The US economy on October 26, 2026

Business: Regional manufacturing strengthens; investment momentum remains elevated

Business remained stable. Dallas Fed manufacturing production rose to 29.5 from 16.1, while Empire State manufacturing general business conditions increased to 25.5 from 7.6. Both are watch signals and positive readings indicate expansion; their z-scores are 1.4 and 1.29, respectively.

Core capital goods orders (nondefense ex aircraft) remained strong at a three-month annualised rate of 16.483, down from 18.109, consistent with solid business investment plans but some easing. Durable goods orders turned to -0.071 month on month from 0.87; Philadelphia Fed manufacturing activity also fell to 20.9 from 37.8 but remained positive.

Energy: Oil remains an inflation alert despite a modest daily pullback

Brent crude oil eased to 115.22 from 118.82, and WTI crude oil to 107.89 from 110.01, but both remain alerts against their ten-year windows. Their elevated levels still point to global inflation pressure and a consumer tax. A separate revision signal records WTI revised from 98.73 to 94.99.

Regular gasoline retail price slipped to 4.284 from 4.331, yet remains on watch and above 3.061 a year ago, keeping the consumer-squeeze signal relevant. Commercial crude oil inventories fell to 695200.0 from 698560.0; the packet flags the series because builds read as weak demand.

Global price of copper, measured year-on-year, eased to 44.806 from 48.175 but remains on watch, consistent with a still-positive global-growth read. The pillar remains rising, while its score edged down to 0.44 from 0.5.

Financial conditions: Bank credit growth firmed; financial conditions remain stable

New Total bank credit data show year-on-year growth at 6.406, up from 6.211. Because down means credit contraction, the pickup points to firmer bank credit rather than contraction.

The pillar remains stable, with Chicago Fed National Financial Conditions Index still below zero, though it moved from -0.502 to -0.496, a slight tightening. NFCI leverage sub-index rose from 0.207 to 0.215, indicating more leverage building; St. Louis Fed financial stress index also rose from -0.721 to -0.633 but remains below zero. Banks tightening C&I lending standards (large firms) fell from 8.1 to 0.0, indicating less tightening.

Government finances: Fiscal pillar stable; debt and interest outlays remain on watch

Fiscal is still stable, but Federal interest outlays and Total public debt outstanding (Debt to the Penny) remain on watch. Interest outlays rose to 1279.734 from 1252.858, while debt rose to 40444342709389.15 from 40413639012305.97. Both readings point to ongoing fiscal strain and supply pressure.

Treasury General Account closing balance increased to 961759.0 from 945153.0; a rising balance is not the liquidity-adding drawdown signal. Withheld income and employment taxes (rolling), measured as a rolling twenty-day total versus a year earlier, slowed to 2.327 from 9.343, a sign of earnings weakness.

Federal surplus or deficit (monthly) moved to -26900.347 from -166778.812, so the deficit narrowed; the fiscal pillar state remains stable.

Growth: Growth stable as activity and spending readings firm

New Chicago Fed National Activity Index data rose to 0.07 from -0.08, while the Growth pillar remains stable. Industrial production’s year-on-year growth increased to 2.245% from 1.615%, and retail sales’ year-on-year growth rose to 6.288% from 5.556%.

Real GDP growth, measured at a quarter-on-quarter annualised rate, eased to 2.22% from 2.492%. Real personal consumption expenditures’ year-on-year growth increased to 2.574% from 2.251%. The NY Fed Staff Nowcast was unchanged at 2.67%. The indicators remain calm.

Households: Consumer expectations remain the clearest soft spot

The Consumer pillar remains weaker, unchanged from its prior state. NY Fed Survey of Consumer Expectations, households expecting to be better off in a year fell to 24.068 from 25.865 and is on watch, below its 10-year mean of 33.114. Lower expectations point to less confidence in household finances.

Real disposable personal income growth slowed to 1.301% year-on-year from 1.494%, while the Personal saving rate fell to 4.1% from 4.6%; both moves point to less consumer cushion. Credit card delinquency rate eased to 2.85% from 2.91%, a modest offset as lower delinquency signals less stress. No new data arrived.

Housing: Housing steady; mortgage costs and starts revisions stand out

The 30-year fixed mortgage rate eased to 7.32 from 7.4, but remains a watch signal at a 1.54 z-score; higher rates still worsen affordability. Housing starts were revised up from 1309.0 to 1369.0, while the latest reading fell to 1221.0 from 1288.0, a weaker construction signal.

FHFA purchase-only house price index (SA) rose to 2.572 year-on-year from 2.349, but remained below 2.625 a year ago and registered a -1.01 z-score. Housing starts data are due on 2026-10-27. The Housing pillar remains stable.

Interest rates: Higher Treasury yields keep monetary conditions tight

The Rates & Monetary pillar remains tighter, though its score eased from 0.51 to 0.46. The 10-year Treasury yield rose from 4.96 to 5.0, and the 2-year Treasury yield from 4.65 to 4.69; both are at watch. Higher yields mean tighter borrowing conditions, while the 2-year move reflects more hikes priced.

Real yields also edged higher: the 10-year TIPS real yield rose from 2.64 to 2.66 and the 5-year TIPS real yield from 2.33 to 2.34, both at watch and pointing to tighter real conditions. The Effective federal funds rate was unchanged at 3.88, leaving the policy rate steady as market yields moved up.

Jobs: Labor stays stronger, with participation and quits on watch

Labor remains stronger, but two indicators are on watch. Labor force participation rate rose to 61.8 from 61.6, a stronger-labor direction, yet remains below its 10-year mean of 62.418. Its watch reading flags participation as a softer spot.

JOLTS quits rate was unchanged at 1.9, below its 10-year mean of 2.276. The watch signal points to weaker worker confidence; other labor readings are calm, and no new data arrived.

Leading indicators: Leading & Composite score edges higher as activity readings firm

The pillar score rose to 0.53 from 0.47, while its state remained stronger. Newly reported CFNAI 3-month moving average increased to 0.03 from 0.01, and the Weekly Economic Index rose to 3.33 from 3.02; both moves point to firmer activity.

ADS business conditions index edged down to 0.146 from 0.149 but remained above zero. The NY Fed yield-curve recession probability eased to 26.51% from 27.42%, below its packet threshold for an elevated reading. Overall, the indicators remain calm.

Prices: Import prices accelerate while core inflation edges higher

Import price index rose to 8.097 year-on-year from 6.738, the only watch signal in Inflation, at 1.33 standard deviations against its ten-year window. The increase points to stronger imported inflation pressure. CPI all items also picked up, to 3.717 year-on-year from 3.353.

Core CPI rose to 2.566 year-on-year from 2.446, and Core PCE price index edged up to 3.008 from 2.983. PPI final demand climbed to 6.346 year-on-year from 5.582, adding to the pipeline pressure picture. 10-year breakeven inflation was 2.34, up from 2.32; the pillar state remains stable.

Trade: Trade deficit widened as import growth accelerated

Trade balance goods and services deteriorated to -105572.0 from -92826.0, an alert at a z-score of -2.59; more negative readings drag on GDP. The Trade pillar remains weaker, unchanged from the prior state.

Imports of goods and services accelerated to 22.176 year-on-year from 12.336, a watch signal and a sign of stronger domestic demand. Exports of goods and services also picked up, to 10.691 year-on-year from 9.343, remaining calm. Current account balance became more negative, to -246023.0 from -212597.0, indicating a larger financing need.