b'Economic Update CSIA 17Interest rates, while declining, are still atto the nations recent supply chain ills. Lead the highest levels since 2022. Costs fortimes have diminished as companies have materials and supplies are increasing. Therefound alternative or additional suppliers, is uncertainty about the nations future tradesaid Petryk. Those that relied on one or two policy. Lower and middle income consumers,vendors now have three, four or five.nervous about inflation, are tapped out and closing their wallets. Against suchBusinesses should also benefit from a decline headwinds, a host of otherwise attractivein the cost of money over the coming months, projects can look less promising. as the Federal Reserve shifts its focus from fighting inflation to bolstering employment. One might also expect business profitabilityWe look for inflation to peak at just above to suffer. Yet Oxford Economics expects it to3% when 2025 numbers are finalized, and follow the same general pattern as the GDP.for the Fed to cut interest rates into 2026 We look for corporate profits to rise by 4.9%until the federal funds rate falls to about 3%, in 2026, said Yaros. Thats up substantiallysaid Yaros. That rate, while much higher than from the 0.5% expected when 2025 numbersthe rates of early 2022, is a considerable are finalized. Even so, the 2026 pace remainsimprovement over the 4.3% of mid-2025.slower than the 7.9% clocked in 2024.Declining interest rates, which encourage the The expected 2026 rebound in profitabilitylaunch of new projects, are also a reflection stems from a belief that stimulus fromof looser pockets on the part of the nations Washington will lift all boats. We believe thelenders. Credit conditions have improved passage of the One Big Beautiful Bill, withsignificantly for businesses, said Basu. its tax cuts for businesses and households,Companies with strong balance sheets will should help the economy regather somefind bankers very willing to supply debt. We steam in early 2026, said Anirban Basu,also know that equity investors, including Chairman & CEO of Sage Policy Groupprivate equity, remain quite aggressive in (sagepolicy.com). The legislations 100%supplying capital.bonus depreciation should help fuel business investment, while large tax refunds shouldHousing doldrums CENTRAL STATES INSULATION ASSOCIATIONinvigorate consumer spending. Both activitiesSpeaking of lower interest rates, they cant are important drivers of the nations economy. come soon enough for a major driver of construction activity and the nations economy: This stimulus from Washington is arriving atthe housing sector. Housing is in a funk, the same time companies are getting a moresaid Yaros. Single-family homebuilders are solid footing on the nations shifting tradecontending with a growing supply of unsold, policy. There has been a bit of a shock tocompleted new homes, as well as greater the system in and around tariffs over thecompetition from the resale market and falling past year, and it is taking some time forhome prices in a rising number of regions.many operators to understand their impact, noted Andrew Petryk, Head of IndustrialsThe high cost of money is not helping matters. at Brown, Gibbons Lang & Company, anA significant increase in interest rates since investment banker (bglco.com).the summer of 2022 has increased the monthly payments required from buyers of Specifically, companies have responded tonew or existing homes, said Petryk. They China tariffs by sourcing imports from otherhave also led to a significant market shortage countriesa move which has also lent succorbecause families who bought homes three continued on pg.18csiaonline.org'