Clearwater Analytics (CWAN) Status update summary

Macroeconomic outlook for 2026

• The U.S. economy is expected to avoid recession in 2026, with a base case of slow growth and persistent macro uncertainty.

• Inflation remains above the Federal Reserve's 2% target, partly due to new tariffs, while the labor market is softening but not unraveling.

• The unemployment rate is ticking up due to increased labor supply, not layoffs, with immigration restrictions further limiting labor force growth.

• The Federal Reserve has shifted to a more neutral policy stance, cutting rates modestly as labor market concerns rise, but is unlikely to cut aggressively unless conditions deteriorate.

• Policymakers project GDP growth of 2.3% for 2026, reflecting cautious optimism about economic resilience.

Consumer and corporate sector dynamics

• Consumer spending remains the primary support for the economy, with real wage growth still positive despite elevated inflation.

• Tariffs have led to higher costs for firms, which absorbed much of the impact in 2025; these costs are expected to be gradually passed to consumers in 2026.

• Corporate profits remain strong overall, supporting investment and employment, though sector-specific challenges persist.

• CFOs anticipate limited hiring but also limited layoffs, indicating a stable but subdued labor market.

Financial markets and portfolio positioning

• Corporate cash allocations are at multi-year lows as firms extend duration to lock in yields amid Fed rate cuts.

• Insurers maintain slightly higher cash allocations than in previous years but are also gradually reducing them.

• Duration exposure in both corporate and insurer portfolios is stable, with little appetite for further extension or contraction.

• Credit spreads are at historic lows and business delinquencies remain minimal, reflecting low systemic risk.

• Foreign investor flows into U.S. assets rebounded after initial outflows following tariff announcements, underscoring continued confidence in U.S. markets.