This article originally appeared in the November 2026 edition of the Nashville Business Journal. You can read the story online at the Nashville Business Journal (subscription not required) or continue below.
During the fourth quarter, people start to wonder about what will happen during the upcoming year. Will it be their worst-case scenario? The best-case? Or will it be, more than likely, the most probable outcome? If the latter, what exactly does that mean?
This is where people who do what I do for a living gaze into their crystal balls in order to come up with something coherent to say. Believe it or not, it isn’t always going to be completely accurate. After all, no one can look into the future with any sort of clarity.
However, the message has to be plausible, defensible and directionally accurate, mostly. I mean, no one is going to pay much attention to someone predicting alien invasions, zombie apocalypses or a Beatles reunion. Still, telling folks “if you liked last year, you will probably like next year” gets a little tiresome, even when it is true.
So, what of 2027? What do the tea leaves have to say?
Long years ago, I attended a conference where one of the speakers, a business economist of some renown, said economic growth essentially came down to two things: interest rates and energy prices.
Their theory was that the higher both are, the slower gross domestic product growth should be.
Intuitively, this makes some sense. Interest rates are little more than the cost of money. Since money isn’t immune from the law of supply and demand, the more expensive money is, the less people will demand. Voila.
As for energy prices, the more consumers and producers have to pay to turn on the lights, operate the machinery, turn on the furnace/AC, drive the kids to school, transport the product across country, etc., the less money they will have to spend on other things. Again, voila.
Therefore, if this train of thought has any merit, higher interest rates and energy prices should result in lower overall economic activity. The inverse can also be true. I suppose you could say there is an inverse relationship between these things.
As I type on Oct. 13, 2026, and according to Investing.com, the yield to maturity on the 10-year U.S. Treasury note is around 5.22%. It was roughly 4.17% in late December 2025. Obviously, this particular interest rate is up over one percentage point thus far this calendar year. (1)
While that might not sound like that much, only one percentage point or so in absolute terms, it is a 25.18% increase in relative terms. That will make you sit up and take notice, won’t it? Put another way, an increase of 1.05 percentage points works out to be an additional $875 per month in interest payments on $1 million in variable-rate debt.
To be sure, that amount might not drive the dynamic, innovative and entrepreneurial U.S. economy off the proverbial cliff, but it might slow consumer spending down a little bit.
As for energy prices, I doubt there is anyone reading this article who hasn’t complained while at the gas pump at some point this calendar year. If not that, perhaps they didn’t like their electric or gas bill during this past summer.
According to Bloomberg News, WTI crude oil for February delivery settled at $57.42 per barrel at the close of trading on Dec. 31, 2025. (2) At the close on Oct. 12, 2026, WTI crude oil was $93.74 per barrel. (3) Some quick math suggests that is a 63.25% increase.
I dare say you probably don’t need a PhD in applied mathematics to conclude that sort of change in energy prices might have an impact on consumer spending over time.
So, to summate, in 2027, there could potentially be less demand for money and less money for the U.S. consumer to spend on a wider variety of goods and services. Of course, that assumes interest rates and energy prices really are two of the driving factors in domestic GDP.
Now, what that all means for any one individual is anyone’s best guess. After all, I don’t know how much debt you have or will need in the upcoming year. I also don’t have any idea how you have your money invested. There are simply way too many unknowns to throw out some kind of prediction that would serve no purpose other than to get me in trouble with my internal compliance folks.
However, when push comes to shove, and if the year were to end today on Oct. 13, 2026, my forecast for 2027 would be for slower economic growth, in general. That doesn’t mean it will happen nor does it mean the world is coming to an end.
It simply means the cloudy crystal ball on my desk, and I do have one, says the probable-case scenario is a little less rosy than the best-case scenario. However, it is also better than the worst-case scenario that keeps people up at night.
It almost always is.
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SOURCES:
- Investing.com, “United States 10-Year Bond Yield Historical Data,” Oct. 13, 2026.
- Bloomberg News, “Oil Ends Year With Steepest Loss Since 2020,” published by Rigzone, Dec. 31, 2025.
- Investing.com, “Crude Oil WTI Futures Historical Data,” Oct. 12, 2026.