U.S. consumer confidence took a noticeable step back in January, dropping to levels we haven’t seen since 2014. Both how people feel today and how they expect the economy to behave over the next six months deteriorated, with inflation worries and job market concerns front and center for many households. Since consumer spending tends to drive roughly two-thirds of U.S. economic activity, this pullback in sentiment could translate into more cautious buying behavior in the coming months, even as core economic growth remains intact. How we view our spending and watch our wallets is becoming more of a “hot” topic in many circles. With the downright colder winter most of us have witnessed so far, there is no doubt our energy bills will be higher this year. I feel like my dad telling us to add another layer of clothes on and to leave the thermostat alone!
The housing market is feeling some of that caution, too. December data showed an unusually high share of buyers walking away from signed purchase agreements — the fastest pace in nearly a decade. Higher inventories and ongoing affordability challenges are giving some buyers room to step back or delay decisions, despite modest declines from peak mortgage rates. This dynamic often slows sales activity and can put subtle downward pressure on prices as we move deeper into the typical spring buying season. I believe some of this can be attributed to the tepid job market we are currently sitting in. Many buyers are likely being cautious right now, and with the prospect of lower rates still ahead, the timing might be right to just wait it out for now.
Monetary policy was front and center this week as the Federal Reserve held interest rates steady at 3.50%–3.75% at the conclusion of their January meeting this past week. This is the first pause we have seen in recent policy decisions after several cuts last year. Chairman Powell addressed reporters in his post-meeting speech: “Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization, while Inflation remains somewhat elevated.” He also spoke to the importance of maintaining independence and a data-driven approach amid heightened political scrutiny, underscoring that future rate moves will depend on incoming economic data rather than external pressures. As usual, this is a mouthful to consume. But, it appears to me at least, that the Fed is doing a decent job at managing not only the current economic environment but the political one as well. Never an easy task.
Interesting to note: A new federal savings program will give eligible newborns a $1,000, tax-advantaged investment account, and some employers are sweetening the deal by offering matching contributions to help families get an early start. Stay tuned – more to come on this.
Looking Ahead
- Next week brings key labor market and inflation data that will help clarify how sentiment and spending trends are playing out in hard numbers.
- Fed commentary between now and the March meeting will provide signals on whether rate cuts are likely later this year.
- With tax season underway, we are reminding our clients to review their retirement contributions, adjust cash flow planning as needed, or simply ask questions they are unsure about!
Have a nice weekend and stay warm!
https://www.cnn.com/2026/01/27/economy/us-consumer-confidence-january
https://www.cnbc.com/2026/01/27/homebuyers-backing-out-of-deals.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail
https://www.cnbc.com/2026/01/28/jpmorgan-chase-trump-accounts.html
https://www.cnbc.com/2026/01/28/fed-rate-decision-january-2026.html
Christopher E. Wasson, CFP®
President
Mosaic Asset Partners, LLC
1122 Kenilworth Drive, Suite 310
Towson, MD 21204
410.821.0089 fax 410.821.5993
MosaicAssetPartners.com
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The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.
