News & Insights

Building permits fell 10.8% in March and 7.4% over the year. Permits for single-family homes in March decreased 3.8% and 7.9% over the year. At the same time, permits for buildings with five or more units plummeted 23.5% from February and 5.3% over the year.

In March, housing starts jumped 10.8% from February and the same percentage over the year. Starts for single-family homes climbed 9.7% from February and 8.9% over the year. Meanwhile, starts for buildings with five or more units surged 9.6% over the month and 13.5% over the year.

Housing completions ticked up 0.1% over the month but fell 12.8% over the year. Single-family home completions declined 4.8% from February and 14.5% from March 2025. At the same time, completions for buildings with five or more units increased 10.2% over the month but decreased 9.1% from one year ago.

In February, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index recorded a 0.7% annual gain, down from the 0.8% rise in January. The 10-City Composite increased 1.5%, down from 1.7% the previous month, while the 20-City Composite rose 0.9% year-over-year, down from 1.2% in January. Among the 20 cities, Chicago posted the highest annual gain at 5.0%, followed by New York at 4.7% and Cleveland at 4.2%. Meanwhile, Denver posted the lowest annual return, with prices falling 2.2%.

On a month-over-month basis, the U.S. National Index moved up 0.3% before seasonal adjustment. At the same time, the 10-City and 20-City Composites both stepped up, rising 0.6% and 0.4%, respectively. After seasonal adjustment, the U.S. National Index and 10-City Composite both increased 0.1%, while the 20-City Composite edged down less than 0.1%. The Northeast and Midwest continue to outperform other regions, but price declines across more than half of the major U.S. metropolitan markets signal a housing slowdown beyond just the Sun Belt. Meanwhile, in addition to Denver, Tampa (down 2.1%), Seattle (down 2.0%), Phoenix (down 1.8%), Dallas (down 1.7%), Los Angeles (down 0.8%) and Washington, D.C. (down 0.1%) exhibited declines in February.

Affordability concerns continue to be impacted by elevated interest rates, which show no signs of easing. Those concerns have held back transaction growth and kept increases in U.S. home values below inflation for nine consecutive months. Before seasonal adjustment, 6 of the 20 major metro areas saw price declines in February.

Consumer confidence inched up 0.6 points in April to 92.8. Among its components, the Present Situation Index contracted while the Expectations Index improved as customers’ concerns regarding the present situation worsened and concerns about the future eased.

The Present Situation Index, reflecting current business and labor market conditions, edged down 0.3 points to 123.8. Meanwhile, the Expectations Index, which reflects customers’ short-term outlook for income, business and labor market conditions, increased 1.2 points to 72.2, remaining below the recession signal threshold of 80 since February 2025.

Views of the current labor market situation improved in April, with 27.3% of consumers saying jobs were “plentiful,” down slightly from March (27.4%), while 19.8% said jobs were “hard to get,” also down from March (21.3%). Looking to the future, 16.1% expect more jobs to be available, up from 15.4% the prior month, while 26.9% anticipate fewer jobs, down from 27.8% the previous month.

Consumers’ views of the economy skewed pessimistic in April. In addition, mentions of inflation, oil and gas and war picked up as consumers continue to express concern over the conflict in the Middle East. Consumers’ 12-month inflation expectations edged down but remain elevated after a spike in March, and the proportion of consumers expecting higher interest rates rose to nearly 50.0%. At the same time, the share of consumers who believe that a recession is “very likely” over the next year increased, and the small share thinking the economy is already in a recession ticked up.

Buying plans for cars, with a clear preference for used cars, rose in April, and purchasing plans for homes recovered slightly. Meanwhile, consumers’ plans for buying other big-ticket items declined. At the same time, consumers’ intentions to purchase more services fell for all categories but pet care. Despite declining, restaurants, bars and take-out remained the top planned service spending category in April. Overall, consumers’ views of their current financial situation weakened slightly in April, while views of their future financial situation improved.

In April, Texas factory activity expanded at a faster pace after weakening the prior month. The production index increased from 6.8 to 19.0, climbing well above the series average of 9.6. The new orders index stepped up 3.8 points to 9.9, while the capacity utilization index jumped 12.6 points to 19.8, both above the series averages of 4.7 and 7.5, respectively. Meanwhile, the shipments index soared 13.2 points to 15.0, also climbing above the series average of 7.8. The Eleventh District consists of all of Texas, northern Louisiana and southern New Mexico.

Perceptions of manufacturing business conditions weakened in April, with the general business activity index moving down 2.1 points to -2.3. At the same time, the company outlook index turned positive, improving 6.5 points to 3.0. Moreover, the uncertainty index fell 8.1 points to 17.9 but remained slightly above the series average of 16.9.

Labor market indicators suggested a slight decline in headcounts and a longer workweek in April, with the employment index ticking up 0.1 points to -0.9 and the hours worked index rising 3.1 points to 4.0. Nearly 14.1% reported net hiring, while a larger percentage (15.0%) noted net layoffs.

Price pressures strengthened, while wage pressures weakened in April. The prices paid for raw materials index rose 4.3 points to 37.0. Meanwhile, the prices received for finished goods index jumped 9.2 points to 27.6, both higher than the series averages. The wages and benefits index ticked down 0.4 points to 24.8, also remaining above the series average of 21.0.

The outlook for future manufacturing activity remained positive in April, despite the future production index moving down 1.1 points to 34.6. Moreover, the future company outlook index declined 2.6 points to 15.6, while future general business activity increased 3.5 points to 14.1, as the future general business activity index climbed above the series average.

Manufacturing activity in the Fifth District rose in April after staying the same in March, with the composite manufacturing index increasing from 0 to 3. At the same time, the local business conditions index advanced from -5 to 10 in April. Despite an improvement in the headline index in April, manufacturers are less optimistic about the future, with the outlook for future local business conditions falling from 16 in March to 3 in April. The Fifth District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.

Among its components, shipments remained unchanged and negative at -2 in April, while new orders rose from 4 to 8. The indexes for employment and vendor lead times ticked up in April, moving from -2 to 0 and from 13 to 14, respectively. Meanwhile, the share of firms reporting backlogs stayed the same, increasing from -10 to 0. At the same time, the average growth rate of prices paid accelerated in April, while the average growth rate for prices received slowed from March.

Looking ahead, firms expressed an expectation that both price indexes would increase in the next 12 months, and at a faster pace than forecasted in March. Expectations for future shipments and new orders remained positive but weakened from 26 to 21 and from 30 to 26, respectively. Expectations for backlogs ticked down from 3 to 0. Meanwhile, firms’ expectations about equipment and software spending fell from -2 to -5. In sum, businesses in the Fifth District are less optimistic about future business conditions and remain pessimistic about future investment plans.

The S&P Global Manufacturing PMI was 54.5 in April, up from the March reading of 52.3. New orders grew at the fastest pace in four years in April, but exports declined for the 11th consecutive month as tariffs and the conflict in the Middle East drove up costs and hindered foreign demand. Meanwhile, input and selling prices increased at faster paces as input and output cost inflation both hit 10-month highs. The conflict in the Middle East had a notable impact on new orders in April, with companies purchasing now to avoid price increases and supply shortages before they become more widespread.

Production rose during the month, and despite an uptick in sales, stocks of finished goods grew for the first time in three months. Employment declined for the first time in nine months as higher raw material costs have started influencing hiring decisions. Meanwhile, delivery times continued to lengthen, a result of the conflict in the Middle East causing widespread material shortages.

Expectations that the impact of the conflict in the Middle East will be less than previously forecasted drove business confidence to its highest level since February 2025. Furthermore, firms have a positive outlook for production, partly attributable to the large gains in new orders in April.

As anticipated, the Federal Open Market Committee maintained its interest rate target range at 3.50%–3.75% at its April meeting. On the other hand, one FOMC member—Stephen Miran—dissented from the action, preferring to lower the target range by 25 basis points. In a change to its previous statement, the FOMC noted that inflation remains elevated, in part reflecting the recent increase in global energy prices. Furthermore, three FOMC members—Beth Hammack, Neel Kashkari and Lorie Logan—supported keeping the target range steady but did not support the inclusion of an easing bias in the statement regarding considering “additional adjustments to the target range.” Collectively, there were four dissents to the policy statement out of 12 members, the most since 1992.

In the press conference following the meeting, Federal Reserve Chairman Jerome Powell said that economic activity continues to expand at a solid pace, with job gains staying low while inflation has moved up and remains elevated. Chairman Powell noted that higher oil prices due to events in the Middle East will push up the overall inflation rate in the near term, but the scope and duration of potential effects on the economy remain unclear, as does the future of the conflict itself. He reaffirmed that the FOMC is well positioned to determine the extent and timing of additional adjustments to its policy stance. This press conference was Powell’s last as chairman, but he noted that he planned to remain on the central bank’s board for a period of time to be determined and at least until the resolution of the administration’s legal challenges against the Federal Reserve, which he believes are battering the institution.

The FOMC’s summary of economic projections, which maps out the Federal Reserve’s expectations for where interest rates may be headed in the future, generally is released in conjunction with every other FOMC meeting. Since the March meeting included a release of economic projections, there was not a release in conjunction with the April FOMC meeting. The March summary signaled a mixed stance regarding where monetary policy should go in 2026. Twelve Federal Reserve officials projected additional rate cuts across 2026, while seven anticipated no additional rate cuts this year. Furthermore, a majority of the officials who predicted a rate cut this year anticipated just one 25-basis-point cut across 2026.

In April, the U.S. manufacturing sector expanded for the fourth consecutive month and at the same pace as the prior month, with the ISM Manufacturing® PMI remaining at 52.7% from March. Certain demand indicators, such as the New Orders and Backlog of Orders indexes, stayed in expansion territory, while the New Export Orders Index remained in contraction territory. Meanwhile, the Customers’ Inventories Index continued to contract into “too low” territory and at a faster pace, falling 1.0 percentage point to 39.1. Meanwhile, the Production Index expanded at a slower pace in April, dropping from 55.1% to 53.4%.

The New Orders Index expanded for a fourth consecutive month in April and at a slightly faster pace, ticking up 0.6 percentage points from March to 54.1%. Of the six largest manufacturing sectors, four—machinery, transportation equipment, chemical products and computer and electronic products—reported an increase in new orders. Optimism about near-term demand turned positive, with 1.6 positive comments for every negative comment.

The New Export Orders Index contracted for a second consecutive month in April, dropping 2.0 percentage points to 47.9%. Respondents remained concerned about trade and war frictions, with 1.6 negative comments for every positive comment. Meanwhile, the Imports Index expanded for the third consecutive month but at a slower pace in April, down 2.3 percentage points from March to 50.3%.

The Employment Index contracted for the 31st consecutive month and at a faster pace than the prior month, declining 2.3 percentage points from March to 46.4%. Of the six largest manufacturing sectors, three—transportation equipment, computer and electronic parts and machinery—reported increased employment. For every comment on hiring, 1.7 respondents noted reduced headcounts.

After surging 7.8 percentage points in March, the Prices Index jumped another 6.3 percentage points in April to 84.6%, indicating raw materials prices grew for the 19th straight month and at a much faster pace than the prior month. The index hit its highest reading since April 2022. Of the six largest manufacturing sectors, all reported increased prices. The increase continued to be driven by higher steel and aluminum prices impacting the entire supply chain and the tariffs applied to most imported goods, as well as increases in petroleum-based products as a result of the Middle East conflict. Roughly 70.3% of companies reported paying higher prices, up from 59.4% in March and from 21.0% in January 2025.

Real GDP increased at an annual rate of 2.0% in the first quarter of 2026, up from a 0.5% rise in the fourth quarter but slightly below consensus expectations. The increase in GDP during the first quarter mostly reflected increases in investment, consumer spending on services, exports and government spending, which were partially offset by reductions in consumer spending on goods and an increase in imports. Since, by definition, GDP measures domestic output, imports are subtracted from the final calculation since they are reflected in other parts of the equation, such as inventories and consumption.

Consumer spending grew at an annual rate of 1.6%, down from a 1.9% increase in the fourth quarter, with spending on services (up 2.4%) driving the gain, while spending on goods declined (down 0.1%). Consumer spending on nondurable goods edged down 0.2%, but spending on durable goods stayed the same after ticking up 0.1% in the fourth quarter. The decline in nondurable goods consumer spending was driven by food and beverages and clothing and footwear, with increases in other nondurable goods categories. Meanwhile, for consumer spending on durable goods, increases in motor vehicles and parts, furnishings and other durable goods were offset by drops in spending on recreational goods and vehicles. Within services, spending increases were relatively widespread, with health care being the largest contributor to the gain.

Investment grew 8.7% at an annual rate in the first quarter, after rising 2.3% in the fourth quarter. The improvement was driven by 13.0% and 43.4% surges in intellectual property products and information processing equipment investments, respectively, up from 5.4% and 4.3% in the fourth quarter. Meanwhile, business spending on structures declined 6.7%. Exports jumped 12.9% in the first quarter, with the rise primarily concentrated in goods exports (up 18.1%). At the same time, imports soared 21.4% in the first quarter, with the increase also primarily concentrated in goods (up 25.8%). The jump in federal government spending (up 9.3%) was driven by the rebound from the extended government shutdown in the fourth quarter, with nondefense spending up 20.3%. Meanwhile, state and local government spending increased 1.6% in the first quarter, up slightly from the 1.5% rise in the prior quarter.

NAM: Sen. Young, H.R. 1 restored immediate domestic R&D expensing, ending the amortization requirement that had been in effect since 2022. You have been one of the Senate’s most dedicated champions of R&D competitiveness through the American Innovation and Jobs Act. How did your years of sustained advocacy help deliver this outcome in the final reconciliation package?

Sen. Young: The American Innovation and Jobs Act laid the foundation for a multiyear, bipartisan effort to restore full and immediate expensing. From the outset, our goal was to make clear that strong R&D incentives are essential to maintaining America’s competitive edge. With the support of my Senate Finance Committee colleagues and active industry partners like the NAM, we built a broad coalition that understood the real-world consequences of the amortization treatment. This sustained advocacy was critical to ensuring this policy was included in the final version of the One Big Beautiful Bill Act.

NAM: The amortization requirement that was in effect from 2022 to 2024 was particularly damaging for manufacturers, who conduct 52% of private-sector research. Now that immediate expensing is restored and prior-year costs can be accelerated, what are Indiana manufacturers or other stakeholders telling you about how this relief changes their investment and hiring plans?

Sen. Young: During the three-year span when businesses had to amortize, I heard from countless Hoosier employers, including many in the manufacturing and life sciences industries, about how the R&D tax treatment was forcing incredibly difficult decisions. These included delaying R&D projects, scaling back hiring for key personnel like engineers and scientists and, in some cases, even considering shifting research activity overseas. That kind of uncertainty is especially challenging for industries that rely on long-term investment cycles.

Now that immediate expensing has been restored, and restored on a permanent basis, there is a renewed sense of confidence. Businesses back home have shared with me that they are moving forward with previously delayed investments, expanding their research operations and accelerating plans to grow their workforce. Those are the types of business decisions we should be encouraging in our tax code.

NAM: Restoring R&D expensing is a major step, but the United States still trails competitors like China in the overall generosity of R&D incentives. What is your honest assessment of where America now stands in the global innovation competition, and what further actions—whether through additional tax policy, increased federal R&D investment or streamlined regulatory pathways—should Congress prioritize to ensure the U.S. remains the world’s leading destination for manufacturing innovation?

Sen. Young: As our global competitors, like China, are expanding their R&D incentives, we simply cannot allow our nation and our economy to fall behind. To remain the world’s leading destination for innovation and advanced manufacturing, we need a more comprehensive approach. That includes increasing federal investment in critical research areas, ensuring our regulatory environment supports the commercialization of new technologies and strengthening workforce development and apprenticeship streams so that we can better connect students and workers to high-demand careers in manufacturing and innovation.

My focus going forward is on advancing policies that not only restore our competitiveness but position the United States to lead in rapidly growing industries like advanced manufacturing, artificial intelligence, quantum and biotechnology.

NAM: Thank you, Sen. Young. What can NAM members do to help manufacturers take advantage of the restored R&D deduction and to support continued investment in American manufacturing innovation?

Sen. Young: I would encourage NAM members to continue engaging with policymakers and sharing examples of how R&D incentives are driving investment, hiring and innovation in their communities. Those real-world stories about the advancements companies are making are incredibly important as we consider future policy decisions.

I’d also urge manufacturers to fully utilize the restored deduction and continue investing in their workforce and research capabilities. By doing so, and by staying engaged in the policymaking process, you can help ensure we build on this progress and continue strengthening America’s leadership in manufacturing.