National Association of Health and Educational Facilities Finance Authorities
On Wednesday, October 7, 2026, Peter Rupert gave an economic update lecture to the National Association of Health and Educational Facilities Finance Authorities at their Fall Conference.
Pretty much all inflation measures moved up in the latest data. Core CPI rose at a 3.5 percent monthly rate (annualized) in the most recent month, with a year-over-year rate of 2.4 percent, and a trend rate of 2.6 percent. Core PCE, the Federal Reserve's preferred measure, is at 3.0 percent year-over-year. The 16% Trimmed Mean CPI is at 2.7 percent, and services inflation is 3.1 percent year-over-year. All of these measures remain above the Fed's 2 percent target.
Wages are not keeping pace. Average hourly earnings are up 3.0 percent, compared with 3.4 percent for headline CPI. Monthly payroll numbers have been all over the place. Employment fell by 156,000 in February, then rose by 214,000 in March. More recently, we saw a loss of 10,000 in July, a gain of 133,000 in August, and a modest 29,000 in September. The labor market also looks balanced. There are roughly 7.1 million unemployed people and roughly 7.1 million job openings, essentially one opening per job seeker.
The broader economy continues to grow. Real GDP increased at an annualized 2.2 percent in the second quarter of 2026, real consumption rose 3.8 percent, and payroll employment grew by 29,000 in September. There are 7.1 million unemployed persons and 7.1 million job openings, and the estimated probability of recession is 0.6 percent.