The Indicator from Planet Money

Episode•January 2, 2026•9 min

We resolve to watch these 2026 indicators

2025 is finally over. We had bad consumer sentiment vibes, tariffs, and a seemingly ascendant stock market. And those are just a few indicators from last year! As we enter 2026, what indicators should we keep an eye on … in the future? On today’s episode, our top indicator predictions for the new year. Related: What AI data centers are doing to your electric bill (https://www.npr.org/2025/12/19/nx-s1-5649814/ai-data-center-electricity-bill) Tariffs. Consumer sentiment. Cape ratio. Pick the Indicator of the Year! (https://www.npr.org/2025/12/19/nx-s1-5648809/tariffs-consumer-sentiment-cape-ratio-pick-the-indicator-of-the-year) What indicators will 2025 bring? (https://www.npr.org/2024/12/23/1221439465/indicators-of-the-year-economy-tariffs-inflation-soft-landing) For sponsor-free episodes of The Indicator from Planet Money, subscribe to Planet Money+ via Apple Podcasts or at plus.npr.org (http://plus.npr.org/). Fact-checking by Sierra Juarez (https://www.npr.org/people/1268825622/sierra-juarez). Music by Drop Electric (https://dropelectric.bandcamp.com/). Find us: TikTok (https://www.tiktok.com/@planetmoney), Instagram (https://www.instagram.com/planetmoney/), Facebook (https://www.facebook.com/planetmoney), Newsletter (https://www.npr.org/newsletter/money). To manage podcast ad preferences, review the links below: See pcm.adswizz.com (https://pcm.adswizz.com) for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences. Learn more about sponsor message choices: podcastchoices.com/adchoices (https://podcastchoices.com/adchoices) NPR Privacy Policy (https://www.npr.org/about-npr/179878450/privacy-policy)

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Transcript

0:01

Npr.

0:12

This is the Indicator from Planet Money. I'm Waylon Wong and I'm joined today by Stephen Pisaha.

0:17

Greetings, Waylon.

0:18

And our producer, Cooper Katz McKim.

0:21

Hi. Hello. Great to meet you.

0:23

Hello. Great to meet you.

0:25

Day one.

0:26

Come here.

0:26

All day.

0:27

It's like we had a little break for the holidays and you just forgot who we were.

0:30

Exactly.

0:32

Colleague Waylon.

0:33

Oh, okay.

0:33

And just to catch you up from what you might have missed, we had a family feud situation here at the Indicator. It featured our very own Darian Woods. And then Planet Money's Greg Rosalski and Kenny Malone. And these guys battled over which indicator best represented 2025.

0:53

Kenny chose consumer sentiment. Greg argued tariffs were king. And Darian made a convincing case for the Cape ratio in a Dracula costume.

1:02

We have counted up your votes. And drumroll, please. The indicator of the year chosen by you, the listener, was tariffs by just five votes. Congratulations to one Greg Wazalski for successfully arguing that tariffs were the indicator of the year in 2025.

1:25

You know, I think Darian should have done just a little more New Zealand Dracula and he would have got there. Hey, Matio. We're not here to discuss the past, though. We want to what's going to happen in the future.

1:38

Flying cars, karate kicking robots, guaranteed. Today on the show, we'll bring you three indicators that could shape 2026.

1:47

Stay with us after the break. Okay, Waylon, you are first. What is your indicator of the future? Ooh.

2:00

The indicator I'll be watching in 2026 is, is the federal funds rate, aka the Federal Reserve's benchmark interest rate. So right now, the rate is between 3 and a half and 3.75%. The Fed, you might remember, did three consecutive rate cuts at the end of last year. And these are not unanimous decisions. You are seeing some divisions within the Fed about what to do on interest rates. So my indicator is really about the future of the Fed and how it's going to make decisions this year.

2:33

Yeah, 2025 felt like this really big year for the Fed and feels like 2026 could be even bigger. I mean, it is the end of the Jerome Powell era.

2:40

It is. And we had some close calls in 2025 where we thought maybe President Trump was going to fire Jerome Powell. That didn't end up happening. But Fed independence is still a really big story. So Powell's term as Fed Chair ends in May. The President has been very clear about how he wants lower interest rates. And then he said on Truth Social just before Christmas, and anybody that disagrees with me will never be the Fed chairman.

3:06

So we will most likely get a Trump loyalist as chair. The President wants more allies on the committee that votes on interest rates. He already tried to fire Lisa Cook last year.

3:16

Yeah, and the Supreme Court will actually hear arguments in the Lisa Cook case early this year. But you can already see tensions in the committee from the last few interest rate decisions. Like in December, two members of the committee voted for no cut, and then one wanted a bigger reduction in rates.

3:32

Yeah, and it seems like the economic data is just really hard to parse right now. I mean, you got unemployment ticking up, but GDP growth is also looking healthy. Inflation is maybe slowing down, but it is still above the Fed's 2% target.

3:45

But also the economic data from the end of the year got disrupted from the government shutdown.

3:49

Yeah. And so the Fed would have a pretty tricky job even without this added pressure from the President. And that is why I think interest rates and the Fed will be the economic story to watch in 2026.

4:01

Okay, Stephen, you are up.

4:04

Yes, my indicator is all about affordability, but it is a different indicator than the ones we've been, like, harping on about forever.

4:11

Okay, we talking groceries?

4:12

Yeah.

4:13

So grocery prices, they are still up, but, you know, food inflation, it is under 3% right now. There's also housing, but we have actually seen rental prices drop recently. No, my affordability indicator to watch in 2026 are electricity rates.

4:28

Oh, I think my bill's already been up this last year.

4:31

Almost certainly. Yeah. I. For a long time, electric rates in the US have been pretty stable for like 20ish years. But recently, like you said, the cost of electricity in the US has been climbing way faster than overall inflation. Electric prices have jumped about 7%.

4:48

Oi. Okay, so 7% compared with, you know, just under 3% for general inflation. So does this have something to do with AI and data centers?

4:57

Yeah, everything has to do with Data Centers and AI in 2025 and 2026.

5:01

I knew it.

5:02

In fact, we recently did a planet Money. All AI data centers are affecting your electric bill. So you could check that out in our show notes. What you need to know now, though, is that the data centers that power AI need a lot of, you know, power, and that extra demand is leading to higher electric rates.

5:20

Yeah. And it's not like the AI race is slowing down anytime soon. So we should expect that demand and those rates to keep going up, I imagine.

5:27

Right. And again, we are already seeing rates go up. If you use electricity to heat your home, you could expect that cost to jump by about 12% this winter. That is according to the National Energy Assistance Directors Association.

5:39

12%. So that's even more than the 7% you cited earlier.

5:44

Yeah, it is not pretty.

5:45

But this can't be just about AI, right? I mean, I can think of maybe some other factors, like an aging power grid infrastructure that needs replacing.

5:54

States like California have been dealing with natural disasters like wildfires. And that's meant spending more money on repairing lines.

6:01

Yes. And all these factors are why I predict electric rates are going to keep climbing and why this is my indicator to watch for 2020. Okay, Cooper, your turn. What is your indicator?

6:13

Okay, my indicator to watch this year is consumer spending. Oh.

6:18

Not consumer sentiment, huh? I feel like we've been obsessed with consumer sentiment, but this is a little twist.

6:23

I know. Sorry to Kenny. Don't want to put salt in the

6:26

wound, rub it in.

6:28

But yeah, hard data shows the American consumer has actually been resilient in 2025, which is confusing because as we've heard, consumer sentiment has been pretty bad. It sits 30% below sentiment in December of 2024 this time last year. Yeah.

6:42

And if I got it right, you know, like the highest rollers are spending so much, it's basically hiding the difficulties of everyone else.

6:49

Yeah. So just the top 10% of consumers account for a near majority of consumer spending, according to global bank RBC.

6:57

And so that top 10% is basically anyone who makes around $200,000 or more a year, Right?

7:03

Exactly.

7:04

Yeah, there's that K shaped economy coming on back for us.

7:07

Y and they're making money not just from working, but through assets that accrue value on their own. So these high income earners are benefiting from their home values going up and a thriving stock market.

7:17

The thing is that below that 10% are a lot of signs that show reduced consumer confidence. Like, you know, you look at auto loan delinquencies, credit card debt, these are both at record highs.

7:30

So the question is, can this overly powerful 10% keep the good times rolling into 2026? RBC, this global bank argues, yes. They say, look, President Trump's tax cuts through the one big beautiful bill will keep benefiting upper income households. And as long as the stock market keeps on, they'll keep soaking in those dividends.

7:49

So basically, consumer spending is hinging on the market, staying strong.

7:54

It's at least a big part of it. A stock market correction would be bad for consumer spending no matter what. But right now it would have a particularly big impact.

8:04

Sounds a lot like trickle down economics. Interesting.

8:07

Yeah, it feels like I'm rooting for all that spending right now.

8:10

It's gonna be fine. It's gonna trickle down. It's gonna trickle down.

8:13

I'll have my cup out and ready.

8:14

Just keep the water metaphors rolling.

8:17

We will keep the flow going far into 2026. You know, we're excited to deliver economic stories and news for you for the rest of the year.

8:26

This episode of the Indicator was produced by Angel Carreras with engineering by Robert Rodriguez. It was fact checked by Cierra Juarez. Julia Ritchie edited this episode. Cake and Cannon edits the show and the indicators of production of npr.

We resolve to watch these 2026 indicators

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