Rising inflation and shifting Federal Reserve monetary policy expectations

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Multiple companies flagged a material deterioration in the macroeconomic outlook, with PCYO citing a record-low University of Michigan Consumer Sentiment index, sharply revised inflation projections (median year-end 2026 raised to 3.6%), and new tariff-driven construction material cost pressures. KB Home added rising inflation as a new headwind alongside affordability pressures, while Krystal reported negative traffic of 5.1% from lower consumer spending. The combination of persistent inflation, higher rates, and eroding confidence signals broad demand risk heading into the second half of 2026.

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