The Consumer is Ready to Spend
As we enter the beginning of 2026, we are now able to draw more accurate and stable predictions for consumer behavior and the economy as a whole, since the tumultuous holiday season has come to an end. The American consumer begins to settle in, get back to work or school, and most of all begin to budget and spend again in a consistent way.
Understanding consumer patterns throughout the year is essential for any small business. As I often state, the goal for any brand, outside of creating a great product, is to compete with other brands within their industry for market share i.e. consumer cash. People especially in America, spend and tend to over-consume, logically there are limits and those placed on consumers are in the form of their available capital they are able to deploy particularly expenditures deemed “disposable”.
The strength of “buying power” for the American consumer has embarked on a favorable route to start the year with higher-than-expected employment, lower stable inflation, gas prices and interest rates coming in lower on average than in previous years since Covid. As a result, a boost of wealth for the private sector and the middle-class is slowly taking place and looks to be a bright spot for the economy as a whole into the beginning of 2026.
This can be further evidenced by the latest jobs report, which came in at over 130k jobs added to the US economy, blowing away expectations by over double. What is noteworthy about these numbers is over that period 170k jobs were added in the private sector while during this time 40k jobs were cut from the Federal workforce. This is a radical re-calibration of the employment landscape compared to the previous 5 years. The overall ratio of government-based jobs compared to those in the private sector is the lowest it’s been since 1966.
Since Jan 1st 2026, over 40k construction jobs were added as well, onshoring of manufacturing, due to tariff implications and the AI datacenter boom have vastly contributed to this as well as a push for de-regulation in many exploratory and manufacturing industries which are set to take effect this year.
The reprivatization of the US economy is afoot. Private sector and small-cap industry job growth has outpaced expectations and is lining up America for a middle class pay rise and high economic activity.
As a further example of this observation, the public will be receiving the benefits of the 2025 tax-cuts in the form of IRS returns now through April. Policies made permanent by congress in last year: no tax on tips, social security, overtime and Interest write-offs on American-made autos, has seen the average American receiving a 22% increase in tax returns already this year. Combined with lower interest rates on outstanding debt (which remains exorbitantly high) will provide an injection of capital in the main street of middle America not seen in previous years.
So how does all this impact small businesses? In simple terms it leaves an existing, and potential customer base more likely to spend on products or services mainly deemed non-essential. A more active consumer means more opportunities for growth, and a great time for brands to invest in marketing, rolling out new products or scaling for growth.
As with seasons such as back to school or Christmas where there is heightened consumer demand and economic activity, the current numbers with jobs, inflation, interest rates and higher tax returns turn the first quarter of 2026 into a heightened spending season of its own. The only question is: Does your business have a plan in place to capitalize?
To gain personalized guidance for your business on this topic and others contact us.
- Vince Calace
Founder - Venture Business Development