US Economy Strengthens: Rising Wages, Retail Sales, and Home Sales Signal Growth

Recent economic data indicates a growing strength on Main Street, as Americans’ take-home pay rises, contributing to increased retail sales and home purchases. However, some challenges remain.

According to data released last week by the Bureau of Labor Statistics, average weekly earnings saw a 1.42% increase after adjusting for inflation from January to December 2025.

Retail spending experienced a 3.3% year-over-year increase in November, with a 0.6% rise from the previous month. This follows a revision of October’s data, which showed a slight monthly decline of 0.1%, as reported by the Census Bureau.

These figures exceeded economists’ expectations, who had predicted a 0.4% increase in November after a previously reported unchanged figure.

Lower interest rates have played a significant role in boosting home sales. The National Association of Realtors (NAR) reported a 5.1% increase in existing home sales for December, coinciding with recent declines in mortgage rates.

MORTGAGE RATES FALL TO LOWEST LEVEL SINCE 2022

Recent economic data has shown signs of strength on Main Street despite some headwinds. (Stefani Reynolds/AFP via Getty Images / Getty Images)

The average 30-year fixed-rate mortgage stood at 6.19% in December, down from 6.24% in November and 6.72% a year earlier.

NAR chief economist Lawrence Yun noted that while “2025 was another tough year for homebuyers, marked by record-high home prices and historically low home sales,” conditions in the housing market began to improve in the fourth quarter, aided by lower mortgage rates and slower home price growth.

“Inventory levels remain tight,” Yun added. “With fewer sellers eager to move, homeowners are taking their time deciding when to list or delist their homes. Similar to past years, more inventory is expected to come to market beginning in February.”

INFLATION HELD STEADY IN DECEMBER, REMAINING WELL ABOVE THE FED’S 2% TARGET

Retail sales increased 0.6% on a monthly basis in November, according to data from the Census Bureau released this week. (Stefani Reynolds/AFP via Getty Images)

Inflation appears to be stabilizing, although the Bureau of Labor Statistics’ consumer price index (CPI) indicates that inflation remained elevated at the close of 2025.

The December CPI report revealed that headline inflation rose 0.3% month-over-month and 2.7% year-over-year.

Core CPI, which excludes volatile food and energy prices, increased by 0.2% in December and is up 2.6% compared to the previous year.

US ECONOMY ADDED 50K JOBS IN DECEMBER AS UNEMPLOYMENT RATE DECLINES

Home sales surged at the end of the year with more favorable mortgage rates. (Lindsey Nicholson/UCG/Universal Images Group via Getty Images)

These figures remain significantly above the Federal Reserve’s long-term target of 2% for inflation, creating challenges for policymakers as they strive to balance stable prices with maximum employment amid ongoing inflation and a sluggish labor market.

The Fed has reduced its benchmark federal funds rate by 25 basis points at each of its last three meetings, indirectly contributing to lower mortgage rates influenced by bond markets.

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Market expectations suggest that the Fed will maintain its current target range of 3.5% to 3.75% for the federal funds rate during its next meeting at the end of January, with the CME FedWatch tool indicating a 95% probability of no rate cuts.

Reuters contributed to this report.

Recent economic data indicates a growing strength on Main Street, as Americans’ take-home pay rises, contributing to increased retail sales and home purchases. However, some challenges remain.

According to data released last week by the Bureau of Labor Statistics, average weekly earnings saw a 1.42% increase after adjusting for inflation from January to December 2025.

Retail spending experienced a 3.3% year-over-year increase in November, with a 0.6% rise from the previous month. This follows a revision of October’s data, which showed a slight monthly decline of 0.1%, as reported by the Census Bureau.

These figures exceeded economists’ expectations, who had predicted a 0.4% increase in November after a previously reported unchanged figure.

Lower interest rates have played a significant role in boosting home sales. The National Association of Realtors (NAR) reported a 5.1% increase in existing home sales for December, coinciding with recent declines in mortgage rates.

MORTGAGE RATES FALL TO LOWEST LEVEL SINCE 2022

Recent economic data has shown signs of strength on Main Street despite some headwinds. (Stefani Reynolds/AFP via Getty Images / Getty Images)

The average 30-year fixed-rate mortgage stood at 6.19% in December, down from 6.24% in November and 6.72% a year earlier.

NAR chief economist Lawrence Yun noted that while “2025 was another tough year for homebuyers, marked by record-high home prices and historically low home sales,” conditions in the housing market began to improve in the fourth quarter, aided by lower mortgage rates and slower home price growth.

“Inventory levels remain tight,” Yun added. “With fewer sellers eager to move, homeowners are taking their time deciding when to list or delist their homes. Similar to past years, more inventory is expected to come to market beginning in February.”

INFLATION HELD STEADY IN DECEMBER, REMAINING WELL ABOVE THE FED’S 2% TARGET

Retail sales increased 0.6% on a monthly basis in November, according to data from the Census Bureau released this week. (Stefani Reynolds/AFP via Getty Images)

Inflation appears to be stabilizing, although the Bureau of Labor Statistics’ consumer price index (CPI) indicates that inflation remained elevated at the close of 2025.

The December CPI report revealed that headline inflation rose 0.3% month-over-month and 2.7% year-over-year.

Core CPI, which excludes volatile food and energy prices, increased by 0.2% in December and is up 2.6% compared to the previous year.

US ECONOMY ADDED 50K JOBS IN DECEMBER AS UNEMPLOYMENT RATE DECLINES

Home sales surged at the end of the year with more favorable mortgage rates. (Lindsey Nicholson/UCG/Universal Images Group via Getty Images)

These figures remain significantly above the Federal Reserve’s long-term target of 2% for inflation, creating challenges for policymakers as they strive to balance stable prices with maximum employment amid ongoing inflation and a sluggish labor market.

The Fed has reduced its benchmark federal funds rate by 25 basis points at each of its last three meetings, indirectly contributing to lower mortgage rates influenced by bond markets.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

Market expectations suggest that the Fed will maintain its current target range of 3.5% to 3.75% for the federal funds rate during its next meeting at the end of January, with the CME FedWatch tool indicating a 95% probability of no rate cuts.

Reuters contributed to this report.