According to WTW’s latest Salary Budget Planning Survey, U.S. employers expect average salary budget increases to remain at 3.4% for 2026, matching the actual increase recorded in 2025. Survey data from September to November 2025, comprising 1,876 U.S. organizations out of 36,960 responses globally, shows that 62% of employers have left their pay budgets unchanged since mid-year projections, while 6% have raised budgets and 21% plan reductions. Variables influencing adjustments include cost management concerns (36%), fears of recession or weak financial results (36%), tight labor markets (32%) and lingering inflationary pressures (25%). Employee turnover has eased to 10.1% over the past year, prompting companies to target remaining budget capacity toward critical talent through targeted pay adjustments, compensation program changes (32%), enhanced training (43%), health and wellness benefits improvements (42%) and expanded workplace flexibility (35%). Heather Ryan, WTW’s Head of Rewards Data Intelligence, notes that strategic allocation of raises to high-impact contributors and efficiency drivers will continue shaping compensation practices beyond 2026.

WTW’s Willis business, in partnership with Oxford Analytica, has published a report identifying five principal economic risks facing defense contractors: the trade-off between pooled scale and national sovereignty, escalating tariff barriers, overreliance on Chinese materials such as rare earths, “phantom” defense spending that fails to materialize, and challenges in rebuilding domestic industrial capacity. Interviews with senior defense executives underscore robust procurement forecasts in Europe regardless of conflict scenarios in Ukraine. The report further highlights looming fiscal pressures—debt-to-GDP ratios exceeding 100% in North America, Europe and Japan—that could trigger social pushback against defense funding if higher taxes or cuts to social programs become necessary. Sam Wilkin, Director of Political Risk Analytics at Willis, emphasizes that the resurgence of state-to-state violence has fundamentally reshaped the defense landscape, driving both surging demand and strategic realignment of global supply chains.