READING \u2014 2025 has been quite a year in terms of the economy.<\/p>\n
The implementation of tariffs, Federal Reserve interest rate actions, talk about inflation, mortgage rates \u2014 all led to discussion and some uncertainty for consumers and businesses.<\/p>\n
What will 2026 bring?<\/p>\n
The Greater Reading Chamber Alliance offered its annual Economic Forecast Breakfast for the region\u2019s business community, with insight offered by Michael Skordeles, head of U.S. economics, senior vice president, Truist Services Inc.<\/p>\n
Skordeles started his Dec. 3 talk by saying that during 2025, the economy has been \u201ca bit sloppy in a lot of respects.\u201d<\/p>\n
\u201cSome of it, yes, is tariffs. Some is behavior because people are trying to adjust to tariffs \u2014 maybe preordering goods before tariffs hit, that sort of thing,\u201d he said.<\/p>\n
He added that due to the federal government shutdown, which lasted 43 days before ending Nov. 13, a lot of economic data was delayed. Now, he said, that information is starting to come in.<\/p>\n
He also pointed out the loss of income during that period for several million furloughed federal workers.<\/p>\n
\u201cPlus, don\u2019t discount the fact that those several million federal workers didn\u2019t stop to get a coffee, didn\u2019t go to breakfast, didn\u2019t get their hair cut. That is a real loss of income not just for those federal employees, but for other service sector employees as well,\u201d he said.<\/p>\n
Moving into 2026, Skordeles said he expects to see a 2.3% uptick in growth during the year. While that number is below average, he said, \u201cit is an uptick from the 1.8% that I think we\u2019re going to achieve for the full year of 2025.\u201d<\/p>\n
He outlined four reasons for the expected uptick:<\/p>\n
\u2022 Tax incentives for consumers and businesses<\/p>\n
\u2022 Federal Reserve rate cuts lowering borrowing costs<\/p>\n
\u2022 Tariff stability, though not full clarity<\/p>\n
\u2022 Continued artificial intelligence- and tech-led capital spending<\/p>\n
There are some risks to that growth, he said, including stumbles in the labor market, inflation that hamstrings the Fed, reigniting trade tensions and additional government dysfunction.<\/p>\n
\u201cNonetheless, I think we\u2019ll see an uptick in 2026,\u201d he added. \u201cI wouldn\u2019t be surprised if it sticks around that average for the next couple of years.\u201d<\/p>\n
TARIFFS<\/p>\n
While acknowledging that the U.S. has its highest tariff rates in 90 years, Skordeles stressed that what has been subject to tariffs and the impact on the economy is greatly different today than it was 90 years ago.<\/p>\n
\u201cWe were an export dominated economy and today we are massively a service based economy,\u201d he said.<\/p>\n
He stressed that there are challenges ahead with tariffs. The Supreme Court is expected to rule on President Donald Trump\u2019s implementation of tariffs by using the International Emergency Economic Powers Act of 1977.<\/p>\n
\u201cBut spoiler alert \u2014 tariffs aren\u2019t going away,\u201d Skordeles added. \u201cBusiness is prepared for and has adjusted to and adapted to new trade policy and a shifting dynamic globally, not just in the U.S. \u2014 so we\u2019ll have a little bit more stability there.\u201d<\/p>\n
![\"The](\"https:\/\/www.newsbeep.com\/us-pa\/wp-content\/uploads\/2025\/12\/REG-L-GRCAEconOutlook-1207_2.jpg\")
The Greater Reading Chamber Alliance presented its annual Economic Forecast Breakfast on Wed. Dec. 3. An estimated 140 attendees heard 2026 insights from Michael Skordeles, head of U.S. economics, senior vice president, Truist Services Inc. (DONNA ROVINS \u2013 MEDIANEWS GROUP)
\nTAXES<\/p>\n
Skordeles sees some tax savings in 2026 that are pro-growth for businesses. On the consumer side, he estimates a 44% increase in federal tax refunds overall in 2026.<\/p>\n
\u201cThat is not a small number,\u201d he said. \u201cThe difference between 2025 and 2026 is roughly the size of another stimulus check.<\/p>\n
He did acknowledge that the vast majority of the increased refunds will go to higher income earners, mostly due to changes in state and local taxes.<\/p>\n
THE FED<\/p>\n
The Federal Reserve\u2019s easing of rates should help lower lending rates. Skordeles said there is a misconception, however, when talking about the Fed lowering interest rates and its impact on mortgage or credit card rates. A 1% decrease by the Fed, he said, does not translate to a 1% reduction in interest rates.<\/p>\n
As to when the Fed may issue its next rate cut, Skordeles said it is likely December (at its Dec. 10 meeting) or January, \u201cnot both.\u201d<\/p>\n
\u201cEspecially because of the backlog of economic data I was talking about. Most of our data is stuck in September. We\u2019re not going to get some of the October stuff or November by the time they meet,\u201d he said.<\/p>\n
The sad part, he added, is \u201cit\u2019s not about the mortgage rate \u2014 it\u2019s about the cost of the house.\u201d<\/p>\n
The median sale price of existing single family homes is up 54% from Dec. 2019. Skordeles said in his presentation. New single family home prices, while down from the 2022 peak, are still 25.5% above Dec. 2019.<\/p>\n
\u201cThey can\u2019t afford the cost of the house,\u201d Skordeles said. \u201cForget what the mortgage rate is. You can make it zero \u2014 they still can\u2019t afford it.\u201d<\/p>\n
He added that there is also a shortage of single-family homes in the U.S.<\/p>\n
Skordeles estimates housing will remain an issue for the next five years, or maybe longer.<\/p>\n
ARTIFICIAL INTELLIGENCE<\/p>\n
The AI boom, Skordeles said, \u201cis real.\u201d<\/p>\n
In his slides he listed nine companies: Apple; Alphabet; Amazon; Meta; Microsoft; Nvidia; Tesla; Oracle and Intel \u2014 saying they are worth more than the rest of the companies in the S&P 500.<\/p>\n
\u201cThey have hundreds of millions in actual revenue, and real contracts,\u201d he said. \u201cThis is real transformational stuff. It didn\u2019t just start in 2025 and it\u2019s not going to end in 2026. This is a long-term trend.<\/p>\n
INFLATION<\/p>\n
Skordeles said he expects to see an increase in the consumer price index by the end of this year. The increases he expects are in home furnishings, some food items, footwear, car parts and tires.<\/p>\n
Gas prices are stable, he added, which is a positive for inflation and consumers.<\/p>\n
SPENDING<\/p>\n
Consumers, Skordeles said are still spending. Retail and food service sales, hit an all-time high in September, despite a drop in auto sales.<\/p>\n
\u201cPeople are still spending, and this is the reason why \u2014 income and wages continue to grow much faster than inflation,\u201d Skordeles said.<\/p>\n
The pre-pandemic long-term average for earnings growth was 2.4% per year. The average hourly wage growth for 2025 is at 3.8%.<\/p>\n
\u201cHourly employees are doing better. Their incomes are up. That is why we\u2019re continuing to see spending,\u201d he said.<\/p>\n
People are paying their bills, he said, and while delinquencies have seen an uptick, the number are at roughly pre-pandemic levels.<\/p>\n
\u201cThat\u2019s not to say there aren\u2019t people struggling,\u201d he said.<\/p>\n
The Greater Reading Chamber Alliance\u2019s Economic Forecast Breakfast, held at the Redner\u2019s Event Center at First Energy Stadium in Reading, attracted about 140 attendees, the agency said.<\/p>\n","protected":false},"excerpt":{"rendered":"READING \u2014 2025 has been quite a year in terms of the economy. The implementation of tariffs, Federal…\n","protected":false},"author":2,"featured_media":53256,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[349,60,61,182,28,736,128,130,129,706],"class_list":{"0":"post-53255","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-reading","8":"tag-berks-county","9":"tag-business","10":"tag-economy","11":"tag-local-news","12":"tag-pennsylvania","13":"tag-reading","14":"tag-reading-city","15":"tag-reading-city-headlines","16":"tag-reading-city-news","17":"tag-top-stories-reg"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts\/53255","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/comments?post=53255"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/posts\/53255\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/media\/53256"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/media?parent=53255"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/categories?post=53255"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-pa\/wp-json\/wp\/v2\/tags?post=53255"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}