US Economy 2026: Inflation, Labor Cooling, and Policy Impacts

Key Quotes

"what was the biggest one for you anna yeah i mean as you mentioned several times tariffs i think trade policy changes are most obvious and their effect on consumers their effect on companies you know we saw a huge jump in business and consumer spending in the spring ahead of the tariffs going into effect and now we're at a point where a lot of that inventory that was bought up in the spring is starting to wane and we could end up seeing prices rise soon for all kinds of consumer goods"

Anna Helhoski highlights the significant impact of trade policy changes, specifically tariffs, on both consumers and businesses. She notes that increased spending occurred before tariffs were implemented, and now, as that pre-tariff inventory diminishes, consumers may face rising prices for various goods.

"well if you frame it by something that really changed in the year i mean again there were multiple things but it really felt like economic policy whiplash throughout the year the one thing that stood out as far as change goes is when the fed resumed cuts in september so they held rates steady throughout the first half of the year they were looking at the new administration coming in the new potential policies and the impacts of those policies and they thought holding steady was the way to go until september that change when they decided to cut again really told me that they saw the risks to the labor market as rising relative to the risks to inflation and that was significant"

Elizabeth Renter points out that the Federal Reserve's decision to resume interest rate cuts in September marked a significant shift in economic policy. Renter explains that this change indicated the Fed's growing concern about the labor market's risks compared to inflation risks, especially after a period of holding rates steady to observe new policies.

"so currently the signals are that both of these factors are at play in the cooling of the labor market but i look forward in the months ahead to getting a little more clarity on which one is the driving force now turning to prices did inflation behave the way that you expected it in 2025 not really there were a couple of surprises but they weren't really dramatic just a few things that didn't go the way i anticipated they would"

Elizabeth Renter discusses the cooling labor market, noting that both supply and demand issues appear to be contributing factors. Renter expresses anticipation for greater clarity on which factor is the primary driver and mentions that inflation in 2025 did not entirely meet her expectations, with some unexpected developments.

"so with the cuts that we saw in 2025 mortgage markets tended to price in those cuts before they happened and of course it's not always predictable but that's the pattern that we see more often than not we talk a lot about the housing market but i think it's more accurate to say housing markets because they can vary from one city or state or even county to the next"

Abby Badach Doyle explains that mortgage markets often react to anticipated Federal Reserve rate cuts before they actually occur. Doyle emphasizes that while the Fed does not directly set mortgage rates, its actions influence them, and this pattern of markets pricing in cuts in advance is frequently observed.

"my best advice is if you are looking for a house that's why it's important to team up with a buyer's agent an experienced buyer's agent who knows the local market in your area and can give you advice specific to where you live"

Abby Badach Doyle advises that working with an experienced local buyer's agent is crucial for anyone searching for a house. Doyle highlights that these agents possess specific knowledge of the local market, enabling them to provide tailored advice relevant to a buyer's particular location.

"well i want to stress that you don't need to buy a house to be an adult right like and some areas especially higher cost of living areas renting really might make more sense as a longer term choice so shout out to another nerd wallet calculator our rent versus buy calculator it can really kind of help you suss out the financials there"

Abby Badach Doyle reassures listeners that homeownership is not a prerequisite for adulthood and suggests that renting may be a more sensible long-term decision in certain high-cost areas. Doyle recommends using NerdWallet's rent versus buy calculator to help assess the financial implications of each option.