Location Strategy Chartbook 08.22.2026

US consumer spending growth is forecast to slow in the second half of 2026 after a surge in tax refunds likely provided a boost to the consumer in the spring, according to Jan Hatzius, Goldman Sachs Research’s chief economist.

Our economists expect real, inflation-adjusted US consumer spending to grow 1%-1.5% in the second half of 2026, down from 1.8% in the first half of the year.

With the Strait of Hormuz still closed, elevated energy prices could pose an additional risk to the outlook for consumer spending. “A renewed spike in gasoline prices would further hurt consumers, especially those with lower and middle incomes,” Hatzius writes.

Strong business investment and the effect of earlier large equity wealth gains should continue to support overall US GDP growth, albeit at a pace slightly below its potential, according to Hatzius. Goldman Sachs Research forecasts US real GDP to expand 2.1% in 2026.

The US Treasury’s plan to double its purchases of longer-dated government bonds could prompt investors to allocate more money to longer-maturity securities. But other structural changes would probably be needed to sustainably limit the rise of Treasury bond yields, according to Goldman Sachs Global Banking & Markets.

The announcement is “part of a bigger story” as the Treasury takes “a much more activist approach in managing the issuance profile” of government debt, including signals that it may tilt future issuance toward shorter maturities, says Mike Mitchell, head of US Treasury and Inflation Trading, on the Breaks of the Game podcast.

If the Treasury repurchases the full amount outlined, it would buy back a third of the longer-dated debt it issues, Mitchell tells Tony Pasquariello, global head of hedge fund coverage, on the podcast.

It remains to be seen whether a change in the issuance mix will have a lasting impact on the trajectory of longer-maturity Treasury yields, according to Mitchell. Investors are demanding more term premium, or compensation for holding longer-dated debt, amid fiscal risks and heavy supply of longer-maturity debt from governments and companies. With the term premium around the middle of its long-term range, he expects it to drift higher.

Core inflation, which excludes the volatile food and energy categories, rose 0.2% in the month to a 2.5% annual increase, the slowest gain in core inflation since February, before the energy price shock occurred following the closure of the Strait of Hormuz.

The producer price index for final demand, the broadest measure of wholesale inflation faced by businesses, was unchanged in July following a 0.1% decline in June. However, annual producer price inflation remained at 4.7%, its highest level since February 2023.

Despite those rising prices, firm margins fell 0.1% during the month, suggesting businesses are absorbing more of their input cost increases. On an annual basis, margin growth slowed to 2.4%, its slowest level since December and down from a peak of 6.9% in April.

According to August’s preliminary Survey of Consumers from the University of Michigan, sentiment tumbled roughly 8% from July, reversing two months of improvement. Findings also show that only 8% of consumers expect their income growth to exceed inflation over the next year, down from 18% in December 2024. Year-ahead inflation expectations edged up to 4.3% in July, suggesting inflation remains a prominent concern, even as overall price growth has moderated.

Luxury apartments are leasing up while middle of the road and lesser apartments are seeing higher vacancy in San Antonio, Austin, Dallas

Austin has the highest percentage in TX of all MF being in the "luxury" segment which candidly has lost a lot of meaning

San Antonio is equal with Dallas at 47%

From 2021-2024, San Antonio increased its apartment supply by 25%

The Westchase-Woodlake apartment market, one of Houston’s largest multifamily submarkets, continues to navigate challenging conditions as elevated vacancy, weak demand and negative rent growth weigh on performance. While the worst of the vacancy spike may be over, market conditions are expected to remain under pressure for several years before fully recovering.

Vacancy in the roughly 41,000-unit submarket has more than doubled from its 2021 low to currently 15.5% in the third quarter of 2026, a record high. Unlike many apartment markets that have struggled with an influx of new supply, Westchase’s challenges stem primarily from demand-side weakness. Leasing has slowed as renters have moved out of the area, with local operators reporting that some immigrants have left the market amid heightened deportation concerns.

The slowdown is no longer limited to workforce housing. Economic uncertainty, a softer job market and affordability challenges have reduced renter mobility across nearly every price point.

Mid-tier properties have been hit particularly hard. Many were built in the 1970s and 1980s and have seen limited reinvestment, making them less competitive against newer properties. At the same time, rising living expenses have constrained many workforce renters, pushing some households to seek lower-cost options elsewhere in Houston.

LS charts: I took a look recently at the Austin and Houston housing markets and how the market has reacted to market conditions over the years but particularly looking at the relationships between permits/supply, solds, rent, median price of single family, population growth, income, mortgage rates and consumer confidence.

The good news and what should be making the headlines is that housing is more affordable now than it has been in years when accounting for inflation and income.

However rents have fallen due to supply, the inability for new supply to be metered out vs single family housing starts can be which created a lot of downward pressure on rents and offering incentives to increase occupancy.

As new permits have fallen, this should help single family housing demand pick up if consumer confidence picks up and the doomer news cycle slows.