements.

A project may be profitable.

It may have an attractive return.

And it may still create short-term liquidity pressure.

Suppose a company invests $10 million in new production capacity.

The project is expected to generate $4 million in annual revenue once operational.

But the company also needs additional inventory.

Customer receivables increase.

And installation requires several months before production begins.

The cash outflow arrives before the revenue.

That’s normal.

But it needs to be planned.

I’d want the capital investment model connected to the cash flow forecast.

When will the equipment be purchased?

When will installation costs be paid?

When will production begin?

When will customers be invoiced?

And when will the company actually collect the cash?

Those questions determine whether the company can finance the project comfortably.

Because a project can have a positive net present value and still create a cash problem if the timing isn’t managed.

The investment committee may be delighted.

Treasury may be less enthusiastic.

Why CFOs Should Connect Capital Spending to Operating Drivers

I think capital budgeting becomes more useful when investments are tied to specific operating assumptions.

For example, a manufacturer shouldn’t simply forecast a 15% increase in capital spending.

I’d want to know what the investment accomplishes.

Additional production capacity?

Lower unit costs?

Reduced equipment downtime?

Improved product quality?

Higher customer service levels?

Each objective should have a measurable operating driver.

If the company is investing in capacity, I’d examine expected production volume and utilization.

If the investment is intended to reduce costs, I’d examine cost per unit.

If it improves reliability, I’d track downtime and maintenance expense.

If it supports growth, I’d connect the investment to customer demand and contribution margin.

That allows FP&A to evaluate whether the project is delivering the expected results.

It also makes the next investment decision easier.

Because management can learn from previous projects.

Which assumptions were accurate?

Which benefits took longer than expected?

What implementation costs were underestimated?

And what operating improvements exceeded expectations?

That’s how capital allocation improves over time.

The Problem With Treating Every Department’s Budget the Same Way

When economic uncertainty increases, companies often ask departments to reduce spending.

Sometimes that is necessary.

But I’d be careful about applying identical reductions across the organization.

A department with substantial discretionary spending may be able to reduce expenses without affecting operations.

Another may already be operating efficiently.

A third may have an investment opportunity that could generate substantial returns.

An across-the-board reduction ignores those differences.

I would rather evaluate spending based on economic value.

Which activities are essential?

Which investments generate measurable returns?

Which costs support customer demand?

And which expenditures can be reduced without damaging the business?

That approach requires more analysis.

It’s also more likely to produce useful results.

A company doesn’t become financially stronger simply because every department spends less.

It becomes stronger when it allocates resources more effectively.

Those aren’t always the same thing.

What I’d Put in a 2027 Capital Spending Dashboard

If I were preparing a capital spending review for management, I’d want a dashboard that connects project economics with execution.

Not just the amount spent.

I’d include:

Metric	Why it matters
Approved capital budget	Establishes the spending commitment
Actual spending	Tracks cash deployed
Forecast spending to completion	Identifies remaining funding requirements
Expected NPV	Measures estimated economic value
Expected payback period	Shows capital recovery timing
Project completion date	Tracks implementation
Expected operating benefit	Connects spending to performance
Actual benefit realized	Measures delivery
Liquidity impact	Shows cash requirements
Key project assumptions	Identifies what could change the outcome

I’d also distinguish between approved projects and proposed projects.

A company may have substantial capital commitments that are difficult to reverse.

New projects offer more flexibility.

That distinction matters when economic conditions change.

Management needs to understand which spending decisions remain optional.

And which are already committed.

How FP&A Can Help Companies Invest With Confidence

I think one of the most valuable roles FP&A can play is helping management make investment decisions without pretending the future is certain.

We can’t eliminate uncertainty.

We can evaluate it.

We can build scenarios.

We can identify the assumptions that matter.

And we can establish decision points.

Suppose a company is considering a $20 million expansion.

The project depends on demand reaching a particular level.

Instead of approving the entire investment immediately, management might divide it into phases.

The first phase establishes initial capacity.

The second begins when customer commitments reach a defined threshold.

The third proceeds when utilization and cash flow support additional expansion.

That approach preserves flexibility.

It also allows the company to capture an opportunity without committing all the capital upfront.

I like phased investment strategies when the economics support them.

They recognize uncertainty without turning it into paralysis.

And they create opportunities to learn before committing additional resources.

What the Economist Surveys Mean for CFO Strategy

The October surveys suggest that business investment remains an important source of economic activity.

But inflation and borrowing costs continue to influence financial decisions.

I think CFOs should take both developments seriously.

The investment opportunity is real.

So is the cost of capital.

That means companies need to evaluate projects carefully.

Not simply spend more because other businesses are investing.

And not stop spending because economic conditions are uncertain.

I’d focus on investments with clear operating benefits, realistic financial assumptions and manageable liquidity requirements.

I’d also revisit projects that were delayed earlier in the year.

Have customer conditions changed?

Have equipment prices increased?

Are competitors expanding?

Has the expected return improved?

Or has the investment become less attractive?

Those questions deserve fresh analysis.

Because the decision that made sense six months ago may not be the right decision today.

Sometimes the Most Expensive Decision Is the One Nobody Makes

I think finance departments are naturally comfortable evaluating the risks of spending money.

We know how to calculate investment costs.

We understand debt.

We can model downside scenarios.

And we can explain why a project might not achieve its expected return.

Those skills are important.

But I think we should apply the same discipline to the decision not to invest.

What revenue might the company lose?

What operating inefficiencies will continue?

What capacity constraints could limit growth?

What costs may increase while management waits?

And what opportunities might competitors capture?

Those are financial consequences too.

A company shouldn’t invest recklessly.

But it shouldn’t confuse caution with good capital allocation.

Sometimes the prudent decision is to preserve cash.

Sometimes it’s to make the investment.

The value of FP&A is helping management understand the difference.

The Best Companies Won’t Wait for the Economy to Become Predictable

I find the October business spending forecasts encouraging.

Companies continue investing despite inflation, higher borrowing costs and uncertainty.

That suggests businesses still see opportunities worth pursuing.

Some investments will be successful.

Others won’t.

That’s the nature of capital allocation.

But I think the important lesson is that uncertainty doesn’t eliminate the need to make decisions.

It increases the value of making them carefully.

For CFOs, that means evaluating returns using current financing conditions.

Understanding cash requirements.

Connecting capital spending to operating performance.

And recognizing the cost of delaying attractive investments.

For FP&A, it means helping management compare opportunities and understand what could change the outcome.

Not simply producing a capital budget.

But making the capital budget useful.

Because companies don’t create value by avoiding every uncertain decision.

They create value by allocating resources to opportunities that justify the risk.

And sometimes the most expensive investment mistake isn’t approving the wrong project.

It’s failing to approve the right one.

Although I would still like to see the financial model before we sign anything.

I’m optimistic.

Not reckless.