U.S. Paychecks Surge as Main Street Displays Economic Resilience
Recent economic indicators reveal a significant boost in financial conditions for Americans, highlighting the resilience of Main Street. Average weekly earnings have shown an increase, contributing to elevated retail sales and a surge in home purchases amidst existing challenges.
U.S. Paychecks Surge as Main Street Displays Economic Resilience
The Bureau of Labor Statistics reported that average weekly earnings rose by 1.42% when adjusted for inflation from January to December 2025. This growth in take-home pay aligns with a 3.3% year-over-year increase in retail spending for November. Additionally, retail sales were up 0.6% from October after a revision indicated a slight decline previously.
Home Sales on the Rise
- Existing home sales increased by 5.1% in December, according to the National Association of Realtors (NAR).
- The average 30-year fixed-rate mortgage dropped to 6.19% in December.
- This marks a decrease from 6.24% in November and 6.72% from the previous year.
NAR chief economist, Lawrence Yun, noted that while 2025 posed challenges for homebuyers due to high prices, improvements are evident as the housing market adjusts. The decline in mortgage rates and slowing home price growth have created better conditions for potential buyers. However, inventory remains limited due to sellers’ hesitancy to list homes.
Inflation Trends
Inflation rates have stabilized but remain above the Federal Reserve’s target. The Consumer Price Index (CPI) for December indicated a monthly increase of 0.3% and a 2.7% rise year-over-year. Core CPI, excluding food and energy, rose 0.2%, reflecting a 2.6% increase compared to the previous year.
The Federal Reserve has responded to these challenges by cutting its benchmark interest rate by 25 basis points in recent meetings. However, the market anticipates that the Fed may maintain the current target range of 3.5% to 3.75% in its upcoming January meeting.
As economic conditions continue to evolve, the strength of U.S. paychecks and the resilience of Main Street provide a positive outlook amid ongoing challenges.
