“Do More of What Works & Less of What Does Not”

1. US Consumer Delinquencies Jump to Highest in Almost a Decade — Delinquency rates on loans ranging from mortgages to credit cards rose to 4.8% of all outstanding US household debt in the fourth quarter, the highest level since 2017, driven by higher defaults among low-income and young borrowers. While the overall share of loans in some stage of default is near pre-pandemic averages, the rise in delinquencies among the lowest earners adds to evidence of an increasingly bifurcated economy, data from the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit released showed. The rise in defaults was driven by delinquencies in mortgage payments, and New York Fed researchers found that they were particularly high in lower income zip codes. Student-loan delinquencies, which have surged following a pause in payment requirements during the pandemic, also contributed to the rise in defaults, the researchers said.
2. December Retail Sales Fell Short. Worries About the Economy Curbed Holiday Spending — Retail sales were virtually unchanged in December from November, according to data released Tuesday by the Census Bureau. Economists polled by FactSet expected a 0.4% increase. While that would have marked a slight deceleration from November’s 0.6% rise, it would have indicated that spending was healthy throughout the holiday season. The biggest drops came among retailers of miscellaneous goods and furniture stores, both with declines of 0.9% in December from November. Sales fell 0.7% and 0.4% at clothing stores and electronic stores, respectively. Car dealers, general merchandise stores, health and personal care stores, and restaurants also saw declines from November.
3. Fed’s Path to More Rate Cuts Challenged by Jobs Surprise — Worries about rising unemployment that prompted three rate cuts at the end of 2025, before a pause in January, were likely eased by numbers out Wednesday showing 130,000 jobs were added last month, and unemployment fell to 4.3%. Fed officials at last month’s policy meeting had already cited signs of stabilization as a reason to hold rates steady. Wednesday’s report from the Bureau of Labor Statistics prompted traders to pare the probability of a rate cut at the June meeting — previously eyed as the most likely timing of the next reduction — to under 50%. Economists cautioned that the upbeat January numbers could yet be revised lower, and that hiring continues to be dominated by a handful of sectors, primarily health care. Revisions to last year’s data showed job gains averaged just 15,000 a month, down from the initially reported 49,000 pace.
4. Home Sales in January Posted Biggest Monthly Decline in Nearly Four Years — Home sales fell 8.4% in January, the biggest monthly decline since February 2022, after snowstorms and low consumer confidence slowed a housing market that was showing signs of recovery. Sales of existing homes fell from the prior month to a seasonally adjusted annual rate of 3.91 million, the National Association of Realtors said. Home prices continued to rise, because the national supply of homes for sale remains below normal historical levels. The national median existing-home price in January rose to $396,800, a 0.9% increase from a year earlier, NAR said. Mortgage rates stand around 6.1%, down from about 6.9% a year ago. That is helping make purchases a little more affordable.
5. Consumer prices rose 2.4% annually in January — The consumer price index for January accelerated 2.4% from the same time a year ago, down 0.3 percentage point from the prior month, the Bureau of Labor Statistics reported Friday. That pulled the inflation rate down to where it was the month after President Donald Trump in April 2025 announced aggressive tariffs on U.S. imports. Excluding food and energy, the core CPI was up 2.5%, the lowest level since April 2021. Economists surveyed by Dow Jones had been looking for an annual rate of 2.5% for both readings. Elsewhere, food prices increased 0.2% as five of the six major grocery group categories posted gains. Energy fell 1.5% while vehicle prices also were muted, with new vehicles up just 0.1% and used cars and trucks falling 1.8%. Airline fares jumped 6.5% while egg prices fell 7% and are now down 34% over the past year after a meteoric surge.

The week ahead — Economic data from Econoday.com: