Chicago Fed National Financial Conditions Index (NFCI)

The St. Louis Fed’s Financial Stress Index (STLFSI4) is one index that is supposed to measure stress in the financial system. Its reading as of the January 21, 2026 update (reflecting data through January 16, 2026) is -.6510:

source: Federal Reserve Bank of St. Louis, St. Louis Fed Financial Stress Index [STLFSI4], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed January 22, 2026: https://fred.stlouisfed.org/series/STLFSI4

Of course, there are a variety of other measures and indices that are supposed to measure financial stress and other related issues, both from the Federal Reserve as well as from private sources.

Two other indices that I regularly monitor include the Chicago Fed National Financial Conditions Index (NFCI) as well as the Chicago Fed Adjusted National Financial Conditions Index (ANFCI).

Here are summary descriptions of each, as seen in FRED:

The National Financial Conditions Index (NFCI) measures risk, liquidity and leverage in money markets and debt and equity markets as well as in the traditional and “shadow” banking systems. Positive values of the NFCI indicate financial conditions that are tighter than average, while negative values indicate financial conditions that are looser than average.

The adjusted NFCI (ANFCI). This index isolates a component of financial conditions uncorrelated with economic conditions to provide an update on how financial conditions compare with current economic conditions.

For further information, please visit the Federal Reserve Bank of Chicago’s web site:

http://www.chicagofed.org/webpages/publications/nfci/index.cfm

Below are the most recently updated charts of the NFCI and ANFCI, respectively.

The NFCI chart below was last updated on January 22, 2026 incorporating data from January 8, 1971 through January 16, 2026 on a weekly basis.  The January 16 value is -.59026:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed January 22, 2026:  http://research.stlouisfed.org/fred2/series/NFCI

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The ANFCI chart below was last updated on January 22, 2026 incorporating data from January 8, 1971 through January 16, 2026 on a weekly basis.  The January 16 value is -.58640:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed January 22, 2026:  http://research.stlouisfed.org/fred2/series/ANFCI

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I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 6913.35 as this post is written

The January 2026 Wall Street Journal Economic Forecast Survey

The January 2026 Wall Street Journal Economic Forecast Survey was published on January 18, 2026. The headline is “Economists Shrug Off Trumponomics, Boost 2026 Growth Outlook Back Above 2%.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the forecasts section.

An excerpt:

The one part of the economy that fared poorly last year was the job market. Monthly job growth averaged 49,000, down from 168,000 in 2024, while the unemployment rate rose to 4.4% in December 2025 from 4.1% a year earlier. The culprit: Cost-conscious businesses turned hesitant about adding new workers due to tariff uncertainties and used artificial intelligence to drive productivity. A crackdown on immigration and retirements dented worker supply. 

Looking ahead, economists think the worst has passed for jobs; they expect the unemployment rate, which ended 2025 at 4.4%, to hover around 4.5% in 2026. They see monthly job growth over the next four quarters at 65,000, up from 49,000 in the prior survey. That was due in part to the Federal Reserve’s rate cuts late last year, which should support hiring in industries like real estate while unlocking more home buying. 

As seen in the “Recession Probability” section, the average response as to whether the economy will be in a recession within the next 12 months was 27%. The individual estimates, of those who responded, ranged from 1% to 90%.  For reference, the average response in October’s survey [the previously published survey] was 33%.

As stated in the article, the survey’s 74 respondents were academic, financial and business economists.  The survey was conducted January 9 – January 15. Not every economist answered every question.

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Economic Forecasts

The current average forecasts among economists polled include the following:

GDP:

full-year 2025:  2.35%

full-year 2026:  2.17%

full-year 2027:  2.09%

full-year 2028:  2.13%

Unemployment Rate:

December 2026: 4.45%

December 2027: 4.30%

December 2028: 4.27%

10-Year Treasury Yield:

December 2026: 4.18%

December 2027: 4.14%

December 2028: 4.06%

CPI:

December 2026:  2.63%

December 2027:  2.39%

December 2028:  2.33%

Core PCE:

full-year 2025:  2.80%

full-year 2026:  2.64%

full-year 2027:  2.31%

full-year 2028:  2.22%

(note: I have highlighted this WSJ Economic Forecast survey each time it is published; it was published monthly until April 2021, after which the survey is conducted (at least) every three months; commentary on past surveys can be found under the “Economic Forecasts” category)

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I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 6940.01 as this post is written

Disturbing Charts (Update 59)

The following is the latest update of 9 charts that depict various aspects of the U.S. economic and financial situation.

I find these charts portray disturbing long-term trends. These trends have been in effect for years.

These charts raise a lot of questions.  As well, they highlight the “atypical” nature of our economic situation from a long-term historical perspective.

All of these charts are from the Federal Reserve, and represent the most recently updated data.

(click on charts to enlarge images)

Housing starts (last update January 9, 2026):

U.S. Bureau of the Census, Housing Starts: Total: New Privately Owned Housing Units Started [HOUST], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/HOUST/, January 14, 2026.

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The Federal Deficit (last updated October 16, 2025):

U.S. Office of Management and Budget, Federal Surplus or Deficit [-] [FYFSD], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/FYFSD/, January 14, 2026.

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Federal Net Outlays (last updated October 16, 2025):

U.S. Office of Management and Budget, Federal Net Outlays [FYONET], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/FYONET/, January 14, 2026.

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State & Local Personal Income Tax Receipts (% Change from Year Ago)(last updated September 25, 2025):

U.S. Bureau of Economic Analysis, State and local government current tax receipts: Personal current taxes: Income taxes [ASLPITAX], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/ASLPITAX/, January 14, 2026.

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Total Loans and Leases of Commercial Banks (% Change from Year Ago)(last updated January 9, 2026):

Board of Governors of the Federal Reserve System (US), Loans and Leases in Bank Credit, All Commercial Banks [TOTLL], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/TOTLL/, January 14, 2026.

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Bank Credit – All Commercial Banks (% Change from Year Ago)(last updated January 9, 2026):

Board of Governors of the Federal Reserve System (US), Bank Credit of All Commercial Banks [TOTBKCR], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/TOTBKCR/, January 14, 2026.

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Median Duration of Unemployment (last updated January 9, 2026):

U.S. Bureau of Labor Statistics, Median Duration of Unemployment [UEMPMED], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/UEMPMED/, January 14, 2026.

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Labor Force Participation Rate (last updated January 9, 2026):

U.S. Bureau of Labor Statistics, Civilian Labor Force Participation Rate [CIVPART], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/CIVPART/, January 14, 2026.

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The Chicago Fed National Activity Index Three Month Moving Average (CFNAI-MA3)(last updated December 22, 2025):

Federal Reserve Bank of Chicago, Chicago Fed National Activity Index: Three Month Moving Average [CFNAIMA3], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/CFNAIMA3/, January 14, 2026.

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I will continue to update these charts on an intermittent basis as they deserve close monitoring…

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 6926.60 as this post is written

Trends Of S&P500 Earnings Forecasts

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” report of January 9, 2026:

from page 32:

(click on charts to enlarge images)

from page 33:

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 6963.74 as this post is written

S&P500 EPS Forecasts For 2025-2027 As Of January 9, 2026

As many are aware, Refinitiv publishes earnings estimates for the S&P500.  (My other posts concerning S&P earnings estimates can be found under the S&P500 Earnings label)

The following estimates are from Exhibit 24 of the “S&P500 Earnings Scorecard” (pdf) of January 9, 2026, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts.  For reference, the Year 2014 value is $118.78/share; the Year 2015 value is $117.46/share; the Year 2016 value is $118.10/share; the Year 2017 value is $132.00/share; the Year 2018 value is $161.93/share; the Year 2019 value is $162.93/share; the Year 2020 value is $139.72/share; the year 2021 value is $208.12/share; the year 2022 value is $218.09/share; the year 2023 value is $221.36/share; and the year 2024 value is $242.73/share:

Year 2025 estimate:

$271.53/share

Year 2026 estimate:

$313.84/share

Year 2027 estimate:

$359.54/share

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 6977.27 as this post is written

Standard & Poor’s S&P500 EPS Estimates 2025 – 2026 – January 9, 2026

As many are aware, Standard & Poor’s publishes earnings estimates for the S&P500.  (My posts concerning their estimates can be found under the S&P500 Earnings label)

For reference purposes, the most current estimates are reflected below, and are as of January 9, 2026:

Year 2025 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $263.34/share

-From a “bottom up” perspective, “as reported” earnings of $244.47/share

Year 2026 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $310.44/share

-From a “bottom up” perspective, “as reported” earnings of $292.11/share

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 6977.27 as this post is written

Total Household Net Worth As A Percent Of GDP 3Q 2025

The following chart is from the CalculatedRisk post of January 9, 2026 titled “Fed’s Flow of Funds: Household Net Worth Increased $6.1 Trillion in Q3.” It depicts Total Household Net Worth as a Percent of GDP.  The underlying data is from the Federal Reserve’s Z.1 report, “Financial Accounts of the United States“:

As seen in the above-referenced CalculatedRisk post:

The net worth of households and nonprofits rose to $181.6 trillion during the third quarter of 2025. The value of directly and indirectly held corporate equities increased $5.5 trillion and the value of real estate decreased $0.3 trillion.

As one can see in the above chart, the first outsized peak was in 2000, and attained after the stock market bull market / stock market bubbles and economic strength.  The second outsized peak was in 2007, near the peak of the housing bubble as well as near the stock market peak. A third outsized peak appears to have formed between 2021 and 2022.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 6973.76 as this post is written

Average Hourly Earnings Trends

I have written many blog posts concerning the worrisome trends in income and earnings.

Along these lines, one of the measures showing disconcerting trends is that of hourly earnings.

While the concept of hourly earnings can be defined and measured in a variety of ways, below are a few charts that I believe broadly illustrate problematic trends.

The first chart depicts Average Hourly Earnings Of All Employees: Total Private (FRED series CES0500000003)(current value = $37.02):

(click on chart to enlarge image)(chart last updated 1-9-26)

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average Hourly Earnings of All Employees:  Total Private [CES0500000003] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed January 9, 2026: http://research.stlouisfed.org/fred2/series/CES0500000003

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This next chart depicts this same measure on a “Percentage Change From A Year Ago” basis.   While not totally surprising, I find the decline from 2009 and subsequent trend to be disconcerting:

(click on chart to enlarge image)(chart last updated 1-9-26)

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There are slightly different measures available from a longer-term perspective. Pictured below is another measure, the Average Hourly Earnings of Production and Nonsupervisory Employees – Total Private (FRED series AHETPI)(current value = $31.76):

(click on chart to enlarge image)(chart last updated 1-9-26)

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average Hourly Earnings of Production and Nonsupervisory Employees:  Total Private [AHETPI] ; U.S. Department of Labor: Bureau of Labor Statistics;  accessed January 9, 2026: 
http://research.stlouisfed.org/fred2/series/AHETPI

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Pictured below is this AHETPI measure on a “Percentage Change From A Year Ago” basis.   While not totally surprising, I find the decline from 2009 and subsequent trend to be disconcerting:

(click on chart to enlarge image)(chart last updated 1-9-26)

I will continue to actively monitor these trends, especially given the post-2009 dynamics.

_________

I post various economic indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 6964.80 as this post is written