Thursday, February 12, 2026

A Lethargic Economy, Flickers of Hope — and a Cloud of Doubt

By EDDIE RIVERA

As the administration enters year two, population slowdown, rising layoffs and uneven housing signals underscore a nation still searching for economic footing

The U.S. economy is moving, but not exactly sprinting.

As the current administration enters its second year, new data compiled by the California Association of Realtors (CAR) suggests a nation still struggling to find momentum. Growth is forecast for both the broader economy and the housing market, but the signals underneath remain uneven, and confidence among employers and consumers alike, seems fragile.

The nation’s population rose 0.5% between July 1, 2024 and July 1, 2025, according to new U.S. Census Bureau estimates. That marks the slowest pace since 2021 and comes not far above the historic 0.2% low recorded during the early COVID period. The country added 1.8 million residents over the year, but the gain was sharply reduced by a drop in net international migration, which fell from 2.7 million to 1.3 million. If current trends continue, migration could decline by another 1 million in the coming year.

At the state level, California was one of five states to post a population decline, losing 9,465 residents. Like the nation overall, the state saw lower net international migration compared with the prior year.

Slower population growth has direct implications for housing demand. If the trend persists, it could weigh on demand in 2026 and 2027.

And the labor market is flashing its own caution signs.

Employers announced 108,435 job cuts in January, according to Challenger, Gray & Christmas, Inc. That represents a 118% increase from the same month a year earlier and a 205% jump from the prior month. It was the highest January total since 2009. While layoffs often rise early in the year, the scale suggests employers may be less optimistic about their business outlook.

California recorded 8,286 layoffs in January — down from 11,862 a year earlier — a steadier showing than several other states. Still, the national spike underscores lingering unease.

Consumers appear cautiously hopeful, though not fully reassured.

The University of Michigan’s consumer sentiment index rose for a third consecutive month in February, reaching its highest level since August 2024. Even so, the index remains 7.4 points below its level a year ago. The survey concluded before last week’s stock market selloff, which could influence the next reading. Overall sentiment remains low by historical standards, with respondents expressing concern about personal finances and the risk of job loss.

Housing data offers a similarly mixed picture.

The national homeownership rate edged up to 65.7% in the fourth quarter of 2025, from 65.3% in the prior quarter, according to the U.S. Census Bureau’s Housing Vacancy Survey. The rate was flat compared with the same quarter in 2024 and remains below both its 2004 peak of 69.2% and the 25-year average of 66.3%. California’s homeownership rate rose slightly to 55.3%, though it slipped from 55.5% a year earlier.

Homeownership among those under 35 saw the most improvement, climbing 1.6 percentage points to 37.9%. Other age groups were largely flat or declined. The data was collected during a government shutdown and includes only two months of data instead of three, potentially affecting accuracy.

Mortgage stress remains contained but has ticked higher. The share of seriously underwater properties nationwide — those with loan balances at least 25% higher than market value — rose to 3% in the fourth quarter, up from 2.8% the prior quarter and 2.5% a year earlier, according to ATTOM data. Even so, it remains well below the 6.4% level recorded at the end of 2019. California’s share stood at 1.7%.

Taken together, the data points to an economy that is growing, but cautiously. Population gains are slowing. Layoffs have surged. Consumer confidence is vaguely improving, though from subdued levels. Housing metrics show incremental gains, but not a surge.

The mixed outlook is expected to persist into 2026, suggesting that while the economy may continue to expand, questions about stability, momentum and direction remain firmly in place.