BMO Business Outlook: U.S. Companies Prioritize AI and Capital Discipline Amid Current Economic Conditions

• AI moves from experimentation to real‑world productivity across industries
• Businesses prioritize cash flow, capital efficiency and selective growth as conditions stabilize
• Insights from major U.S. markets show disciplined execution as the key differentiator 

CHICAGO, March 18, 2026 /PRNewswire/ - BMO today released its BMO Business Outlook, showing U.S. companies cautiously optimistic amid greater clarity on interest rates, policy direction and capital conditions and business leaders shifting from "wait-and-see" to disciplined execution, particularly on AI implementation and capital allocation. 

Across major U.S. regions and industries, businesses are increasingly focused on fundamentals—using AI and automation to improve productivity, strengthen capital efficiency and support sustainable growth—rather than expansion for its own sake. In many industries, leaders who spent the past year waiting for clarity on interest rates, trade policy and other external variables are now re-engaging more deliberately as conditions stabilize, even as uncertainty remains.

A defining theme of the BMO Business Outlook is that 2026 is shaping up to be a year of AI execution: companies are moving beyond pilots and experimentation toward practical deployment of AI and automation to streamline operations, improve productivity and redeploy resources toward higher-value opportunities.

"We're seeing a clear shift from 'wait-and-see' to disciplined execution," said Tony Sciarrino, Head, BMO Commercial Bank, U.S. "In this environment, the winners won't be the companies that take the most risk—they'll be the ones that allocate capital well, protect margins, and put technology to work in ways that measurably improve productivity."

National outlook: solid tailwinds, uneven conditions—and execution as the differentiator 

BMO's Business Outlook notes the U.S. economy has meaningful supports in 2026, including AI-driven business investment. At the same time, risks remain elevated around trade policy, inflation dynamics and geopolitics.

Business leaders report capital markets activity is beginning to thaw unevenly: loan demand is improving as rate cuts work through the system, underwriting remains disciplined, and M&A activity is picking up selectively, especially for bolt-on acquisitions, while broader sponsor-backed activity remains cautious.

"AI-related investment remains a key growth tailwind, but the environment still requires careful navigation," said Scott Anderson, Chief U.S. Economist, BMO. "Productivity and execution will be critical differentiators, especially as businesses balance opportunities created by technology with ongoing uncertainty across trade and inflation."

What business leaders are prioritizing in 2026

BMO's Business Outlook includes perspectives from commercial leaders and economists across major U.S. markets, pointing to three consistent priorities for the year ahead: 

1. Execute with discipline: prioritize cash flow, margin protection and capital efficiency in a normalized—but still complex—environment.
2. Put AI to work: move from experimentation to practical, productivity-driven use cases that strengthen resilience and competitiveness.
3. Invest selectively: pursue phased capex, targeted hiring and strategic M&A where it improves scale, capabilities or efficiency.

Midwest: resilience, modernization and manufacturing strength 

Illinois — Illinois businesses continue to demonstrate resilience and are converting stronger-than-expected performance into plans for investment, expansion and strategic repositioning. Companies are benefiting from activity tied to the expanding data-center ecosystem, food manufacturing/distribution opportunities and stabilization in transportation/logistics, while remaining attentive to fiscal and tax considerations in planning. 

Wisconsin — Wisconsin businesses are entering 2026 from a position of resilience rather than acceleration, navigating a high-uncertainty environment while focusing on stability, productivity and long-term execution in a structurally constrained labor environment. Companies are investing in automation and digital tools to "do more with less," and many are viewing acquisitions as a strategic lever to add scale and bolster leadership depth.

Minnesota — Minnesota companies are emphasizing execution over rapid expansion, prioritizing cost control, productivity and liquidity as the environment stabilizes. Many firms are re-engaging in modernization and capex—highly ROI-driven and phased—where automation and AI-enabled productivity tools can extend capacity amid demographic and labor constraints.

Indiana — Indiana enters 2026 with solid output momentum and a clear competitive edge within the Midwest, supported by a durable manufacturing base, pro-business policy environment and sustained investment in workforce readiness and infrastructure. Manufacturing remains the cornerstone, with particular strength in chemical and pharmaceutical production, while businesses pursue productivity-driven expansion and selective M&A to build scale and deepen leadership capacity in a tighter hiring environment.

West: AI infrastructure tailwinds alongside affordability and labor-market constraints 

Northern California — Northern California remains powered by AI-led capital investment and infrastructure spending, though broader growth transmission is uneven and labor-market gains have been limited. Companies are navigating affordability pressure, selective credit conditions and tariff-related uncertainty while pairing disciplined capital deployment with targeted AI adoption and strong liquidity management. 

Southern California — Stabilizing interest rates are improving the ability to plan and allocate capital, but the operating environment remains uneven, with strength concentrated in aerospace/defense, life sciences and advanced manufacturing while consumer-facing sectors continue to face headwinds. Businesses are prioritizing high-return initiatives, scenario planning and practical AI deployment to drive efficiency and maintain flexibility. 

Arizona — Arizona has shifted from rapid post-pandemic expansion to a more measured, deliberate growth phase, with companies prioritizing balance-sheet strength, margins and flexibility. Advanced manufacturing and semiconductors remain central to the state's long-term profile, while the cooling housing backdrop reinforces the importance of disciplined execution and practical productivity investments.

Colorado — Colorado is in a normalization phase marked by measured confidence rather than acceleration, with leaders emphasizing cash flow, margins and phased investments amid elevated borrowing costs and moderated growth. Technology remains a unifying theme as companies deploy automation and practical digital tools to improve productivity and protect profitability. 

Pacific Northwest (Washington & Oregon) — The region retains strengths in innovation and global connectivity, but momentum has cooled materially amid restrained tech hiring, slower population growth and heightened trade uncertainty. AI-related infrastructure remains a bright spot, while businesses increasingly rely on productivity gains rather than hiring to sustain competitiveness.

Utah — Utah continues to stand out for growth, resilience and long-term orientation, supported by a young, educated workforce and an entrepreneurial culture. While growth is moderating from historic highs, businesses remain constructive and are investing in software, automation and AI to support productivity and scale sustainably amid a still-tight labor market. 

South: moderating growth, strong fundamentals and a flight to scale 

Texas — Momentum remains strong in Texas, driven by population growth, sustained business investment and diversified engines across major metros. Middle-market companies are pairing expansion with capital discipline and working-capital optimization, while consolidation accelerates as firms pursue scale to protect margins and strengthen competitive positioning. 

Florida — Florida continues to outperform the national average even as growth moderates from exceptionally strong recent years, supported by in-migration, consumer spending and a competitive business climate. Businesses report measured optimism as housing stabilizes and planning conditions improve, with investment and job creation concentrated in targeted sectors such as aerospace, life sciences, technology, advanced manufacturing and logistics. 

Georgia — Georgia's business environment is settling into a slower but still constructive growth phase supported by infrastructure investment, industrial/logistics development and improving borrower engagement as rates stabilize. Data-center activity tied to AI-driven infrastructure investment is a notable tailwind, even as labor softness has become more visible in some white-collar roles.

About BMO Financial Group
BMO Financial Group is the eighth largest bank in North America by assets, with total assets of $1.5 trillion as of January 31, 2026. Serving clients for 200 years and counting, BMO is a diverse team of highly engaged employees providing a broad range of personal and commercial banking, wealth management, global markets and investment banking products and services to approximately 13 million clients across Canada, the United States, and in select markets globally. Driven by a single purpose, to Boldly Grow the Good in business and life, BMO is committed to driving positive change in the world, and making progress for a thriving economy, sustainable future, and stronger communities. 

SOURCE BMO US