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    Our economic perspective

    Retailers Face a Purchasing-Power Squeeze as Inflation Outruns Pay

    Faster consumer inflation and slower wage growth are squeezing the purchasing power that supports US retailers and other consumer businesses. Lower Treasury yields offer some relief, but they do not erase the pressure on sales volumes and margins.

    Edition · · Published
    Annual consumer inflation, calculated from CPI
    3.72%
    Annual hourly pay growth
    3.02%
    Unemployment
    4.2%

    Inflation

    3.72%Annual consumer inflation, calculated from CPI↑ +0.36 p.p. · vs Explore data

    Treasury yields

    5.1%10-year Treasury yield↓ -9 bp · vs Explore data

    Labor market

    4.2%Unemployment↑ +0.1 p.p. · vs Explore data

    Inflation expectations

    2.36%5-year market inflation expectations↑ +0.1 p.p. · vs Explore data

    Funding conditions

    3.88%Effective Fed rate↔ 0 bp · vs Explore data

    US retailers face a tougher sales environment because consumer prices are rising faster than hourly pay. Annual consumer inflation accelerated to 3.72% in September 2026 from 3.35% in August, while annual hourly pay growth slowed to 3.02% from 3.11%. That combination puts pressure on what a paycheck can buy. Businesses selling optional purchases face a harder task: raising prices without giving customers another reason to postpone an order.

    The labor market adds to that constraint. Unemployment rose to 4.2% in September from 4.1% in August. That increase alone does not establish a collapse in demand, but it weakens the case that household finances can comfortably absorb faster price increases. Slower wage growth can ease employers’ labor-cost pressure. Yet for consumer businesses, that benefit comes with a catch: the same wages help fund their customers’ purchases. Cheaper labor growth is not an unqualified earnings tailwind.

    Borrowing costs offer only limited relief. The 10-year Treasury yield fell to 5.1% on October 15 from 5.19% on October 14. A lower benchmark can ease pressure on financing costs and the value investors assign to future profits, but a daily decline does not make credit cheap or establish that customer borrowing rates fell alongside it. Businesses still need projects and sales that justify financing costs, rather than relying on a modest bond-market improvement to rescue their economics.

    The stock market’s enthusiasm does not overturn that household arithmetic. The consumer-discretionary sector fund XLY gained 1.77% on October 19, but a share-price gain is not evidence of stronger purchasing power. The economic distinction is between collecting more dollars and selling more goods profitably. Our view is that faster inflation and slower pay growth make broad consumer optimism harder to justify. Valuations need support from durable demand and resilient margins, not simply higher price tags.

    Charts below retain the data used by this edition.

    Inflation

    Annual rates compare prices with the same month a year earlier. Lower inflation means slower price increases, not necessarily lower prices.

    Annual consumer inflation, calculated from CPI
    3.72%
    Annual core consumer inflation
    2.57%
    Annual consumer spending inflation
    3.42%
    Annual core consumer spending inflation
    3.01%
    History · Percent

    Hover or tap a date. Use ← →, Home and End with the chart focused.

    InflationExact observations. Gaps indicate unavailable data.2.232.763.283.84.33Sep 1, 2025Sep 1, 2026
    Annual consumer inflation, calculated from CPI 3.72%Annual core consumer inflation 2.57%Annual consumer spending inflation UnavailableAnnual core consumer spending inflation Unavailable
    View exact values in a table
    Inflation · observation date
    DateAnnual consumer inflation, calculated from CPIAnnual core consumer inflationAnnual consumer spending inflationAnnual core consumer spending inflation
    3.02%3.02%2.78%2.82%
    ——2.66%2.7%
    2.7%2.6%2.71%2.72%
    2.65%2.65%2.78%2.87%
    2.39%2.51%2.73%2.94%
    2.43%2.47%2.8%2.96%
    3.29%2.6%3.37%3.11%
    3.78%2.74%3.57%3.08%
    4.17%2.82%3.82%3.16%
    3.46%2.57%3.45%3.04%
    3.3%2.47%3.36%2.98%
    3.35%2.45%3.42%3.01%
    3.72%2.57%——
    1–13 / 13
    More indicators and reference periods
    Consumer prices
    336.3
    Core consumer prices
    338.9
    Annual consumer inflation
    2.31%
    Consumer spending prices
    131.58
    Core consumer spending prices
    130.46
    Consumer spending, before inflation
    22,308.5 bn USD
    About these numbers

    Core measures exclude food and energy. Annual changes compare matching months. Nominal consumer spending is not real consumption growth.

    Treasury yields

    Treasury yields show the cost of US government borrowing. Each curve uses observations from one actual date; a missing maturity remains a gap.

    2-year Treasury yield
    4.77%
    10-year Treasury yield
    5.1%
    10-year minus 2-year yield
    33 bp
    10-year minus 3-month yield
    82 bp
    History · Percent

    Hover or tap a date. Use ← →, Home and End with the chart focused.

    Treasury yieldsExact observations. Gaps indicate unavailable data.3.213.784.354.915.48Oct 17, 2025Oct 15, 2026
    2-year Treasury yield 4.77%10-year Treasury yield 5.1%
    View exact values in a table
    Treasury yields · observation date
    Date2-year Treasury yield10-year Treasury yield
    4.19%4.65%
    4.25%4.72%
    4.22%4.7%
    4.2%4.68%
    4.15%4.63%
    4.17%4.68%
    4.19%4.72%
    4.19%4.71%
    4.19%4.65%
    4.19%4.69%
    4.24%4.74%
    4.24%4.7%
    4.17%4.64%
    4.19%4.66%
    4.2%4.67%
    4.34%4.73%
    4.34%4.75%
    4.39%4.79%
    4.39%4.79%
    4.34%4.77%
    4.37%4.78%
    4.39%4.8%
    4.43%4.83%
    4.56%4.95%
    4.63%4.96%
    4.65%4.97%
    4.67%5%
    4.74%5.01%
    4.67%4.94%
    4.76%5.01%
    4.76%4.96%
    4.71%4.96%
    4.85%5.11%
    4.87%5.18%
    4.81%5.17%
    4.92%5.24%
    4.89%5.26%
    4.88%5.29%
    4.78%5.24%
    4.83%5.28%
    4.84%5.31%
    4.79%5.27%
    4.77%5.28%
    4.75%5.22%
    4.8%5.24%
    4.79%5.21%
    4.82%5.19%
    4.77%5.1%
    202–249 / 249

    Rate differences

    History · Basis points

    Hover or tap a date. Use ← →, Home and End with the chart focused.

    Rate differences · basis pointsExact observations. Gaps indicate unavailable data.-8.7223.145586.86118.72Oct 17, 2025Oct 15, 2026
    10-year minus 2-year yield 33 bp10-year minus 3-month yield 82 bp
    View exact values in a table
    Rate differences · basis points · observation date
    Date10-year minus 2-year yield10-year minus 3-month yield
    46 bp78 bp
    47 bp83 bp
    48 bp81 bp
    48 bp81 bp
    48 bp76 bp
    51 bp82 bp
    53 bp85 bp
    52 bp85 bp
    46 bp79 bp
    50 bp82 bp
    50 bp86 bp
    46 bp83 bp
    47 bp78 bp
    47 bp81 bp
    47 bp83 bp
    39 bp83 bp
    41 bp84 bp
    40 bp87 bp
    40 bp87 bp
    43 bp88 bp
    41 bp87 bp
    41 bp86 bp
    40 bp88 bp
    39 bp95 bp
    33 bp89 bp
    32 bp86 bp
    33 bp89 bp
    27 bp87 bp
    27 bp82 bp
    25 bp87 bp
    20 bp79 bp
    25 bp80 bp
    26 bp92 bp
    31 bp94 bp
    36 bp93 bp
    32 bp96 bp
    37 bp101 bp
    41 bp109 bp
    46 bp107 bp
    45 bp109 bp
    47 bp109 bp
    48 bp106 bp
    51 bp106 bp
    47 bp99 bp
    44 bp99 bp
    42 bp95 bp
    37 bp91 bp
    33 bp82 bp
    202–249 / 249

    The yield curve

    Choose a maturity by touch, mouse or the arrow keys. Dates shown are actual available observations.

    Treasury yields by maturity, in percent3.354.124.95.671m3m6m1y2y3y5y7y10y20y30y
    30yOct 15, 2026 · 5.43%Oct 14, 2026 · 5.52%Sep 15, 2026 · 5.36%Oct 15, 2025 · 4.64%
    Yield curve values
    Maturities and exact observation dates · percent
    MaturityOct 15, 2026Oct 14, 2026Sep 15, 2026Oct 15, 2025
    1m4.17%4.11%3.93%4.2%
    3m4.28%4.28%4.11%4.03%
    6m————
    1y4.49%4.53%4.39%3.61%
    2y4.77%4.82%4.67%3.5%
    3y————
    5y4.91%5%4.83%3.63%
    7y————
    10y5.1%5.19%5%4.05%
    20y————
    30y5.43%5.52%5.36%4.64%
    More indicators and reference periods
    1-month Treasury yield
    4.17%
    1-year Treasury yield
    4.49%
    3-month Treasury yield
    4.28%
    30-year Treasury yield
    5.43%
    5-year Treasury yield
    4.91%
    About these numbers

    100 basis points equal one percentage point. An inverted curve is an observation, not a guaranteed recession. Curves show actual available dates, not an invented month-end.

    Labor market

    Unemployment, participation and pay show different parts of the labor market. Their reference months may differ.

    Unemployment
    4.2%
    Labor force participation
    61.8%
    Annual hourly pay growth
    3.02%
    Job openings
    7.08 million
    History · Percent

    Hover or tap a date. Use ← →, Home and End with the chart focused.

    Labor marketExact observations. Gaps indicate unavailable data.2.893.333.764.24.63Sep 1, 2025Sep 1, 2026
    Unemployment 4.2%Annual hourly pay growth 3.02%
    View exact values in a table
    Labor market · observation date
    DateUnemploymentAnnual hourly pay growth
    4.4%3.85%
    —3.92%
    4.5%3.93%
    4.4%3.73%
    4.3%3.66%
    4.4%3.7%
    4.3%3.43%
    4.3%3.57%
    4.3%3.34%
    4.2%3.38%
    4.1%3.21%
    4.1%3.11%
    4.2%3.02%
    1–13 / 13
    More indicators and reference periods
    Average hourly pay
    37.81 USD/hour
    Job openings
    7,079 thousand
    About these numbers

    Unemployment and participation are percentages. Job openings are shown in millions; hourly pay uses USD per hour. Wage growth compares the same month a year earlier.

    Inflation expectations

    Market expectations are average annual inflation over the stated horizon. They are not cumulative price increases or a guaranteed forecast.

    5-year market inflation expectations
    2.36%
    10-year market inflation expectations
    2.35%
    Market inflation expectations, years 6–10
    2.34%
    1-year inflation estimate
    2.98%
    History · Percent

    Hover or tap a date. Use ← →, Home and End with the chart focused.

    Inflation expectationsExact observations. Gaps indicate unavailable data.2.082.222.372.522.67Oct 1, 2025Oct 1, 2026
    5-year market inflation expectations Unavailable10-year market inflation expectations UnavailableMarket inflation expectations, years 6–10 Unavailable
    View exact values in a table
    Inflation expectations · observation date
    Date5-year market inflation expectations10-year market inflation expectationsMarket inflation expectations, years 6–10
    2.36%2.31%2.25%
    2.35%2.27%2.18%
    2.28%2.24%2.21%
    2.39%2.31%2.22%
    2.45%2.3%2.15%
    2.56%2.34%2.12%
    2.6%2.38%2.17%
    2.62%2.44%2.27%
    2.37%2.29%2.22%
    2.26%2.25%2.23%
    2.26%2.29%2.31%
    2.36%2.35%2.34%
    ———
    1–13 / 13
    More indicators and reference periods
    10-year inflation estimate
    2.73%
    30-year inflation estimate
    2.7%
    5-year inflation estimate
    2.77%
    About these numbers

    The years 6–10 series describes the five years after the first five. Market-implied expectations and model estimates are different measures.

    Funding conditions

    Fed and overnight rates describe the cost of short-term financing. Rate spreads are in basis points; borrowing volumes are separate from rates.

    Effective Fed rate
    3.88%
    Secured overnight borrowing rate
    3.88%
    Interest on bank reserves
    3.9%
    Secured borrowing minus reserve rate
    -2 bp
    History · Percent

    Hover or tap a date. Use ← →, Home and End with the chart focused.

    Funding conditionsExact observations. Gaps indicate unavailable data.3.433.673.914.144.38Oct 19, 2025Oct 19, 2026
    Effective Fed rate UnavailableSecured overnight borrowing rate UnavailableInterest on bank reserves 3.9%
    View exact values in a table
    Funding conditions · observation date
    DateEffective Fed rateSecured overnight borrowing rateInterest on bank reserves
    3.63%3.65%3.65%
    3.63%3.66%3.65%
    3.63%3.65%3.65%
    3.63%—3.65%
    3.63%—3.65%
    3.63%—3.65%
    3.63%3.64%3.65%
    3.63%3.64%3.65%
    3.63%3.62%3.65%
    3.63%3.62%3.65%
    3.63%—3.65%
    3.63%—3.65%
    3.63%3.62%3.65%
    3.63%3.64%3.65%
    3.63%3.62%3.65%
    3.88%3.85%3.9%
    3.88%3.85%3.9%
    3.88%—3.9%
    3.88%—3.9%
    3.88%3.85%3.9%
    3.88%3.87%3.9%
    3.88%3.87%3.9%
    3.88%3.88%3.9%
    3.88%3.9%3.9%
    3.88%—3.9%
    3.88%—3.9%
    3.88%3.9%3.9%
    3.88%3.88%3.9%
    3.88%3.9%3.9%
    3.88%3.87%3.9%
    3.88%3.88%3.9%
    3.88%—3.9%
    3.88%—3.9%
    3.88%3.89%3.9%
    3.88%3.9%3.9%
    3.88%3.88%3.9%
    3.88%3.87%3.9%
    3.88%3.87%3.9%
    3.88%—3.9%
    3.88%—3.9%
    3.88%—3.9%
    3.88%3.89%3.9%
    3.88%3.88%3.9%
    3.88%3.89%3.9%
    —3.88%3.9%
    ——3.9%
    ——3.9%
    ——3.9%
    319–366 / 366

    Rate differences

    History · Basis points

    Hover or tap a date. Use ← →, Home and End with the chart focused.

    Rate differences · basis pointsExact observations. Gaps indicate unavailable data.-19.59-4.5410.525.5540.59Oct 19, 2025Oct 19, 2026
    Secured borrowing minus effective Fed rate UnavailableSecured borrowing minus reserve rate Unavailable
    View exact values in a table
    Rate differences · basis points · observation date
    DateSecured borrowing minus effective Fed rateSecured borrowing minus reserve rate
    2 bp0 bp
    3 bp1 bp
    2 bp0 bp
    ——
    ——
    ——
    1 bp-1 bp
    1 bp-1 bp
    -1 bp-3 bp
    -1 bp-3 bp
    ——
    ——
    -1 bp-3 bp
    1 bp-1 bp
    -1 bp-3 bp
    -3 bp-5 bp
    -3 bp-5 bp
    ——
    ——
    -3 bp-5 bp
    -1 bp-3 bp
    -1 bp-3 bp
    0 bp-2 bp
    2 bp0 bp
    ——
    ——
    2 bp0 bp
    0 bp-2 bp
    2 bp0 bp
    -1 bp-3 bp
    0 bp-2 bp
    ——
    ——
    1 bp-1 bp
    2 bp0 bp
    0 bp-2 bp
    -1 bp-3 bp
    -1 bp-3 bp
    ——
    ——
    ——
    1 bp-1 bp
    0 bp-2 bp
    1 bp-1 bp
    —-2 bp
    ——
    ——
    ——
    319–366 / 366
    More indicators and reference periods
    Fed funds trading volume
    115 bn USD
    Fed target, lower bound
    3.75%
    Fed target, upper bound
    4%
    Fed overnight repo operations
    0.01 bn USD
    Fed overnight reverse repo operations
    0.33 bn USD
    90-day financial company funding
    4.08%
    90-day nonfinancial company funding
    4.09%
    Bank funding, 25th percentile
    3.87%
    Bank funding, 75th percentile
    3.88%
    Overnight bank funding volume
    246 bn USD
    Overnight bank funding rate
    3.88%
    Secured borrowing, 25th percentile
    3.85%
    Secured borrowing, 75th percentile
    3.93%
    Secured borrowing volume
    2,925 bn USD
    Secured borrowing minus effective Fed rate
    1 bp
    Treasury repo, 25th percentile
    3.85%
    Treasury repo, 75th percentile
    3.86%
    Treasury repo reference rate
    3.85%
    Treasury repo trading volume
    1,193 bn USD
    About these numbers

    SOFR is secured overnight financing; IORB is interest on bank reserves. Volumes do not prove cash flows into stocks. Commercial paper uses its documented rate basis.

    How the market moved

    Same-session price moves, excluding dividends. These comparisons describe what happened; they do not establish cause or investor cash flows.

    • S&P 500 · SPY+0.46%Benchmark
    • QQQ+1.21%+0.75 p.p. vs SPY
    • XLB+0.02%-0.44 p.p. vs SPY
    • XLC-0.16%-0.62 p.p. vs SPY
    • XLE-0.64%-1.1 p.p. vs SPY
    • XLF-0.83%-1.28 p.p. vs SPY
    • XLI-0.63%-1.09 p.p. vs SPY
    • XLK+1.36%+0.9 p.p. vs SPY
    • XLP-0.45%-0.9 p.p. vs SPY
    • XLRE-1.16%-1.62 p.p. vs SPY
    • XLU-2.01%-2.47 p.p. vs SPY
    • XLV-0.61%-1.07 p.p. vs SPY
    • XLY+1.77%+1.31 p.p. vs SPY
    Source: Massive. Reference periods are shown for each series.Snapshot retained