Weekly Economic Recap: 10.12- 10.16 2026

Weekly Economic Recap: October 12 – October 16, 2026

Mortgage rates climbed again last week to roughly 7.5%, the highest since late 2023, and buyers kept pulling back, with mortgage applications falling to their lowest level since January 2025. The Fed is expected to deliver at least one more rate hike by year-end, while jobless claims stayed near multi-decade lows. Inflation, meanwhile, re-accelerated on surging energy costs.

Inflation

Inflation Rate (CPI) rose 0.6% month-over-month in September, up from 0.4% in August and the largest monthly gain in five months. Energy prices jumped 5.2%, led by a 9.1% surge in gasoline that accounted for more than half of the overall increase. Shelter costs rose 0.4%, while food was flat as pricier dining out offset cheaper groceries. Year-over-year, headline inflation accelerated to 3.7% from 3.4% and came in above the 3.6% forecast, with gasoline up 34.2% annually (from 27.4%) and fuel oil up 74.2% (from 52%).

Core Inflation Rate (excluding food and energy) rose 0.3% month-over-month, matching August and beating the 0.2% forecast. Shelter rose 0.4%, and transportation services rose 0.6% — the biggest gain in six months — suggesting higher energy costs are feeding through to transportation and logistics. Year-over-year, core inflation climbed to 2.6% from August's five-year low of 2.4%, above the 2.5% forecast. Over the past year, shelter is up 3.2%, airline fares 22.4%, education 3.8%, recreation 2.8%, and medical care 1.5%.

Export Prices jumped 2.2% in September, the biggest monthly gain since April and well above the 1% forecast. Nonagricultural prices rose 2.1%, while agricultural prices climbed 2.6%, their strongest monthly gain since November 2022. Year-over-year, export prices are up 11.6%, the fastest pace since July 2022.

Import Prices rose 1.1% in September, the biggest monthly gain in four months and above the 0.8% forecast. Fuel imports surged 4.8% as Iran's tighter tanker blockade and the US leaving the Persian Gulf pushed oil prices higher globally, while non-fuel imports rose 0.7%. Prices are up 8.1% from a year earlier, the fastest pace since July 2022. Because these figures exclude tariffs, they suggest foreign companies aren't cutting prices to absorb the duties.

Labor Market

ADP Employment Change showed US private-sector employment rising by 24.75 thousand in the week ending September 26. That's above the series average of 15.58 thousand since 2025, though well below the record high of 40.75 thousand set in May 2026.

Jobless Claims continued to point to a tight labor market with few layoffs. The 4-week average edged up to 198,500 for the week ending October 10, far below the long-run average of about 358,850 and close to the record low of 179,000 from 1969. Initial claims rose by 1,000 to 199,000, slightly below the 200,000 forecast, while continuing claims fell by 4,000 to 1.71 million, staying near a more-than-three-year low. Claims from federal workers, which are in focus because of the push to shrink the public sector, rose by 68 to 463.

Business & Consumer Activity

NFIB Business Optimism Index slipped to 97.9 in September from 98.7 in August, its lowest in three months and in line with forecasts. Owners were less optimistic about future conditions, and fewer saw it as a good time to expand. Labor quality and availability remained the top concern for a third straight month at 26%, while inflation rose to second at 20%. NFIB's chief economist said owners are proceeding with caution as rising costs, higher interest rates, and hiring difficulty weigh on their businesses.

Retail Sales rose 0.8% in September, well above the 0.3% forecast, but the gain was driven mostly by a 6.4% jump in gas station sales from higher prices. Excluding gas, sales rose just 0.2%, and the control-group measure used for GDP rose only 0.1% after a 1.2% gain in August. Spending was uneven, with furniture and restaurants up while miscellaneous stores, building materials, and sporting goods fell. Year-over-year, retail sales rose 6.3%, accelerating from 5.6% — though since the figures aren't adjusted for inflation, part of the gain likely reflects higher prices.

Housing

MBA 30-yr Mortgage Rate rose 1 basis point to 7.5% in the week ended October 9, its eighth straight weekly increase and a cumulative climb of 141 basis points since the US-Israeli strikes on Iran began in late February. Rates are tracking high Treasury yields as markets expect the Fed to hold rates higher for longer to fight inflation.

Mortgage Applications fell 2.7% for the week, the sixth straight weekly decline and the lowest level since January 2025. Refinance applications slipped 0.4% and purchase applications fell 4%. Long-term yields kept climbing despite Treasury efforts to contain them through more bill issuance and expanded buybacks of notes and bonds.

Existing Home Sales rose 1.5% in September to a seasonally adjusted annual rate of 3.99 million, just above the 3.95 million forecast and ending three straight monthly declines — though only after hitting a two-year low the month before. Sales improved in the South and West (up 2.8% each), fell 2.1% in the Northeast, and were flat in the Midwest. Inventory rose 1.9% to 1.6 million homes, or 4.8 months of supply. NAR's chief economist noted that August and September were the two slowest months of the year and that rising mortgage rates mean fewer buyers can qualify. Higher inventory and longer time on the market are giving buyers more negotiating power, and sellers are weighing price cuts and incentives.

The Bottom Line

Energy costs are driving inflation higher across consumer, producer-facing, and trade data, which keeps pressure on the Fed and on long-term yields — and that's flowing straight into mortgage rates near 7.5%. With a resilient labor market keeping the Fed on the offensive, borrowing costs are unlikely to ease soon.

For buyers: get pre-approved and focus on the monthly payment rather than the rate alone. Rising inventory and longer market times give you more room to negotiate.

For sellers and investors: price realistically and underwrite deals at today's financing costs, not last year's.