Week Of: 02/16/2026

02-13-26 10:38am In a week packed with major economic data, weaker than expected inflation and consumer spending data outweighed strong job gains. As a result, mortgage rates ended the week lower.

The key Employment report revealed that the economy added 130,000 jobs in January, well above the consensus forecast of 70,000 and the most since April. The unemployment rate unexpectedly fell from 4.4% to 4.3%, the lowest level since August. Average hourly earnings, an indicator of wage growth, were 3.7% higher than a year ago, down from an annual rate of 3.8% last month.

The Consumer Price Index (CPI) is one of the most closely watched inflation indicators released each month. To reduce short-term volatility and get a better sense of the underlying inflation trend, investors look at core CPI, which excludes food and energy. In January, Core CPI was 2.5% higher than a year ago, down from an annual rate of 2.6% last month and the lowest level since 2021. Shelter (housing) costs were up 3.0% on an annual basis and continue to be a primary reason why progress in bringing down inflation remains challenging, but this reading has been trending lower in recent months. Also notable, used vehicle prices declined 1.8% from December while airfares posted their largest monthly increase since May 2022.

Consumer spending accounts for over two-thirds of U.S. economic activity, so the monthly Retail Sales report is a key measure of the health of the economy. Delayed by the government shutdown, the most recent data revealed that retail sales in December were flat from November, far below the consensus forecast for an increase of 0.3%. Significant declines were seen in furniture, appliances, and apparel. Due to severe winter weather in January, the results are anticipated to be weak again next month.

The latest report on home sales was disappointing. In January, sales of existing homes declined 8% from December, far below expectations, to the lowest level since December 2023. The median price of $396,800 was up a slim 0.9% from last year at this time but at a record high for the month of January. Inventories remain stuck at low levels, standing at just a 3.7-month supply nationally, well below the roughly 6-month supply typical in a balanced market. However, inventories were 3% higher than a year ago.

Looking ahead, investors will continue to monitor comments from Fed officials for hints about future monetary policy. For economic reports, Friday will be the big day. Fourth quarter GDP, Personal Income, and the PCE price index, the inflation indicator favored by the Fed, will be released on Friday. Gross Domestic Product (GDP) is the broadest measure of economic activity. Mortgage markets will be closed on Monday for Presidents Day.

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