Checking on the Market: Economic Insights from January’s Market Pulse

Highlights:

• The U.S. consumer economy is sharply divided (K-shaped); businesses and lenders must look beyond averages and tailor strategies for stressed lower-income segments versus affluent, high-spending households.

• Artificial Intelligence investment is the current engine for economic growth, while the auto industry faces a significant shift with sharply rising electric vehicle (EV) lease returns starting later in 2026.

As 2026 begins, economists are deeply divided on where the U.S. economy is headed. 

Some predict strong growth near 3%, while others warn of slowing momentum and rising risks. The January 2026 Market Pulse webinar brought together elite experts to unpack what’s really happening — and what to watch next.

Here are some takeaways shaping the year ahead.

The Economy Is Growing — but Unevenly

There is no clear consensus on 2026. Optimists, especially in the financial sector, see steady growth driven by investment and markets. More cautious voices point to slowing job growth and consumer stress. The truth likely sits somewhere in the middle: continued expansion, but with real cracks beneath the surface.

AI Is the Engine of Growth

Artificial intelligence is the strongest part of the economy right now. Investment in data centers, chips, and power infrastructure is booming. Major tech firms now account for about one-third of all capital spending in the S&P 500.

That level of concentration is powerful, but risky. If AI investment keeps rising, it could support growth through 2026. If it slows, the impact could be felt quickly across the economy.

Consumers Are Split Into Two Economies

Consumer spending data shows a clear K-shaped economy. Higher-income households, especially homeowners with stock portfolios, continue to spend. Lower-income consumers are pulling back, especially on essentials like food, vehicles, and home goods.

Holiday shopping data made this gap even clearer: Spending rose for higher earners but fell for lower-income groups. This divide remains one of the biggest risks to economic stability.

The Labor Market Is Flashing Warning Signs

Job growth has slowed sharply, with recent six-month averages close to zero. More people are working part-time because they can’t find full-time jobs, and more workers are holding multiple jobs just to cover expenses. While this isn’t a collapse, it is a clear cooling trend to watch.

The Auto Market Is Softer but Not Breaking

Vehicle affordability remains a challenge, with average car prices now above $50,000. While prices are up nearly 30% since before the pandemic, they are rising in line with other major costs like food, housing, and insurance.

Auto sales in 2026 are expected to dip slightly from 2025, but tighter inventories, stable used-vehicle demand, and a strong tax refund season could help support the market, especially early in the year.

EV Lease Returns Will Reshape the Market

The auto industry is approaching a turning point. Lease maturities are currently at a low, but they will rise sharply starting later in 2026, especially for electric vehicles.

EVs made up about 5% of lease returns in 2025. That figure could jump to 12% in 2026 and reach 20% or more by 2028. This wave will increase used-EV supply and could pressure resale values for years to come.

Consumer Credit Is Stabilizing — Slowly

Total consumer debt has climbed to $18.1 trillion, but delinquency rates are improving across many credit products. Credit cards, personal loans, and auto loans are performing better than in 2024, and newer loan vintages look healthier than those issued right after the pandemic.

That said, younger generations — especially Gen Z and some millennials — remain under pressure due to high housing and living costs. The financial divide between generations continues to grow.

Bottom Line

The 2026 economy is not headed for disaster, but it isn’t all smooth sailing either. AI investment and high-income consumers are driving growth, while labor market stress and consumer inequality remain key risks. For businesses and lenders, success this year will depend on understanding these divides and planning for volatility, not just averages.

Keep Your Business Goals Within Sight

We hope you will join us for our February 2026 Market Pulse webinar. To ask questions in real time and gain deeper insights before anyone else, you have to be there. Don’t miss it! Stay tuned to register, plus find our monthly Small Business Insights, National Consumer Credit Trends reports, the Market Pulse podcast, and more at our Market Pulse hub. 

Source:

Equifax, January 2026 Market Pulse Webinar