If you lead a business right now, the hardest part isn’t one specific problem. It’s making sense of mixed signals.
Inflation is lower, but costs still feel high. Hiring is slowing, yet some roles remain difficult to fill. The economy is described as stable, but decisions feel riskier than they used to.
This disconnect is what many leaders are struggling to make sense of.
So instead of predictions or opinions, here’s a plain look at what the most recent U.S. Bureau of Labor Statistics data says as we head into 2026 and what it clarifies for leaders making real decisions.
Inflation: Slower, Not Gone
The Consumer Price Index rose 0.3% in December and is up 2.7% over the past 12 months. Core inflation, which excludes food and energy, is up 2.6% over the same period.
Inflation has moderated compared to earlier peaks, but it has not returned to pre-2020 norms. Many business costs, especially wages, benefits, insurance, rent, and services, tend to move up faster than they move back down.
Wholesale prices reinforce this picture. The Producer Price Index rose 3% over the past year, indicating that cost pressure is still working its way through supply chains rather than disappearing.
What this clarifies:
Costs are no longer accelerating rapidly, but they remain elevated. Leaders should not expect broad cost relief simply because inflation has cooled.
Employment: Slower Growth, Uneven Impact
The unemployment rate held at 4.4% in December 2025, according to the BLS Employment Situation report. Payroll growth continued in areas such as healthcare and social assistance, while sectors like retail trade saw declines.
This reflects a rebalancing across industries rather than a broad slowdown.
For leaders, this distinction matters. A slower overall labor market does not automatically make every role easier to fill. Many skilled and operational roles remain competitive, especially those tied closely to customer experience, revenue protection, or uptime.
What this clarifies:
Hiring conditions vary significantly by role and industry. Slower hiring overall does not eliminate talent constraints in critical areas.
Earnings: Flat in Real Terms
The BLS Real Earnings release shows that real average hourly earnings were unchanged in December, while real average weekly earnings declined slightly at 0.3%, primarily due to a reduction in hours worked.
This is often misread. Flat real earnings do not mean compensation pressure has disappeared. It means purchasing power is not improving meaningfully, which tends to keep sensitivity high around workload, scheduling, stability, and benefits.
What this clarifies:
Wage growth may be slowing, but labor cost pressure and workforce expectations remain present.
Productivity: Improved, but Not Uniform
The BLS Productivity and Costs report shows productivity increased in parts of the economy in late 2025, including in manufacturing and nonfarm business sectors. However, these gains were uneven.
Some organizations improved processes and output efficiency. Others are simply producing more with fewer people, which is harder to sustain over time.
What this clarifies:
Productivity gains should not be assumed across the board. Leaders should be cautious about building plans that rely on continued productivity improvement without structural support.
How Business Leaders Are Interpreting 2026
As we all know, economic data only tells part of the story.
According to the JPMorgan Chase Business Leaders Outlook for 2026, many leaders report cautious optimism about growth while citing labor availability, revenue pressure, and policy uncertainty as top concerns.
Similarly, S&P Global outlines a base case of continued growth rather than an imminent recession, while emphasizing ongoing uncertainty tied to costs, labor, and execution risk.
What’s notable is not confidence or fear. It’s selectivity. Leaders are planning to move forward, but with fewer mistakes and fewer assumptions.
What the Economy Is Actually Signaling to Leaders
The economy is not signaling a stop, but it is operating with less tolerance for missteps than in years past. Costs remain elevated, hiring conditions are uneven, and productivity gains are mixed.
For many leaders, uncertainty comes not from collapse, but from a thinner margin for avoidable mistakes.
Next week, we’ll look at what this environment means for leaders making real decisions about hiring, leadership capacity, and execution and how to navigate it without freezing or overcorrecting.
If this perspective is useful and you want a second set of eyes on your hiring or people priorities for 2026, you can schedule a free, confidential conversation with the Hoops team.
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