Page 12 - TrailerTalk - February 2026

TRAILERTALK
Expectations of a Recession Lessen

EXPECTATIONS INDEX are moderate, with most analysts expecting a gradual reduction
to a terminal rate around 3.0%–3.5%. While early 2026 saw strong
The Conference Board Consumer Confidence Index® increased by 2.2 employment data reducing immediate pressure to cut, projections
points in February to 91.2 (1985=100), from an upwardly revised 89.0 in suggest two to three 25-basis-point cuts in the latter half of the year,
January. The Present Situation Index — based on consumers’ assessment driven by cooling inflation.
of current business and labor market conditions — decreased by
1.8 points to 120.0 in February. The Expectations Index — based on Consensus generally points to 2–3 cuts of 25 basis points each (50–75
consumers’ short-term outlook for income, business, and labor market bps total) throughout 2026. The federal funds rate is expected to move
conditions — rose by 4.8 points to 72.0. The cutoff for preliminary toward a 3.0%–3.25% range by the end of 2026. Some forecasts, such
results was Feb. 17, 2026. as J.P. Morgan, suggest a more cautious approach, with potential for no
cuts if inflation remains sticky.
The Present Situation Index continued to decline, as net views on
current business conditions fell to +0.7%. Perceptions of employment The S&P Global Flash U.S. Composite PMI for January 2026 showed a
conditions improved slightly, with the labor market differential — the solid expansion in private-sector activity, with the index rising to 53.0
share of consumers saying jobs are “plentiful” minus the share saying from 52.7 in December 2025. Manufacturing strengthened, with the
jobs are “hard to get”— rising 0.6 points to +7.4%. All three Expectations flash reading at 51.9, while service sector expansion remained robust.
Index components advanced slightly in February: expectations This indicates continued economic growth early in 2026.
for business and labor market conditions six months from now were
less negative, while expectations for incomes were more positive. MORTGAGE RATES FALL
On net, consumers’ views of their Family’s Current Financial As of February 26, 2026, 30-year fixed mortgage rates have dipped
Situation retreated in February, after an unexpected surge in January, below 6% for the first time since September 2022, hovering around
based on final data. Expectations for their Family’s Future Financial 5.98% to 6.05% due to falling Treasury yields. This marks a significant
Situation continued to be less optimistic. Meanwhile, the share of drop from 7% levels a year ago, potentially easing the frozen housing
consumers who said a U.S. recession over the next 12 months is “very market, though home sales remain low.
likely” fell, while those saying “not likely” rose. Respondents who said
recession is “somewhat likely” over the next year increased somewhat, Mortgage rates peaked at just under 7.8% in October 2023 and drifted
and the percent believing we are “already in one” dipped. (These down gradually, stifling the market for Americans struggling to afford
measures are not included in calculating the Consumer Confidence to buy homes as well as for homeowners reluctant to sell. Housing is a
®
Index ). crucial driver of the U.S. economy, serving as the most important asset
for millions of American households.
FED RATE CUTS?
As of February 2026, forecasts for Federal Reserve rate cuts in 2026

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