Callan’s EconIndicators is a monthly collection of 14 key measures of economic and capital markets activity, placed in the context of recent experience. The purpose of the chart is to show current activity, a comparison to the last 10 years of data, and the recent direction of change for each measure.

We use 10 years of monthly data for all of the Callan EconIndicators, except GDP, which is reported quarterly.

Within each horizontal segment of the chart, which represents one of the 14 measures, we show:

• The two standard deviation range of the 10-year historical data, identified by the endpoint values on the left and right edge of the display
• The one standard deviation range identified by the shaded dark green region
• The average value of the indicator over the last 10 years
• The current value for the measure
• Under the current measure, an arrow to show direction of change

We limited the observations to two standard deviations to avoid the severe outliers for many economic indicators that appeared during the supply chain shock of the 2020-23 pandemic period.

Explaining the Callan EconIndicators

The intent of the chart is to provide readers with a current snapshot of the broad economy and the capital markets, placed in the context of the last 10 years of history. I will walk through the chart to bring the display to life and familiarize readers with each of the measures.

The first measure is GDP, the broadest reading of U.S. economic activity. The chart shows the quarterly increase in GDP, converted to an annual rate of growth, discounted for inflation and seasonally adjusted. GDP came in at 2.0% for 1Q26, compared to the average rate of growth for the last 10 years of 2.6% (the orange line). The recent trend, indicated by the arrow, shows an increase over the previous quarter. The reading of 2.0% is well within a range of one standard deviation around the average (the dark green region).

CPI measures the year-over-year change in the price index. CPI came in at 3.3% for 1Q26, above the average value of 3.1% for the last 10 years, and the recent trend is rising.

Employment measures the monthly change in total non-farm employment in the U.S., in thousands. The 1Q reading is 178,000 new jobs created, below the average of 247,000 for the past 10 years, but trending upward. For context, readings above 100,000 are consistent with economic growth, while readings below 100,000 suggest a slowing U.S. economy.

Unemployment measures the percentage of workers who do not have jobs as a percent of those who are employed or are actively seeking work. The current reading of 4.3% is low by historical standards, and close to the average of the last 10 years.

Retail sales measures the percent change in monthly sales. Retail sales are an indicator of consumer purchasing activity. The current reading of 0.6% is above the recent average and trending upwards.

Housing starts show the monthly rate of new housing construction starts in the U.S., measured in thousands. Starts are a key measure of consumer and builder confidence in the U.S. economy. Starts faltered when interest rates rose in 2022 and 2024, but have since moved up, as indicated by the trend. The 1Q measure came in well above the average for the past 10 years.

Consumer sentiment is a monthly index that seeks to gauge how consumers feel about their current situation and expectations for the near future. Prior to the start of the pandemic in 2020, a robust economy was synonymous with a reading of 85 to 95. Since 2020, the index has been suppressed between readings of 55 and 75, and is now hovering near its lowest point ever.

PMI refers to the Purchasing Managers’ Index, one of the few forward-looking measures of the current economy. The index compilers ask purchasing managers across industries about their plans for spending in the coming 6 to 18 months. Key to understanding the PMI is that 50 is the dividing line between expansion and contraction in the economy; a reading above 50 points to economic expansion, and below 50 suggests economic contraction. The 1Q reading on PMI came in at 52.7, into expansion territory, after spending most of the previous three years below 50.

The 10-year U.S. Treasury yield was 4.3% at the end of 1Q26. This looks high relative to the last 10 years, but this period was dominated by the low interest rate policy that prevailed until rates normalized in 2022-23. Compared to much longer-term history, the U.S. Treasury yield is near a long-term equilibrium value. The current reading of 4.3% is not as far “off the charts” as the graphic depiction would suggest, given that the recent 10-year history is heavily influenced by the low interest rate environment of the first five years.

The 2Y-10Y U.S. Treasury yield spread measures the difference between yields on 10-year Treasury notes minus 2-year Treasury notes. We typically expect an upward sloping yield curve over the long term, where yields are higher for the longer-maturity bonds over shorter-maturity bonds—the reward for taking on higher maturity risk. This spread is currently 52 basis points, higher than the recent 10-year average, but lower than the longer-term average.

The IG corporate spread and the HY corporate spread are both option-adjusted spreads relative to comparable Treasury securities. Spreads show the bond markets’ pricing of risk in investment-grade (corporate) and below-investment-grade (high yield) debt relative to U.S. Treasuries. The narrower the spread, the greater the confidence the market has that investments in IG corporate and HY corporate bonds will not be riskier than Treasuries. Both spreads are near all-time lows, suggesting supreme confidence in the corporate bond market.

The S&P 500 Forward PE is the measure of analysts’ price/earnings estimates based on forward-looking earnings estimates, often referred to as a gauge of over- or under-valuation of the stock market. The current reading of 20.2 is down from lofty readings of 26.6 in 2025, below the 10-year average of 20.6, and trending downward.

The U.S. Dollar Index measures the value of the dollar relative to a basket of currencies. The dollar index has fallen 10% from its peak in 2024, and is trending higher.

So, at a glance:

The 1Q26 EconIndicators chart suggests:

1. GDP, CPI, and the job market (both employment gains and unemployment) suggest all is well in the U.S. economy, while…
2. Retail sales and housing starts suggest the consumer is spending and investing in housing.
3. However, sentiment is near an all-time low, in direct contrast to consumers’ spending.
4. Corporate and high yield spreads suggest investor confidence in the economy that is extreme when viewed through the lens of historical experience, and
5. Equity markets are richly valued, after the experience of 1Q26.

We will be updating and posting the EconIndicators to the Callan website each month.