The week in the economy, with our read on it.

National rates, inflation and jobs, plus an Arizona overlay, refreshed from FRED with Alt-30's take on each.

Published 9/22/2026, 7:35:17 PM · archived edition

Rates & the Fed

What the Fed set, and what the market did with it.

The Fed reversed course on Sept 17, raising the target range 25 bp to 3.75-4.00%. This is the first hike after a series of cuts and with inflation still stuck above 3%. Markets have already moved: the 10-year is near 5% and the 30-year mortgage is holding near 7%. For Arizona borrowers the message is that the expected era of rate relief has paused and financing costs are not easing in the near term.

4.00%

Fed funds target (ceiling) · +0.25 pp/wk · as of 2026-09-21

3.88%

Fed funds rate (effective) · +0.25 pp/wk · as of 2026-09-18

5.01%

10-year Treasury · +0.05 pp/wk · as of 2026-09-18

+0.20 pp

10yr-2yr spread · -0.12 pp/wk · as of 2026-09-21

Inflation & prices

Is price growth still cooling toward target?

Disinflation has stalled above target. Headline CPI is running above 3% and PCE higher still, both over the Fed's 2% goal, while core CPI is closer but sticky. That gap is exactly why further rate cuts are a harder call than the funds-rate path alone suggests.

+3.4%

CPI, all items (YoY) · +0.0 pp/mo · as of 2026-08-01

+2.4%

Core CPI (YoY) · -0.0 pp/mo · as of 2026-08-01

+3.7%

PCE price index (YoY) · -0.0 pp/mo · as of 2026-07-01

Jobs (national)

The labor market the Fed is watching.

The labor market is cooling gently but not breaking. Unemployment is near 4%, payrolls still added jobs in the latest month, and initial claims remain historically low. This is the soft-landing picture the Fed is watching, a softening at the margin without a spike in layoffs.

4.10%

Unemployment rate · +0.00 pp/mo · as of 2026-08-01

+162K

Nonfarm payrolls (MoM change) · as of 2026-08-01

196K

Initial jobless claims · -10K/wk · as of 2026-09-12

Growth & the consumer

Is demand holding up?

Spending is holding up even as households express cost concerns. Retail sales are up solidly year over year while consumer sentiment sits deeply depressed, a divergence that has persisted while real GDP growth is slowing but positive.

+6.0%

Retail sales (YoY) · +1.0 pp/mo · as of 2026-08-01

55.2

Consumer sentiment (UMich) · +5.7/mo · as of 2026-07-01

1.50%

Real GDP (q/q, annualized) · -0.60 pp/qtr · as of 2026-04-01

Arizona overlay

How the state is tracking against the national picture.

Arizona is running softer than the nation on labor. State unemployment is above the US rate and has risen faster over the past year, and job growth is modest. But the broader state economy is still expanding. The coincident activity index is up year over year and home prices are roughly flat-to-up so this reads as a cooling, not a contraction.

4.90%

Arizona unemployment rate · +0.00 pp/mo · as of 2026-08-01

+0.6%

Arizona nonfarm payrolls (YoY) · +0.0 pp/mo · as of 2026-08-01

+0.9%

Arizona house price index (YoY) · -1.4 pp/qtr · as of 2026-04-01

+2.3%

AZ coincident economic index (YoY) · -0.1 pp/mo · as of 2026-07-01