Economic Data and Growth

In November, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index recorded a 1.4% annual gain, consistent with the gain in October. The 10-City Composite increased 2.0%, up from 1.9% the previous month, while the 20-City Composite rose 1.4% year-over-year, up from 1.3%. Among the 20 cities, Chicago posted the highest annual gain at 5.7%, followed by New York at 5.0% and Cleveland at 3.4%. Tampa again posted the lowest annual return, with prices falling 3.9%.

On a month-over-month basis, the U.S. National Index declined 0.1% before seasonal adjustment. At the same time, the 10-City Composite inched up 0.1%, while the 20-City Composite edged down less than 0.1%. After seasonal adjustment, the U.S. National Index rose 0.4%, while the 10-City and 20-City Composites both grew 0.5%.

The combination of high financing costs and prices continue to cap growth. Before seasonal adjustment, 15 of the 20 major metro areas saw price declines in November. The Northeast and Midwest continue to outperform other regions as overall conditions cool. Meanwhile, in addition to Tampa, the Sun Belt and Western markets continue declining, including Phoenix (down 1.4%), Dallas (down 1.4%) and Miami (down 1.0%).

Any short-term momentum from last year has slowed across regions. Home price gains continue to trail inflation, weakening home values over the past year. The new equilibrium of minimal price growth and elevated costs is leaving home values essentially flat in real terms.

Consumer confidence plummeted 9.7 points in January to 84.5, its lowest level since 2014. Among its components, the Present Situation Index and Expectations Index both declined as consumers’ concerns regarding the present situation and expectations for the future worsened.

The Present Situation Index, reflecting current business and labor market conditions, fell 9.9 points to 113.7. Meanwhile, the Expectations Index, which reflects consumers’ short-term outlook for income, business and labor market conditions, decreased 9.5 points to 65.1, remaining below the recession signal threshold of 80 since February 2025.

Views of the current labor market situation weakened, with 23.9% of consumers saying jobs were “plentiful,” down from December (27.5%), while 20.8% said jobs were “hard to get,” up from December (19.1%). Looking to the future, 28.5% expect fewer available jobs in the next six months, up from 26.0% the prior month, while 13.9% anticipate more jobs to be available, down from 17.4% the previous month.

Mentions of high prices and inflation, tariffs and trade, politics and the labor market continued to top the list of topics influencing consumers’ views of the economy. At the same time, mentions of health care and insurance and war edged higher in January. Consumers’ 12-month inflation expectations increased, and the proportion of consumers expecting interest rates to rise dipped in January. At the same time, the share of consumers who believe a recession is “very likely” over the next year ticked up, and the small share thinking the economy is already in a recession rose.

Buying plans for cars overall were flat in January, as purchasing plans for homes fell. Consumers’ plans for buying big-ticket items declined in January, with purchasing plans for household appliances and electronics decreasing in all categories except smartphones. Consumers’ intentions to purchase more services also dropped; however, restaurants, bars and take-out remain the top planned service spending category and continued to rise. Overall, consumers’ views of their current and future financial situation weakened in January.

The Producer Price Index for final demand (also known as wholesale prices) rose 0.5% over the month in December, after prices ticked up 0.2% in November. Over the year, producer prices moved up 3.0% in December, unchanged from November. Meanwhile, prices for final demand excluding foods, energy and trade services increased 0.4% over the month in December after rising 0.2% in November. Prices for these goods advanced 3.5% from December 2024.

Within final demand, prices for services jumped 0.7% in December after staying the same in November. Meanwhile, prices for goods stayed the same in December, after rising 0.8% in November. Within the final demand services index, margins for machinery and vehicle wholesaling moved up 4.5%, accounting for more than 40% of the December increase. Within the final demand goods index, prices for nonferrous metals climbed 4.5%, while prices for diesel fuel fell 14.6%.

Processed goods for intermediate demand inched down 0.1% in December, following a 0.5% increase in November. The decrease was driven by a 2.4% decline in the index for processed energy goods, in particular the drop in prices for diesel fuel. On the other hand, the index for processed materials less foods and energy advanced 0.7%. Over the year, the index rose 3.4% after a 0.1% increase in December 2024.

Meanwhile, prices for unprocessed goods for intermediate demand grew 2.3% in December, the largest increase since January 2025, after moving up 0.5% in November. The gain was led by a 34.8% jump in the index for natural gas. At the same time, prices for slaughter hogs declined 10.1%. Over the year, prices for unprocessed goods for intermediate demand decreased 0.3% after moving up the same amount in November.

Manufacturing activity in the Fifth District contracted in January, but at a slightly slower pace than the previous month, with the composite manufacturing index inching up from -7 to -6. At the same time, the local business conditions index improved from -9 in December to -8 in January. Despite current weakness, manufacturers are more optimistic about the future, with the outlook for future local business conditions rising from 16 in December to 19 in January. The Fifth District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.

Among its components, shipments remained negative but contracted at a slower pace, increasing from -11 to -5. New orders improved slightly, ticking up from -8 to -6 in January. Employment worsened, falling from -1 to -6, and the vendor lead time index declined from 9 to 0. Meanwhile, the share of firms reporting backlogs worsened, decreasing from -7 to -13. The average growth rate of prices paid quickened, while average growth of prices received slowed in January.

Looking ahead, firms expect both price indexes to increase in the next 12 months, with both rising at a slightly faster pace than forecasted in December. Expectations for future shipments climbed from 28 to 34, while new orders increased from 27 to 36. Expectations for backlogs inched down from 5 to 4. Meanwhile, firms’ expectations about equipment and software spending turned negative, declining from 0 to -3. At the same time, expectations for capital expenditures improved but remained negative, increasing from -6 to -4. In sum, businesses in the Fifth District remain optimistic about future business conditions but pessimistic about future investment plans.

In January, Texas factory activity expanded notably after contracting the prior month. The production index increased from -3.0 to 11.2, moving above the series average of 9.6. The new orders and capacity utilization indexes also turned positive, rising 18.4 points to 11.8 and 11.7 points to 7.1, respectively. Meanwhile, shipments jumped 22.5 points to 12.0. The Eleventh District consists of all of Texas, northern Louisiana and southern New Mexico.

Consistent with the growth seen across indexes in January, perceptions of manufacturing business conditions strengthened, with the general business activity index increasing 10.1 points to -1.2. At the same time, the company outlook index rose 15.2 points to 2.9. On the other hand, the uncertainty index moved up 4.8 points from 0.0, remaining below the series average of 16.9.

Labor market indicators suggest strong growth in headcounts but almost no change in the workweek in January, with the employment index rising 9.6 points to 8.2 and the hours worked index stepping up 8.5 points to 0.7. Nearly 21.5% of firms reported net hiring, while a smaller percentage (13.3%) noted net layoffs.

Price pressures accelerated while wage pressures weakened in January. The prices paid for raw materials index inched up 1.9 points to 37.1. Meanwhile, the prices received for finished goods index jumped 9.7 points to 18.5, more than double the series average. The wage and benefits index decreased 4.3 points to 17.4, staying below the series average of 20.9.

The outlook for future manufacturing strengthened in January, despite the future production index declining 3.7 points to 29.2. Moreover, the future general business activity index and future company outlook index both moved up, increasing to 16.6 and 23.2, respectively.

New orders for manufactured goods increased 2.7% in November, following a 1.2% decline in October. Meanwhile, new orders for manufactured goods grew 3.4% over the year. When excluding transportation, new orders inched up 0.2% over the month and 0.7% year-over-year in November. Orders for durable goods jumped 5.3%, following a 2.1% decrease in October. Year to date, durable goods orders rose 7.3%. Nondurable goods orders stayed the same in November after declining 0.3% in October. Nondurable goods orders edged down 0.3% over the year.

New orders for nondefense aircraft and parts led the increase in durable goods orders, surging 97.6%, following October’s 17.9% drop. In November, the largest monthly decrease occurred in defense search and navigation equipment, which fell 9.7% after increasing 2.5% the prior month. The largest over-the-year changes occurred in nondefense aircraft and parts (up 111.8%) and mining, oil field and gas field machinery (down 6.8%).

Factory shipments declined 0.1% in November, after ticking up 0.1% in October. Shipments over the year rose 1.5%. Shipments excluding transportation increased 0.2% in November, following a 0.1% decrease the previous month. Shipments for durable goods dropped 0.3% in November, following a 0.5% rise in October, and are up 3.3% year to date. Meanwhile, nondurable goods shipments stayed the same after moving down 0.3% the prior month, and are down the same amount year to date.

Unfilled orders for all manufacturing industries increased 1.4% in November, after inching up 0.2% in October. Unfilled orders over the year jumped 9.4%. Inventories rose 1.1% year-over-year. The inventories-to-shipments ratio remained unchanged at 1.56 in November. The unfilled orders-to-shipments ratio for durable goods moved up to 7.04 in November from 6.93 in October.

Manufacturing activity stayed the same in the Tenth District in January, with the month-over-month composite index remaining unchanged at 0 from December. Meanwhile, expectations for future activity stayed positive but declined 3 points to 7. The month-over-month activity remaining constant was due to an increase in durable manufacturing offsetting a decline in nondurable manufacturing. At the same time, the new orders index inched up, while shipments turned negative in January. New orders for exports decreased at a slightly faster pace than the prior month. The Tenth Federal Reserve District encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico.

The production index remained negative but inched up from -3 to -2, while the new orders index moved up from -2 to 0, indicating new orders were constant over the month after declining for two consecutive months. The employment index rose in January from -4 to 0, while the average employee workweek index ticked up from 3 to 4. The backlog of orders fell further into negative territory, dropping from -5 to -11. The pace of growth for prices received weakened, while growth for prices paid accelerated over the month, with raw materials prices increasing 3 points to 44, and prices received falling from 24 to 19. Over the year, the indexes for prices received and paid both decreased, moving down from 54 and 67, respectively.

In January, survey respondents were asked special questions about changes in labor demand and factors negatively affecting business. Over half of the firms (57%) reported little to no changes in labor demand over the past year, while 14% saw reduced labor demand and 17% experienced increased demand. When asked about business concerns, more than one-third (39%) noted concerns about domestic demand for goods and services, 24% were concerned about geopolitical uncertainty and 21% cited worries about worker availability.

The NFIB Small Business Optimism Index inched up 0.5 points to 99.5 in December, remaining slightly above the 52-year average of 98. December’s increase was due primarily to the rise in those expecting better business conditions. Of the 10 components included in the index, two increased, three decreased and five stayed the same. Meanwhile, the Uncertainty Index dropped 7 points to 84, the lowest reading since June 2024 but still well above the 51-year average (68) and slightly above the average since 2016 (80).

Taxes were cited as the top concern for small business owners, with 20% reporting them as the most important problem, up 6 points from November. The share of business owners reporting labor quality as the top problem fell 2 points from November to 19%, with 33% struggling to fill open jobs and 53% reporting hiring or trying to hire in December. Meanwhile, inflation fell to third in the list of concerns, with 12% reporting it as a top problem, down 3 points from November, with a net 30% raising prices.

A net 31% of small business owners reported raising compensation, up 5 points in December after remaining unchanged in November. Meanwhile, 24% of business owners plan to raise compensation in the next three months, unchanged from November. Pressure on profitability weakened in December, with positive profit trends rising 3 points from November to a net negative 20%. Among owners reporting lower profits, 41% blamed weaker sales, 13% cited increased material costs, 12% mentioned usual seasonal changes, 9% reported price changes from their products or services and 7% noted labor costs. Meanwhile, 5% reported their last loan was harder to get than previous attempts, up 1 point from November, and a net negative 3% of owners cited paying a higher interest rate on their most recent loan, down 5 points from the prior month.

The outlook for general business conditions rose 9 points to 24%, the first increase since July. Despite the improvement in December, expectations for better business conditions have fallen 23 points since the start of 2025. At the same time, 13% reported that it is a good time to expand their business, unchanged for the second consecutive month and a rather weak reading compared to times of economic expansion. Overall, despite consumer sentiment remaining low, small business owners anticipate economic conditions to remain broadly favorable in 2026, with cost pressures moderating and other challenges easing.

U.S. import prices rose 0.4% from September to November, while increasing 0.1% over the year in November. Meanwhile, U.S. export prices stepped up 0.5% from September to November, while growing 3.3% over the year in November. Since the Bureau of Labor Statistics was unable to collect survey data in October due to a lapse in appropriations, indexes for that month were missing.

In November, U.S. import prices for manufacturing rose 0.2% over the year, as a surge in metals manufacturing prices offset declines across other sectors of the industry. Primary metal manufacturing experienced the most significant over-the-year U.S. import price increase in November, jumping 17.4%. On the other hand, the greatest yearly decrease in U.S. import prices occurred in beverage and tobacco product manufacturing, which fell 14.7% from November 2024. At the same time, U.S. export prices for manufacturing grew 4.0% over the year, with primary metal manufacturing exhibiting the largest rise (32.0%). Meanwhile, U.S. import prices for nonmanufacturing decreased 3.8% from November 2024, while U.S. export prices for nonmanufacturing edged down 0.6% over the year.

Fuel import prices decreased 2.5% from September to November. Over the past year, fuel import prices have dropped 6.6%, the largest over-the-year decline since August. Import petroleum prices declined 8.4% year-over-year in November, while natural gas prices surged 51.4% over that period. Nonfuel import prices ticked up 0.6% from September to November and 0.7% on an over-the-year basis. Higher prices for nonfuel industrial supplies and materials and for capital goods more than offset lower prices for foods, feeds and beverages; automotive vehicles; and consumer goods.

Agriculture export prices rose 1.3% from September to November and 2.6% over the past 12 months, driven by higher prices for vegetables, nuts and fruit. Meanwhile, nonagricultural export prices grew 0.4% from September to November and 3.3% over the year. Higher prices for consumer goods, capital goods and nonagricultural industrial supplies and materials drove the 12-month increase.

Manufacturing activity in New York state increased in January, with the headline business conditions index climbing 11.4 points to 7.7. The new orders index turned positive, rising 7.6 points to 6.6, while the shipments index jumped 21.3 points to 16.3, its highest level in over a year. Unfilled orders improved from -14.9 to -8.2, while inventories slipped 6.1 points to -2.1, indicating business inventories have started to decline. Delivery times lengthened, and supply availability improved but remained negative, increasing 2.8 points to -4.1.

Employment fell in January, with the index for the number of employees plunging 16.5 points to -9.0. Meanwhile, the average employee workweek declined to -5.4 from 2.5, signaling a decrease in hours worked from December. The prices paid index stepped down 1.4 points to 42.8, while the prices received index dropped 11.0 points to 14.4, a reflection of a slower pace of increase in both prices received and prices paid.

In January, firms’ optimism regarding the future declined slightly but remained high. The future business activity index edged down 3.2 points to 30.3. In the next six months, new orders are expected to rise but at a slightly slower pace compared to the prior month at 33.3. The future employment index rose 7.1 points to 14.9, suggesting an anticipated faster pace of employment growth over the next six months. Meanwhile, input and selling price expectations are forecasted to increase at a slower pace, falling from 55.4 to 52.6 and from 41.6 to 36.5, respectively. Furthermore, capital spending plans strengthened from December, up from 6.9 to 10.3.