Weekly Economic Update 01-23-26: Industrial Production & Capacity Utilization; Personal Income & Spending; and PCE Inflation

The Fed's favorite measure of inflation shows they still have work to do. Unfortunately, they are making the problem worse.

The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

The update will be a little shorter than usual this week, as it was a very light week for economic data. Last week, I mentioned that I would be laying out some of my “opportunities and obstacles” to growth here in the blog for those who aren’t able to attend one of my economic talks. I went on to discuss the #1 opportunity for the economy in 2026 - Artificial Intelligence. This week, I want to briefly touch on one of the obstacles for economic growth in 2026 - global supply chain disruption and geopolitical tension.

This is not another commentary on current U.S. tariff policy, as I have written extensively on that in the past. From a personal perspective (again, for reasons I have explained in the past), the current U.S. tariff policy doesn’t concern me. Nor (despite the mainstream media claims to the contrary) am I concerned that U.S. consumers are bearing the brunt of the cost (again, as I have discussed in the past). So this isn’t a commentary on U.S. tariff policy. But regardless on which side of the tariff debate you fall, the simple fact of the matter is that our current tariff policy is disruptive to global supply chains, and by extension, U.S. manufacturers and consumers, which makes it an obstacle to economic growth in the coming year.

Further, in the past week, the administration has threatened Venezuela, Colombia, Mexico, Cuba, Iran, and Greenland. And those are just the ones off the top of my head. Again, this isn’t a commentary on U.S. foreign policy, but it is hard to argue against the fact that such geopolitical tension also represents a threat to near-term domestic economic growth, for much the same reason as tariff policy - it introduces uncertainty - and the economy hates uncertainty.

Interestingly, there is a flipside…