Weekly Economic Recap 9.7- 9.13

Weekly Economic Recap: September 7 – September 13, 2026

Last week's data releases painted a picture of a labor market holding steady, inflation reaccelerating on energy costs, and housing affordability continuing to slip as mortgage rates climb to multi-year highs.

Inflation

Inflation Rate (CPI) rose 0.4% month-over-month in August, the largest monthly gain in three months, driven mainly by a 3.9% surge in gasoline prices amid rallying crude on US-Iran tensions. Shelter costs rose 0.3% and food rose 0.1%. Year-over-year, headline inflation held steady at 3.4%, with gasoline up 27.4% annually. Core CPI (ex-food and energy) rose 0.3% for the month, above forecast, but the annual core rate eased to 2.4% — its lowest since March 2021.

PPI (Producer Price Index) rose 0.4% month-over-month in August, the biggest increase in three months, led by a 1.1% jump in goods prices (diesel fuel alone was up 24.1%). Year-over-year, producer inflation accelerated to 5.4% from 4.8%. Core PPI, which excludes food and energy, rose 0.2% for the month and 4.6% annually, both slightly hotter than July's pace.

Consumer Inflation Expectations held steady at a median of 3.6% for the one-year outlook in August, per the NY Fed's Survey of Consumer Expectations. Expectations still rose for individual categories, though — gas (+1.7pp to 4.6%), food (+0.3pp to 5.3%), medical care (+0.2pp to 9.1%), college costs (+0.3pp to 6.1%), and rent (+0.7pp to 6.6%). Longer-term expectations were mixed, with the five-year outlook flat at 3% and three-year expectations dipping to 3.2%.

Labor Market

Jobless Claims continued to signal a resilient labor market. The 4-week average edged down to 206,000, while initial claims fell to 206,000 for the week — close to July's near-60-year low — and continuing claims dipped slightly to 1,774,000. That said, claims tied to federal employees rose, a reminder that public-sector workforce cuts are still working their way through the data.

Consumer Inflation Expectations also showed rising anxiety about jobs, separate from the price outlook above: the perceived probability of higher unemployment a year out jumped to 44.4% in the NY Fed survey — the highest reading since April 2020.

Consumer Sentiment

Michigan Consumer Sentiment fell to 47.8 in early September, a second straight monthly decline and the weakest reading since May's record low. Sentiment now sits 16% below February (pre-Iran conflict) levels and 13% below a year ago. Year-ahead inflation expectations jumped to 4.6%, the highest since June, while the five-year outlook ticked up to 3.4% after holding steady for three months.

Housing

MBA 30-yr Mortgage Rate climbed to 6.85% for the week ended September 4, its highest level since June 2025, as rising Treasury yields, Middle East tensions, and strong labor data combined to push borrowing costs higher. Rates are now up nearly 80 basis points since US-Israel strikes on Iran began in late February. Total mortgage applications fell 2.7% for the week, reversing the prior week's gain, with refinance applications down a sharp 6.2% and purchase applications essentially flat. Adjustable-rate mortgages made up 8.5% of applications — their largest share since last June — as buyers look for ways to manage monthly payments.

Existing Home Sales fell 2.0% in August to a seasonally adjusted annual rate of 3.98 million units, following a 1.7% drop in July. Declines were broad-based across the Northeast, Midwest, and South, while the West held flat. Housing inventory rose 3.2% to 1.62 million units, giving buyers a bit more selection — though the median price still climbed 1.6% year-over-year to $429,100. NAR's chief economist attributed the slowdown to rising mortgage rates, driven by higher energy costs and heavy corporate debt issuance pushing up longer-term yields.

The Bottom Line

Energy prices are once again the dominant force in this economic story — pushing headline inflation higher, souring consumer sentiment, and adding to the upward pressure on mortgage rates. For the housing market specifically, the combination of a 15-month-high mortgage rate and slowing sales suggests affordability will remain the central challenge heading into the fall, even as rising inventory offers buyers a bit more room to negotiate.