February 9, 2026

The below transcript is a translation of the podcast audio that has been machine generated by Notta.

Hi, everyone. My name is Taylor St. Germain with ITR Economics. Thanks so much for joining me on this episode of TrendsTalk. We at ITR, you’re a political and unbiased source of economic intelligence. And today I wanted to take a step back and look at our some of our core data sets, as we’d like to refer them to some of our core leading indicators, core economic benchmarks. Again, for those of you that are Trends Report subscribers, these would be familiar to you. There are three primary series that I wanted to focus on. US Industrial Production, US Private Sector Employment and US Nondefense Capital Goods New Orders, which is our CAPEX benchmark. I’ll also likely talk through retail sales very briefly, just to highlight how the consumer is doing.

But let’s kick things off first with US Industrial Production. Coming into 2026, as many of you heard, if you were listening to me throughout 2025, we are forecasting a positive year for most of these economic data sets. And that continues to be the case. US industrial production, as we sit here today, is up 1.3%. That is the current annual growth rate. By the end of 2026, we expect this benchmark to finish at 1.5%. So we have this steady single digit growth forecasted for the industrial economy all the way through 2026. This should be exciting. This should be exciting for producers, manufacturers, distributors, as 2025 and 2024, we saw a lot more negative growth rates in the industrial economy than we did positive ones. So we kicked off this year positive as our forecast suggested, and we expect to remain in the positive through 2026. Now, I really love this economic data series because it is really focused on volume. It’s focused on demand and it strips out that inflationary component. So I am simply telling you that we expect more industrial demand to come your way throughout 2026. And again, that’s great news because it means that we’re not just growing because of higher prices, it means we are actually seeing volume growth, which is very important in these times of higher inflation.

Now, the labor market, you know, I’ve been very interested in how the media has been covering this trend lately because there’s all these talks about a weakening labor market. Now, I tend to disagree with that comment around a weak labor market. Yes, the labor market has slowed, but it certainly is not weak. And yet the unemployment rate has risen a few points. However, it’s still a historically very low unemployment rate. And again, in our Trends Report, we tend to track employment instead of unemployment. And what we can see is that the growth rate for private sector employment has slowed down to 1%. And that is where we are today, so we’re seeing 1% Private Sector Employment growth. Now, again, that’s not a negative number. That’s not the labor market contracting. That is just a slower pace of growth. And that data is a BLS data set. I know some folks are a little bit uncomfortable with the BLS data, but I can assure you we’ve we look at other data sets like ADP’s employment data to correlate or to support or triangulate the BLS data. And they look very similar.

Now, the challenge you’re going to face as far as it relates to the employment market is that in the second half of the year, we have that growth rate improving from one percent to 1.4%. And positive momentum in the economy is going to drive a more competitive labor market. So even though it’s good news for the economy, generally speaking, to see employment start to accelerate in its pace of growth, does create a challenge for businesses, which means that employment markets going to become more competitive.

Now, again, the last two data sets I wanted to call out, Nondefense Capital Goods New Orders and Retail Sales. Nondefense Capital Goods New Orders, that’s our CapEx benchmark. This is another data set that was largely negative for ’24 and most of ’25. But as we sit here in February of 2026, we are up 2.6% and we expect that number to improve to 3.2%. So we are seeing more of this cash come off the sidelines, we’re seeing small business CapEx improving. That’s all good news. Again, we’ve got growing industrial demand. We’ve got an increase in capital investment. I mean, those are two pretty positive trends as far as businesses following those growth paths as we move in 2026. So expect clients to pick up their level of spending with you, expect more of that cash to come off the sidelines.

And then finally, the state of the consumer is important. Listen folks, two thirds of GDP is consumer spending. Now I like to look at the subset, which is Retail Sales, again, one of our Trends Report indicators and that data sets up 3.8% today. Now this is a data set that is impacted by inflation, but the key here is our CPI is at about 2.7% year-over-year, retail sales is at 3.8%. So our consumers, yes, are spending more in part because of higher prices, but with retail sales coming in above inflation, it means we’re also buying more stuff, we are seeing still volume increases when we look at retail sales. The challenge of higher prices isn’t going away. I don’t wanna suggest that that’s the case for 2026. We are still going to have to be laser focused on our margins. But when we look at a lot of these data sets, especially the volume ones or the dollar denominated ones trending above inflation, that’s good news for the economy moving forward.

So again, it’s important to stay laser focused on those margins, protect your margins through price, through productivity, through efficiency. But I want you all to feel encouraged that a lot of these core data sets continue to remain on track for a positive year in 2026. I hope you found this information helpful. Thanks so much for joining me on this episode of TrendsTalk. Please like and subscribe to TrendsTalk wherever you listen to your podcast. Look forward to seeing you all in the next one. Thanks so much. Take care for now.