Trustmark Corp

Economic activity during the first six months of 2026 expanded at a moderate pace, supported by continued consumer spending and business investment, including investment in artificial intelligence (AI) infrastructure, while inflationary pressures, elevated energy prices, tariffs and geopolitical uncertainty weighed on the outlook. Labor market conditions remained relatively stable, with unemployment little changed, but inflation remained above the FRB’s longer-run objective and contributed to a more cautious monetary policy posture. Economic concerns remain as a result of the cumulative weight of uncertainty regarding the potential economic impact of geopolitical developments, such as the conflicts in Ukraine and the Middle East, the current United States presidential administration's policies, inflationary and broader pricing pressures, volatility in energy prices and other economic and industry volatility. Concerns surrounding the direction of global markets and the potential impact on the United States economy are expected to persist for the near term. While Trustmark's customer base is wholly domestic, international economic conditions affect domestic economic conditions, and thus may have an impact upon Trustmark's financial condition or results of operations.

difficulty finding skilled workers, particularly technicians, trades people and certain health care and manufacturing workers. Wage growth remained modest to moderate in most Districts, with some wage increases attributed to competition for skilled workers and cost-of-living adjustments related to higher household costs. Several Districts also noted the growing use of AI in business processes, though contacts generally did not report broad employment reductions attributable to AI.

Economic activity during the first quarter of 2026 was characterized by a rebound in growth following a weak end to 2025, driven by robust artificial intelligence (AI) related business investments and consumer spending, though this was tempered by a significant geopolitical shock at the end of the quarter. While labor markets remained tight, escalating energy prices and geopolitical volatility, particularly in the Middle East, slowed momentum late in the quarter, forcing the Federal Reserve Board (FRB) to pause rate cuts it might have otherwise approved. Economic concerns remain as a result of the cumulative weight of uncertainty regarding the potential economic impact of geopolitical developments, such as the conflicts in Ukraine and the Middle East, the current United States presidential administration's policies, inflationary and broader pricing pressures, volatility in energy prices and other economic and industry volatility. Concerns surrounding the direction of global markets and the potential impact on the United States economy are expected to persist for the near term. While Trustmark's customer base is wholly domestic, international economic conditions affect domestic economic conditions, and thus may have an impact upon Trustmark's financial condition or results of operations.

Employment levels were generally stable to up slightly and demand for labor was generally stable, with low turnover, minimal layoffs and hiring mostly for replacement. Several Districts noted increased demand for temporary or contract workers, as firms remained cautious about committing to permanent hires. Labor availability improved, although difficulty finding some skilled workers, especially in the skilled trades, persisted. While most Districts indicated that AI had not yet significantly impacted overall staffing levels, some noted that AI-driven productivity improvements had enable firms in certain segments to delay or reduce hiring. Wages generally continued to rise at a modest to moderate pace. Some Districts noted continued wage pressures for some roles in health care and the skilled trades, though overall wage competition remained muted.

Economic activity improved slightly during 2025, but was characterized by mixed signals, notably, strong equity market performance, continued consumer spending and FRB rate cuts, but also a softening labor market and persistent inflationary pressures, driven partly by new tariffs. United States stocks performed strongly during the second half of 2025, supported by optimistic sentiment around lower interest rates, better-than-expected corporate earnings and strong performance in the technology and artificial intelligence (AI) sectors. However, economic concerns remain as a result of the cumulative weight of uncertainty regarding the potential economic impact of geopolitical developments, such as conflicts in Ukraine and the Middle East, the current United States presidential administration's policies, inflationary and broader pricing pressures and other economic and industry volatility. Concerns surrounding the direction of global markets and the potential impact on the United States economy are expected to persist for the near term. While Trustmark's customer base is wholly domestic, international economic conditions affect domestic economic conditions, and thus may have an impact upon Trustmark's financial condition or results of operations.

Districts reported that employment declined slightly in the November 2025 report and was mostly unchanged in the January 2026 report. Despite an uptick in layoff announcements, more Districts reported contacts limiting headcounts using hiring freezes, replacement-only hiring and attrition than through layoffs. Several employers adjusted hours worked to accommodate higher or lower than expected business volume instead of adjusting the number of employees. Multiple Districts reported an increase in the usage of temporary workers. Firms continued to report challenges finding skilled labor, particularly in engineering, health care and other trades. Multiple contacts reported exploring AI implementation primarily for productivity enhancement and potential future workforce management. AI's current impact on employment was limited, with more significant effects anticipated in the coming years rather than immediately. Wages grew at a moderate pace, though rising health insurance premiums continued to put upward pressure on labor costs.

Economic activity improved slightly during 2025, but was characterized by mixed signals, notably, strong equity market performance, continued consumer spending and FRB rate cuts, but also a softening labor market and persistent inflationary pressures, driven partly by new tariffs. United States stocks performed strongly during the second half of 2025, supported by optimistic sentiment around lower interest rates, better-than-expected corporate earnings and strong performance in the technology and AI sectors. However, economic concerns remain as a result of the cumulative weight of uncertainty regarding the potential economic impact of geopolitical developments, such as the conflicts in Ukraine and the Middle East, the current United States presidential administration's policies, inflationary and broader pricing pressures and other economic and industry volatility. Concerns surrounding the direction of global markets and the potential impact on the United States economy are expected to persist for the near term. While Trustmark's customer base is wholly domestic, international economic conditions affect domestic economic conditions, and thus may have an impact upon Trustmark's financial condition or results of operations.

Economic activity improved slightly during the third quarter of 2025, but was characterized by mixed signals, notably, strong equity market performance, continued consumer spending and a Federal Reserve Board (FRB) rate cut, but also a softening labor market and persistent inflationary pressures, driven partly by new tariffs. United States stocks performed strongly during the third quarter of 2025, supported by optimistic sentiment around lower interest rates, better-than-expected corporate earnings and strong performance in the technology and artificial intelligence (AI) sectors. However, economic concerns remain as a result of the cumulative weight of uncertainty regarding the potential economic impact of geopolitical developments, such as the conflicts in Ukraine and the Middle East, the current United States presidential administration's policies, the United States government shutdown, inflationary and broader pricing pressures and other economic and industry volatility. Concerns surrounding the near-term direction of global markets and the potential impact on the United States economy are expected to persist for the near term. While Trustmark's customer base is wholly domestic, international economic conditions affect domestic economic conditions, and thus may have an impact upon Trustmark's financial condition or results of operations.

Employment levels were largely stable and demand for labor was generally muted across Districts and sectors. In most Districts, more employers reported lowering head counts through layoffs and attrition, with contacts citing weaker demand, elevated economic uncertainty and, in some cases, increased investment in AI technologies. Employers that reported hiring generally noted improved labor availability, and some favored hiring temporary and part-time workers over offering full-time employment opportunities. Nevertheless, labor supply in the hospitality, agriculture, construction and manufacturing sectors was reportedly strained in several Districts due to recent changes to immigration policies. Wages grew at a modest to moderate pace and labor cost pressures intensified due to outsized increases in employer-sponsored health insurance expenses.

Employment increased very slightly overall. Hiring remained generally cautious, which many contacts attributed to ongoing economic and policy uncertainty. Labor availability improved for many employers, with further reductions in turnover rates and increased job applications. A growing number of Districts cited labor shortages in the skilled trades. Several Districts also mentioned reduced availability of foreign-born workers, attributed to changes in immigration policy. Employers in a few Districts ramped up investments in automation and AI aimed at reducing the need for additional hiring in certain segments. Wages increased modestly overall, extending recent trends, with a few Districts indicated that higher costs of living continued to put upward pressure on wages. Although reports of layoffs were limited in all industries, they were somewhat more common among manufacturers. Looking ahead, many contacts expected to postpone major hiring and layoff decisions until uncertainty diminished.