From SEMA Market Research
Despite years of economic disruption, from pandemic shutdowns to tariffs and inflation, the U.S. consumer continues to power forward. Now in March 2026, SEMA's Market Research team has provided the following Q1 update to industry members:
The last several years have brought severe economic challenges--from COVID lockdowns, supply-chain constraints, inflation and tariffs. These successive shocks sowed uncertainty in the market and increased prices for consumers. Despite this, the U.S. consumer has been resilient, and spending has continued to climb. Personal consumption expenditures have shot up 20% from 2019 levels, adding nearly $10 trillion into the economy.
As we push into 2026, the economy is expected to continue to see some growth, with about a 2.2% rise in GDP over the next two years.
The U.S. economy is expected to continue to grow, with about a 2.2% rise in GDP over the next two years.
Consumers continue to spend as disposable personal income rose by 15% over the last five years. Both personal income and consumer spending are forecast to grow over the next couple of years. The unemployment rate has dropped into the "normal" range at 4.3% across the economy--and there was stronger-than-expected January job growth to start 2026.
The challenges for consumers continue to be prices and interest rates. Inflation has slowed to a forecast 2.4% rate, and price hikes in many core categories appear to be leveling off. But many prices remain high. For example, the average price of a new passenger vehicle is now >$50,000, a nearly 30% jump from pre-COVID levels. In addition, interest rates remain elevated when compared to the long streak of very low rates in the early 2010s.
The Federal Reserve System (Fed) has remained cautious in slowly reducing the prime rate, though a leadership change may accelerate rate cuts later in the year. High vehicle prices and interest rates put a strain on consumers, which may result in less disposable income for automobile customization. Although total U.S. debt balances have increased, incomes have risen, keeping consumer debt ratios aligned with historical norms. New-car sales in 2025 posted another gain to >16 million units, with consumers purchasing more crossover utility vehicles (CUVs) and shying away from electric vehicles (EVs).
Both personal income and consumer spending are forecast to grow.
On the business front, cost pressures are expected to ease as the Producer Price Index is projected to fall below 2% this year. An industry study in late 2025 showed that tariffs and the economy are the biggest concerns on executives' minds.
Tariffs are expected to be less volatile in 2026, which would create price stability and foster easier inventory planning. The recently announced U.S. Supreme Court decision to strike down tariffs authorized under the International Emergency Economic Powers Act opens new uncertainty. As publish date, tariffs on vehicles, auto parts, steel and aluminum remain in effect as they fall under separate authorities. It is unclear if the government will provide refunds and if the administration will reinstall tariffs under a different authority.
The stock market continues to grow, with the Dow Jones hitting all-time highs during the week of February 16 at over 50,000. The Dow has doubled since the start of 2019, despite COVID, supply chain shocks and tariffs. While day-to-day volatility remains, the index continues to show confidence in the market.
The Dow has doubled since the start of 2019, despite COVID, supply chain shocks and tariffs.
While some volatility will remain across the economy, the forecast is for GDP and consumer spending to continue climbing and employment to remain strong. In our recent industry survey, 85% of manufacturers had some confidence in specialty-equipment market growth over the next two to three years. Unless these indicators take a sudden turn, we expect to see the industry returning toward the steady growth we experienced throughout the 2010s.
Get deeper insights into the trends shaping your business at the SEMA Market Research Center. Visit sites.sema.org/market-research/ to access the latest reports and tools to help you make smarter business decisions in 2026 and beyond.
