Category Archives: Finance & Economics

The US labor market began 2026 at a surprisingly strong pace, while newly released benchmark revisions show that job growth in 2025 was considerably weaker than previously reported. Nonfarm payrolls increased by 130,000 jobs in January, and the unemployment rate edged down to 4.3%. January’s job gains were concentrated on health care, social assistance, and construction, while federal government and financial activities experienced job losses. …Excluding recession years (2008, 2009, and 2020), 2025 now stands as the weakest year of employment growth since 2003. Wage growth was unchanged in January, with average hourly earnings rising 3.7% year-over-year. This pace is 0.3 percentage points lower than a year ago. Importantly, wage growth has been outpacing inflation for nearly two years, which typically occurs as productivity increases.

The US Bureau of Labor Statistics (BLS) reports that as of December 2025, the year-over-year increase in consumer prices and construction bid prices both stood at 2.7%. While an annual price increase below 3.0% is generally considered manageable, several factors suggest construction material costs are more concerning than they may appear. …The international oil market has been relatively stable, with gasoline prices decreasing by 10.8% in the PPI and diesel fuel costs dropping by 8.2%. Additionally, the weak new homebuilding market has eased pressure on construction materials. Softwood lumber prices declined 8.2%, while plywood and gypsum saw slight gains of 0.6% and 0.5%, respectively. Particle board and oriented strandboard (OSB) prices retreated significantly, falling 28.5%. …Two key PPI sub-indices reveal broader trends in construction material prices. The “inputs to new construction” series rose 3.5% year-over-year, while the “construction materials special index” climbed a steeper 6.2%. These figures indicate that some materials are experiencing sharp price hikes, particularly those affected by tariffs.

Lending standards for most types of residential mortgages were essentially unchanged but overall demand was weaker in the fourth quarter of 2025, according to the recent release of the Senior Loan Officer Opinion Survey (SLOOS). However, for commercial real estate (CRE) loans, lending standards for multifamily were looser, while standards for construction & development were essentially unchanged. Demand for construction & development loans was stronger, while demand for multifamily loans was essentially unchanged for the quarter. After three consecutive 25 basis point cuts to finish 2025, the Federal Reserve decided to maintain its key short-term interest rate (i.e., Federal Funds) unchanged during its first meeting of 2026. …Given the current macroeconomic landscape and a change in leadership at the Fed as Jerome Powell’s term as Chair ends in May, NAHB anticipates that any further rate cuts will occur in the latter half of this year.

The most significant challenge builders faced in 2025 was high interest rates, as reported by 84% of builders in the latest NAHB/Wells Fargo Housing Market Index survey. A smaller, albeit still significant share of 65% expect interest rates to remain a problem in 2026. The next four most serious issues builders faced in 2025 were buyers expecting prices/interest rates to decline (81%), concern about employment/economic situation (65%), the cost/availability of developed lots (63%), and negative media reports making buyers cautious (62%). Builders expect these challenges to persist with limited improvement in 2026. In addition to those top tier challenges, 54% to 61% of builders also reported facing serious problems in 2025 with cost/availability of labor (61%), rising inflation in the US economy (59%) gridlock/uncertainty in Washington (58%), impact/hook-up/inspection and other fees (57%), and local/state environmental regulations and policies (54%). Looking ahead at 2026, fewer builders expect high interest rates (65%) rising inflation in the US economy (46%) to be a significant problem.

Long-term mortgage rates continued to decline in January. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.10% last month, 9 basis points (bps) lower than December. Meanwhile, the 15-year rate declined 4 bps to 5.44%. Compared to a year ago, the 30-year rate is lower by 86 bps. The 15-year rate is also lower by 72 bps. The 10-year Treasury yield, a key benchmark for long-term borrowing, averaged 4.20% in January – an increase of 8 bps from the previous month, but remained considerably lower than last year by 43 bps. While mortgage rates typically move in tandem with the treasury yields, the spread between the two narrowed during the month. Reports that the Trump administration encouraged Fannie Mae and Freddie Mac to expand purchases of mortgage-backed securities (MBS) boosted demand for MBS, pushing mortgage rates lower. However, treasury yields rose sharply in the final week of January from global and fiscal pressures. 

When it comes to housing affordability, the logic of “build build build” is straightforward enough: Housing is too expensive. If there were more of it, prices would fall. …Homebuilders are even pushing a plan for a million new affordable houses. …Unfortunately, it’s not that simple. The problem of housing affordability is much bigger than insufficient supply; it’s a mismatch with demand. And that demand is driven by income inequality that has seen soaring income growth at the top and tepid growth (or even stagnation) in the middle. In other words: The way to improve housing affordability is to reduce income inequality. …What’s needed are policies that increase income for households at the bottom and middle. Rather than boosting the housing supply in the hope that they benefit, the answer is to fix the labor market to make sure that they do. 

The United States is one of the world’s largest timberland investment markets, with returns driven primarily by land values rather than timber prices, according to Domain Timber Advisors’ timberland market analysis. Timberland values remain strong at the end of 2025, supported by continued appreciation in land values, while timber prices remain relatively flat. …During 2025, Domain underwrites 14 institutional bid events, 54 public listings, and 38 off-market or non-public offerings. By the end of the fourth quarter, the acquisition pipeline consists of 46 deals covering more than 500 thousand acres, providing visibility into pricing dynamics, regional demand shifts, and emerging non-timber value drivers. …Looking ahead, Domain states that renewable energy development and technology infrastructure are expected to expand non-timber revenue opportunities in 2026 and beyond. Alternative timber product markets, including molded fiber products and biomass-to-electricity, are expected to offset part of the pulpwood demand lost due to mill closures and production quotas.

CAMBRIDGE, Massachusetts – Annual spending on improvements and maintenance to owner-occupied homes is expected to gradually slow through 2026, according to the latest Leading Indicator of Remodeling Activity (LIRA). The LIRA projects that year-over-year growth in home renovation and repair spending will be 2.9% early this year before easing to 1.6% growth by the end of the year. “Single-family home sales and permitting activity have picked up modestly from very low levels, which should support a nominal increase in remodeling activity this year,” says Rachel Bogardus Drew. “Even with some deceleration later in the year, overall annual homeowner spending on improvements is expected to reach $522 billion by the end of 2026.” “Remodeling trends closely track the health of the broader housing market,” says Chris Herbert, Managing Director of the Center.

MEMPHIS, Tennessee – International Paper announced results for the full-year and fourth quarter ended December 31, 2025. The Company separately announced its plan to create two independent, publicly traded packaging solutions companies in North America and EMEA. Full-year highlights include: Net sales of $23.63 billion; and Adjusted EBITDA (non-GAAP) from continuing operations of $2.98 billion. Q4, 2025 highlights include: Net sales of $6.01 billion, up from $3.9B in Q4 2024 prior to the DS Smith acquisition; and Loss from continuing operations of $2.36 billion, compared with a $88M net profit from continuing operations in Q4 2024. …The cuts in the Europe, Middle East and Africa business are part of IP’s ongoing optimization plan.

The Fed paused its easing cycle at the conclusion of the January meeting of the Federal Open Market Committee, the central bank’s monetary policy body. The Fed held the short-term federal funds rate at a top rate of 3.75%, the level set in December. This marked the first policy pause since the Fed resumed easing in September of last year. The Fed characterized the economy as being in solid health. The January statement noted: Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated. …There was little forward guidance in today’s statement. …NAHB is forecasting two additional rate cuts for 2026, based on expectation of modest easing of inflation and a cooled labor market.

The Conference Board Consumer Confidence Index® fell by 9.7 points in January to 84.5 (1985=100), from an upwardly revised 94.2 in December. A 5.1-point upward revision to December’s reading of the Index resulted in a slight increase last month, reversing the initially reported decline. However, January’s preliminary results showed confidence resumed declining after a one-month uptick. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—dropped by 9.9 points to 113.7 in January. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell by 9.5 points to 65.1, well below the threshold of 80 that usually signals a recession ahead. The cutoff for preliminary results was January 16, 2026. …Dana M Peterson, Chief Economist, said “All five components of the Index deteriorated, driving the overall Index to its lowest level since May 2014 (82.2)—surpassing its COVID-19 pandemic depths.” 

Jerome Powell

WASHINGTON — Federal Reserve officials are expected to keep their short-term interest rate unchanged Wednesday after three cuts last year, ignoring huge pressure for lower borrowing costs from the White House in favor of waiting to see how the economy evolves. The central bank’s rate reductions last year were intended to shore up the economy and prevent a sharper deterioration in the job market, after hiring slowed to a near-crawl in the wake of President Donald Trump’s sweeping tariffs last April. Yet there are signs that unemployment has stabilized and the economy could be picking up. At the same time, inflation remains stubbornly above the Fed’s 2% target. All those trends argue for keeping rates where they are. A key issue that Chair Jerome Powell will likely address at his news conference Wednesday is how long the Fed will remain on hold. The rate-setting committee remains split.

Consumer sentiment lifted about 3.5 index points this month, with minor gains seen across all index components. While the overall improvement was small, it was broad based, seen across the income distribution, educational attainment, older and younger consumers, and Republicans and Democrats alike. However, national sentiment remains more than 20% below a year ago, as consumers continue to report pressures on their purchasing power stemming from high prices and the prospect of weakening labor markets. …Year-ahead inflation expectations fell back to 4.0% this month. This is the lowest reading since January 2025 but remains well above that month’s 3.3%. Long-run inflation expectations inched up from 3.2% last month to 3.3% this month.