Economic Updates for Jan 2026

Atlanta FED GDPNow estimate is starting off at 3% for Q4 2025.

The LEI has been bouncing over the recession line a few times.

After a steep decline in early part of 2025, USD has been hovering around the 98 mark for the rest of the year.

Commodity prices have been range bound for the last few years. Oil price remains contained against any supply/demand pressures.

Gold has been marching higher steadily inspite of sharp intraday corrections a couple of times in Q4 2025.

BitCoin lost some elevation in the early part of Q4 2025 and is yet to recover. It is seen diverging from Gold as well as risk assets such as mega tech stocks.

After a month of not reporting CPI numbers due to government shutdown, the latest core CPI came at 2.6% annualized. While this looks to be a promising number, the market participants are less confident inflation will stay low.

PPI increased by 0.1% for September 2025.

This is the headline inflation number that everyone talks about. For Nov 2025 we are at 2.7%.

CPI Components Last Month Source BLS.gov Consumer Price Index

CPI Components This Month
The contributors to the inflation have been mainly energy. We are missing the previous month data due to government shutdown. (Please note that the y-axis in both the graphs have different scales).

This survey data shows that inflation one year from now is expected to be 4.5%. The tariff related spike has subsided and market participants are expecting the inflation to be higher next year, but not as high as originally estimated.

University of Michigan's consumer sentiment has continuously declined every month of this year except for a rebound in December. For December, the reading is 52.9.

The AAII sentiment is tilted towards bullishness.

Manufacturing PMI has been contracting in 2025. The latest reading for November 2025 is 48.2.

ISM non-manufacturing number jumped back up from a brief dip below 50. The reading for November 2025 is 52.7.

Industrial Production has remained positive through the last year and is showing an uptick in activity.

Retail Sales is barely positive for October 2025.

Non-farm payrolls took a cold bath in October when a total loss in employement of 104k was reported. For November, we are back positive at 64k. The labor condition looks to be weak but tolerable. The market participants are keenly watching how this number shapes up in 2026.

Total Vehicle sales dipped significantly, perhaps the lull after a pull forward in demand due to expectations of tariffs.

Used car prices have seen a moderate increase in November 2025 after a dip down.

New home sales plunged recently as the Fed rate cuts have not impacted the mortgage rates.

The mortgage rates have remained stubbornly higher inline with the 10-year Treasuries.

The unemployment rate has remained low but creeping higher. This indicator is a lagging indicator. We do expect to see this number jump up if recession becomes imminent. This month, it crept up to 4.4%.

This chart will be the first indicator of a telltale sign that unemployment is increasing. As you see the continuing jobless claims number rise, it implies the people who lost their jobs are not going back to labor force fast enough and the unemployment rate is starting to creep higher. Over the last couple of weeks, it has remained roughly flat.

The yield curve is staying normal - 10 year constant maturity minus 2 year constant maturity is about 0.72%.

Yield curve - Then

Yield curve - Now
The FED rate cut is evident on the short end of the curve leaving the long end pretty much unchanged.

For the year (2025), Communications and Utilities sector has led the markets with technology trailing behind. The consumer staples and discretionary were the laggards with weak consumer demand throughout 2025.

If the economy were to enter a recession, it is likely that some of the companies will struggle to keep up with their debt payments causing their credit spread to widen.

The spread is 2.81% currently.

A spike in put / call ratio indicates that investors are very apprehensive about a sudden fall in the equity markets. We are seeing a spike develop as we get closer to the government shutdown in late Jan 2026.

The current earnings forecast by equity analysts estimate the earnings potential for S&P 500 companies to be around $282 which translates to a price to earnings ratio of 21.7 at the current S&P 500 price level. This is above the 5 year and the 10 year averages.

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