Weekly Economic Update 07-17-26: Small Business Optimism; Consumer Price Index; Producer Price Index; Retail Sales; Home Builder Sentiment; and Building Permits & Housing Starts

Inflation took a break, but it is only because oil prices fell. But they are already heading higher again.

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. 

Coming back from vacation almost makes going on the vacation not worth it.

Almost.

After a great week of relaxation, you come back to more than 1,000 emails, most of which are junk, but you still have to go through them all so you don’t miss the important ones. Then, respond to all the email and voicemail messages that require your attention. Get up to speed on all the projects that continued moving forward while you didn’t. It is exhausting.

To make matters worse, my AI desktop interface crashed on Tuesday, and I was without access to my AI agent for three days. I learned several important things over those three days. First, it is almost scary how much I have come to rely on AI to help with my day-to-day job. Gathering and organizing raw data; evaluating and analyzing data; manipulating and applying formulas in Excel; designing slides in PowerPoint; reviewing and editing documents in Word; drafting emails; scheduling meetings; building websites; specifying and building statistical models…I could go on and on. My AI agent has become my research assistant, my administrative assistant, and my research collaborator all rolled into one. I rely as much on AI now as I do the Internet itself, or even my laptop. It is a part of my daily routine and skill set. And for three days I was without. Imagine not having any way to access the Internet for three days. Or not having your cell phone or your laptop. That is what it felt like.

Which leads me to the second thing I learned this week. Not only have I come to rely on the technology, but it has also taken my personal productivity to an entirely different level. Frankly, a completely different planet! Those days I was without I felt like I didn’t accomplish nearly what I had been previously. Again, how much would you accomplish with your laptop, cell phone, or access to the Internet?

Not to sound cliché, but if you aren’t utilizing AI in your daily workflow, you are falling behind. Reminds me of a family member who told me the “Internet was a fad” in the late 1990s. AI isn’t a fad. In fact, if you stop and really think about it, the impact it will have on the economy will be profound. And they could be profoundly good or profoundly bad. Part of me is glad I am in the twilight of my career and won’t be significantly impacted either way. But another part of me wishes I were just starting out, because the opportunities really are endless.

Small Business Optimism

On Tuesday, we got the June report on small business sentiment from the NFIB (full release here). The headline Optimism Index jumped 2.1 points to 97.4, beating the 95.7 consensus and closing back in on the 52-year average of 98.0.

After a year of the index grinding sideways below average, that is a real move — and almost all of it came from expectations, with the net share of owners expecting better business conditions up 10 points to +13% (the first improvement all year) and real sales expectations up 8 points to +9%. The reason is no mystery: fuel prices came down, and cheaper diesel shows up fast on Main Street.

However, dig into the report, and you can see what happened underneath. A net 38% of owners raised their selling prices in June — the fourth straight monthly increase, and the highest rate in three years. Inflation jumped back to the number-one spot on the “most important problem” list at 21%, the highest since October 2024, also rising for a fourth consecutive month. So the same survey that says owners feel better also says they are raising prices faster than at any point since early 2023. Sentiment is a mood; pricing is a behavior. The pricing is the one that ends up in the CPI.