WTW’s latest Salary Budget Planning Survey shows US salary budgets for 2026 are forecast to hold steady at 3.4%, matching the 2025 increase and marking a shift from reactive inflation-driven raises to proactive pay strategies. Of the 1,876 US organizations that responded—part of a global total of 36,960 responses from 156 countries—62% have kept their original pay budgets unchanged since mid-2025, while 6% have increased and 21% have trimmed budgets. Cost management concerns and recession fears each influenced 36% of those adjusting projections, with tight labor markets cited by 32% and ongoing inflationary pressures by 25%. WTW highlights that strategic allocations now prioritize employees who drive revenue growth, critical talent retention and efficiency gains, supported by stronger governance, market data segmentation and internal equity focus. Voluntary turnover has eased to 10.1%, and firms are directing limited increases toward pay compression corrections and enhanced benefits, training and flexibility.

Willis, a WTW business, has co-published a report with Oxford Analytica pinpointing five economic threats to defense contractors as demand surges: scale versus sovereignty trade-offs, tariff wars, China dependence (particularly in rare earths and electronics), phantom spending where budget pledges may not materialize, and challenges reindustrializing Western supply chains. The report warns that debt-to-GDP ratios exceeding 100% in Europe, North America and Japan create fiscal constraints that could trigger soft defaults through inflation or repression, ignite social backlash against defense outlays and jeopardize long-term procurement. Senior executives interviewed emphasize that this evolving risk landscape—characterized by state-sponsored conflict resurgence—requires companies to reassess supply-chain resilience, cost structures and strategic partnerships. WTW advises defense clients to stress-test procurement scenarios under both continued Ukraine conflict and potential ceasefire outcomes to safeguard operations and maintain investor confidence.