December Retail Sales Show Signs of Slowing

 December retail sales had a disappointing ending compared to what was predicted for consumer spending. According to the Commerce Department, retail sales were flat for the month, following a 0.6% increase in November and fell short of economists expectations for a 0.4% gain. Even when excluding purchases related to vehicles, sales showed no growth, reinforcing concerns that holiday spending lost momentum. 

On a yearly basis, retail sales rose 2.4% which was slower than November's 3.3% pace and below December's inflation rate of 2.7%. Therefore, consumer spending failed to keep up with rising prices which is not good as consumer spending accounts for more than two-thirds of the U.S. economic activity.

This slowdown was uneven with furniture, clothing, electronics, and miscellaneous retailers all posted declines and online sales barely increased. Building materials and garden centers had a stronger gain which could mean consumer spending priorities could be shifting. Economists also stated factors such as harsh weather, tariffs, and high prices affected the holiday shopping season.  

Despite the weak December report 2025 was not a poor year for retail. The pattern of spending showed a "k-shaped" economy. Looking ahead consumer spending in early 2026 could slow down more with the growing uncertainty with the labor market and wage growth. This shows the growing pressure on households as inflation and higher costs limit discretionary spending. 

https://www.cnbc.com/2026/02/10/december-retail-sales-were-flat-missing-expectations.html

Falling Inflation Expectations Signal Shifts in the U.S. Business Cycle

 Recent data released by the New York Federal Reserve Survey of Consumer Expectations showed that expectations for inflation over the coming year are falling. This is a clear indication that prices are favorable over time. Americans also seem to have more confidence in their labor market, as few are concerned about losing their jobs. Despite this, many are concerned about their financial well-being.

This has important implications for national income and business cycles. Lower inflation predictions would help encourage consumer spending, which would assist in the expansion of GDP. Additionally, an optimistic job market would help keep the economy as stable as the current income levels. Overall, it seems that the economy may be stabilizing, but mixed consumer sentiment indicates that risks persist.

https://www.reuters.com/business/ny-fed-survey-january-near-term-expected-inflation-lower-amid-better-job-market-2026-02-09/

Labor Market is increasing unemployment

 Layoffs this past January reached their highest level for any January since 2009. U.S. employers announced 108,435 layoffs, which is up 118% from the same month a year ago and 205% from December 2025. Hiring numbers were not encouraging either, with only 5,306 new hires reported—the lowest January total since 2009. The article suggests that layoffs may continue to rise, as the first months of the year are typically the most severe for job losses.

Several large companies have already announced major cuts. Amazon, for example, recently reduced a significant portion of its workforce, shedding about 16,000 mostly corporate jobs. Transportation and technology were the two sectors with the largest losses, largely due to UPS plans to cut more than 30,000 workers and Amazon’s reductions. While it is somewhat expected in transportation—given the surge in delivery drivers in recent years and improvements in automation—it is still striking to see losses of this scale.

With rapid technological growth, fewer workers are needed, and hiring new employees requires time-consuming training. As a result, many companies are combining roles to reduce labor costs. Adding to concerns, job openings fell sharply in December to 6.54 million, the lowest level since September 2020, and are down more than 900,000 since October. Overall, the data point to a weakening labor market, with employers appearing less optimistic about economic conditions heading into 2026.

https://www.cnbc.com/2026/02/05/layoff-and-hiring-announcements-hit-their-worst-january-levels-since-2009-challenger-says.html

Layoffs in January were the highest to start a year since 2009, Challenger says

 In January 2026, we have seen a surge in layoffs and a sharp drop in hiring plans from U.S. companies. We have not seen levels like this since the 2008-09 financial crisis. Employers have announced over 108,000 layoffs, which is more than double last year's January total. Planned hiring has fallen to just over 5,300 jobs, which is the lowest number in January we have seen on record. According to Challenger, Gray & Christmas, these numbers show that employers are anticipating the worst about the economic outlook for 2026. There is a large decline in job opportunities, weak private payroll growth, along with high profile layoffs from companies like UPS and Amazon. There are significant concerns that the labor market may be starting to weaken after a long period of stability.

https://www.cnbc.com/2026/02/05/layoff-and-hiring-announcements-hit-their-worst-january-levels-since-2009-challenger-says.html

Big Tech Stocks Dive as Wall Street Chokes on Massive AI Spending Plans

 Major U.S. technology stocks, including names like Amazon and Oracle, dropped sharply after investors reacted poorly to a wave of earnings reports and spending forecasts that revealed unprecedented capital expenditures on artificial intelligence infrastructure. Amazon’s announcement that it plans to spend roughly $200 billion on capital expenditures in 2026, far above Wall Street expectations, triggered a significant sell-off as shareholders grew concerned about the impact of such large outlays on near-term profitability and cash flow. At the same time, other tech giants — part of a broader trend of planned AI infrastructure investments totaling hundreds of billions of dollars across the industry — saw their stock prices weaken as markets questioned whether these massive expenditures will generate returns soon enough to justify the risk. The sell-off wiped out over $1 trillion in market value across major tech companies as investors rotated away from high-growth, capital-intensive firms toward more stable or cheaper assets, highlighting a shift in sentiment in which the excitement about AI’s long-term potential is now tempered by concerns about the cost and timing of realizing profits.

https://www.cnbc.com/2026/02/06/ai-sell-off-stocks-amazon-oracle.html

Economy Layoffs in January were the highest to start a year since 2009

 The article reports that U.S. job-cut announcements surged in January 2026, reaching their highest January level since the 2009 financial crisis, according to the outplacement firm Challenger, Gray & Christmas. Employers announced more than 108,000 layoffs during the month, a sharp increase compared with both the previous year and the previous month. At the same time, companies announced only about 5,300 planned hires, the lowest January hiring total since the firm began tracking the data, signaling growing caution among employers about the economic outlook.

Major corporations across sectors such as transportation, technology, and finance contributed to the job cuts, suggesting the slowdown is not limited to one industry. Overall, the data indicates that the labor market may be weakening, with employers becoming less optimistic about growth in 2026 and scaling back hiring plans while reducing staff.

Citation: https://www.cnbc.com/2026/02/05/layoff-and-hiring-announcements-hit-their-worst-january-levels-since-2009-challenger-says.html