October 2025 Economic Update: What Entrepreneurs Need to Know

The latest episode of Profitability Playbook: The Simple Numbers Podcast dives deep into the current economic climate and its implications for small businesses and entrepreneurs. Hosted by Brandon Gray with special guest Micah Ledbetter, the conversation explores inflation, labor market trends, consumer spending, and what to anticipate as we enter 2026.

Inflation and Interest Rates

Despite headlines suggesting economic uncertainty, the Federal Reserve has signaled a clear strategy: rate cuts to stimulate liquidity, even if it means tolerating slightly higher inflation. Two cuts have already occurred, and a third — possibly a 50-basis-point adjustment — could be on the horizon. While this offers relief on borrowing costs, entrepreneurs should brace for inflation to hover between 5% and 6% well into the first half of 2026.

Pricing strategy matters more than ever. Businesses must monitor overhead increases and adjust their pricing to maintain profitability.

Labor Market Pressures

Job confidence is slipping, with nearly half of adults expressing doubt about finding quality employment. Wage inflation persists, but the labor market remains soft. Many companies are “right-sizing” their workforce, often leveraging AI to streamline operations. However, as Micah points out, AI isn’t a consumer — reduced payrolls can dampen spending power, creating ripple effects across the economy.

Evaluate labor flexibility. Align staffing levels with production needs and consider creative scheduling to manage costs without sacrificing output.

Consumer Spending and Holiday Outlook

Retailers hoping for a holiday surge may be disappointed. Adobe forecast online holiday shopping growth at 5.8%, down from 8.7% last year. Tariffs and inflation are squeezing margins, and discretionary income is under pressure. Luxury brands and major retailers are already reporting softer sales. Whether you’re introducing new product variations or offering flexible service contracts, creativity still prevails, and businesses that innovate will capture a significant share of limited consumer dollars.

Looking Ahead to 2026

Both Brandon and Micah agree: 2026 will likely remain challenging, however, rate cuts should drive some improvements versus 2025.. Entrepreneurs should plan for a “street fight economy,” where success depends on agility, pricing discipline, and operational efficiency.

Practical Steps for Entrepreneurs

1. Audit your pricing: Factor in 5-6% inflation when setting rates for 2026.

2. Leverage technology wisely: Use AI to enhance efficiency, not just cut costs.

3. Innovate offerings: Introduce new products or services that meet current market needs.

4. Stay close to customers: Personalization and direct engagement can drive sales when budgets are tight.

Final Thoughts

In today’s economic environment, uncertainty is the only constant, but that doesn’t mean opportunity disappears. Entrepreneurs who stay proactive, monitor key indicators, and adapt their strategies will be best positioned to thrive. Whether it’s refining pricing, leveraging technology, or finding creative ways to meet customer needs, success in 2026 will belong to those who act decisively. Now is the time to plan, innovate, and prepare for a market that rewards resilience and agility.

Ready to plan for 2026? CRI Simple Numbers offers customized sessions to help you navigate economic uncertainty and build sustainable profitability. Contact us to learn more.