Financial executives expect wages to rise 4% in 2026, according to a new analysis from the Federal Reserve Bank of San Francisco published this month. The research shows that predictions from senior business leaders have matched actual U.S. wage movements more accurately than household surveys since 2002. The latest projections point to continued wage increases but suggest workers will see only modest improvements in what they can actually afford to buy.
The analysis examined responses from the CFO Survey, a quarterly poll of approximately 530 senior financial decision-makers conducted by Duke University and the Federal Reserve Banks of Richmond and Atlanta. From 2002 through 2019, both expected and actual wage growth averaged roughly 3%. During the pandemic years from 2020 through 2025, real wage growth averaged 4.4% while CFO forecasts came in at 5.2%. Executive expectations peaked at 7.0% for 2022 before cooling substantially. By 2025, actual wage growth had dropped to 3.0%. When comparing forecast accuracy, CFO predictions showed an error margin of just 0.69 percentage points from 2002 through 2025, outperforming both the New York Fed's Survey of Consumer Expectations and the University of Michigan's household surveys. On employment, executives projected 2.4% full-time job growth for 2026, down from approximately 3.5% expected for both 2024 and 2025, though still above the long-term average of 1.8%.
The report finds that business leader surveys offer "an important and reliable source for insights into future labor market conditions, particularly for expected wage growth." The authors note that household survey projections "perform poorly when compared with actual wage growth," with earnings expectations barely moving despite major swings in actual pay and prices. According to the analysis, CFO responses "provide employer perspectives that are grounded in firms' financial planning," explaining their stronger predictive power. The research emphasizes that CFO expectations for employment growth point to "a roughly balanced labor market" with "continued expansion among surveyed firms but at a more moderate pace."
Why workers' purchasing power remains uncertain depends on the gap between wage increases and price inflation. The report calculates that real wage growth, adjusted for inflation, fell 0.9 percentage points short in 2021 and essentially matched inflation in 2022. It then climbed to 2.6 percentage points in 2023 and 1.9 points in 2024 before plummeting to just 0.1 percentage point in 2025, meaning workers saw almost no improvement in what their paychecks could buy that year. For 2026, the authors project real wage growth of just 0.4 percentage point, based on the 4% CFO wage forecast minus expected headline inflation of 3.6%. When businesses anticipate faster wage growth, they expect higher future costs that can fuel inflation pressures, creating a delicate balance between worker pay gains and broader price stability.
The most recent survey readings present what the report calls "a mixed outlook" with firms expecting steady wage growth while employment forecasts suggest labor demand is normalizing. The narrowing distance between wage increases and inflation means gains in purchasing power for workers remain highly uncertain. If past patterns between CFO predictions and actual outcomes hold, 2026 could deliver weak improvements in what workers can afford at best.