Flood of economic data to start the New Year

Trend watch

Welcome to 2026! Air passenger travel in the United States continued the strong momentum from a record-setting 2025. Through 8 days, the daily count is averaging 2.35 million passengers, which is 1.2% above 2025 and 8.2% above 2019.

As a reminder, on slide 4 (available to clients in the full report), we marked the indicators impacted by the federal government shutdown in red and changed the trend to “Ø” once a data release was missed since a stale trend can’t be relied upon. It’s now down to just three indicators – new home sales, personal income and personal spending.   

Our take

There was a flood of economic data this past week. The categories ran the gamut – from jobs-related and housing to auto sales and sentiment surveys. Some was catching up from the backlog following the government shutdown, such as new building permits and housing starts, which remain more than a month in arears.

The December jobs report – for which we publish a separate report – was mixed. On the positive side, there was an improvement in the unemployment rate and wage growth. Yet, overall job growth was lackluster and remains concentrated in a handful of industries. Hours worked and the labor participation rate both declined.

And to sum up the labor trend during the past six months in a single word – sloppy. That’s understandable given the disruptions by tariffs and trade, the Department of Government Efficiency (DOGE) initiative impacting federal workers, and the government shutdown.

More broadly, however, much of the incoming economic data – from retail sales and travel traffic to weekly jobless claims – remain resilient with the obvious exceptions of housing and manufacturing. Moreover, the recent inflation readings have cooperated, thanks in part to lower gasoline prices.

Thus, our working assumption is that the recent labor market weakness was related to the government shutdown and, therefore, temporary. Of course, we’d like a few more months of data to confirm our hypothesis. This would lead us to expect patience rather than urgency in the near term by Federal Reserve (Fed) policymakers, particularly after having cut at the past three meetings. Hence, we think the Fed will punt at the January 28^th meeting. 

Bottom line

The U.S. economy remains resilient. However, economic data remains sloppy due to the government shutdown, which has caused distortions and delays. Be prepared that we probably won't get a clean read on the economy until perhaps mid-February. Nonetheless, we expect an uptick in U.S. growth to 2.3% in 2026 thanks to four primary drivers – tax incentives for consumers and businesses, marginally lower borrowing costs thanks to Fed easing, steadier trade policy and tariffs, and continued investment in AI and technology spending.