Economic Update 9/25/2026
Five Key Takeaways
· Orders for non-defense capital goods grew by 1.6%. in August.
· New Home Sales for August increased by 6.4%, the strongest level since February of this year.
· It will be important to see how the recent rise in mortgage rates will affect home sales going forward.
· As we anticipated, the Fed raised the Funds Rate by a quarter-point during their September meeting.
· We continue to believe we will likely see one more rate increase by the Fed prior to year-end.
This has been a relatively quiet week for economic releases, but a few are meaningful.
Manufacturing Numbers
Today, Durable Goods Orders for August were basically flat with the July level of $338.6 billion. July, itself, was up 0.9% and June showed a gain of 0.5%. The largest gain for the month was in Defense aircraft and parts, up almost 6%. However, overall transportation equipment and parts showed a decline of 0.6%. From a forward- looking perspective, orders for non-defense capital goods grew by 1.6%. This is a closely watched proxy for business spending. This shows a significant gain from the July increase of 0.6% and is the sixth monthly increase this year. Given this administration’s renewed emphasis on manufacturing within the U.S., this is a very positive sign for this sector.
August New Home Sales Increase
Yesterday, we had two contrasting releases for August. Building Permits for the month declined by 2.1%. This would normally indicate some weakness in the home construction market. However, New Home Sales for August increased by 6.4% and was the strongest level since February of this year. One of the reasons for the contrast was the decline in permits for multi-family homes. Given the recent rise in mortgage rates, due to the Fed activity last week, it will be important to see how this affects home sales going forward.
Fed Rate Increase
As we pointed out last week, the Fed did raise the Funds Rate by a quarter-point during their meeting which concluded on the 16th of this month. We did raise some liquidity by selling equities prior to the meeting. We had been saying and anticipating this move and wanted to act before the announcement. We had felt the Fed should have raised rates a few months prior due to inflation levels increasing. We continue to believe we will likely see one more rate increase by the Fed prior to year-end. We are evaluating whether additional equity sales need to occur. We are also holding off on adding to existing fixed-income positions during this time as well. We will obviously update our thoughts and actions in the coming weeks.
We have now entered the Fall season. This is always a period of transition. We hope you will get the opportunity to enjoy the various activities associated with this fun time of year.
