Indicators of the Year, Past and Future

Summary

Planet Money: "Indicators of the Year, Past and Future"

Host: NPR
Episode Date: December 31, 2025

Overview

In this special year-end crossover between Planet Money and The Indicator, the team hosts a spirited, competitive roundtable—dubbed the “Indicators of the Year Family Feud”—where hosts and reporters pitch their top economic indicators of 2025, explaining why each deserves the crown. The episode also includes forward-looking predictions, as three more indicators are presented as “ones to watch” for 2026.

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1. Indicators of the Year: The Planet Money Family Feud

(00:57 – 09:46)

Host Introduction

• Waylon Wong sets the stage, describing the annual tradition: a friendly but intense competition to out-nerd each other with stats and economic storytelling.
• Each participant has 60 seconds to make their pitch for their candidate Indicator of the Year; listeners will eventually vote on the winner.

Contenders & Their Indicators

A. Consumer Sentiment

Presented by: Kenny Malone
Segment: 2:57 – 4:38

• Kenny reuses (and openly jokes about reusing) old scripts because Consumer Sentiment has been a recurring winner for “Indicator of the Year.”
• Key Point: Consumer sentiment—a measure of how people feel about the economy—has hit historic lows, dropping from pre-pandemic averages (~100) to the 50s in 2025.
• Quote:

  "2025 was the year we began to full on drown in bad feelings about the economy. We're sick to our economic stomachs about the future of prices and inflation and, and jobs and housing." (Kenny Malone, 03:32)

• Stresses that consumer sentiment is “the canary in the coal mine” for the economic outlook.

B. Tariffs

Presented by: Greg Rosalski
Segment: 4:42 – 6:15

• Greg points to tariffs as the game-changing economic force of 2025—calling back to President Trump's tariffs, including on trading partners as unexpected as territories with “mostly penguins.”
• Notes “Liberation Day” as a flashpoint, the massive stock market reaction, and ongoing drama over tariff constitutionality and a Supreme Court case.
• Key Data:

  "In 2024, the average effective tariff rate that U.S. consumers face was 2.5%. That number is now 16.8%. That's the highest tariffs have been since 1935." (Greg Rosalski, 06:03)

• Costco has even filed a lawsuit against the Trump administration over them, underscoring how all-encompassing tariffs have become.

C. CAPE Ratio (Cyclically Adjusted Price-to-Earnings)

Presented by: Darian Woods (as “Count Dracula”)
Segment: 6:44 – 8:34

• Darian whimsically dons a cape for his pitch, linking Halloween horror to economic dread.
• Key Point: The CAPE ratio reflects how expensive stocks are relative to their earnings. In 2025, the ratio is at its highest since just before the dot-com crash.
• High CAPE signals concerns about bubbles (especially around AI), the "K-shaped" economy, and widening inequality as the rich get richer on stock gains.
• Quote:

  "The higher the CAPE ratio, the more expensive stocks are. And this indicator is the highest it's ever been apart from just before the dot-com crash. And that is as frightening as any horror story, because when stocks are this expensive, they tend to underperform over time." (Darian Woods, 07:14)

Banter & Memorable Moments

• Kenny is teased for reusing the same pitch, and admits to reading not just his own but also Adrian Ma’s old consumer sentiment scripts.
• Darian’s Count Dracula impression gets applause:

  "My indicator here is the CAPE ratio." (Darian Woods, 09:18)

• Greg jokes about Costco’s lawsuit:

  "I don't care how they deliver it, as long as hot dogs are still $1.50." (Greg Rosalski, 06:31)

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2. Looking Ahead: Indicators to Watch in 2026

(09:46 – 16:51)

A. Federal Funds Rate & The Future of the Fed

Presenter: Waylon Wong
Segment: 10:30 – 12:38

• The Fed funds rate is now 3.5–3.75%; three rate cuts at end of 2025 reflected internal divisions.
• With Jerome Powell’s term ending in May—and heightened presidential pressure for lower rates—Fed independence remains a huge story.
• Quote:

  "Powell's term as Fed Chair ends in May. The President has been very clear about how he wants lower interest rates. And then he said on Truth Social just before Christmas, anybody that disagrees with me will never be the Fed chairman." (Waylon Wong, 11:33)

• Major court fights (e.g., over Lisa Cook's firing) add further intrigue.

B. Electric Rates & Affordability

Presenter: Stephen Psaha
Segment: 12:40 – 14:37

• While food inflation has eased and rents have dropped, electric rates have become the standout affordability challenge, climbing 7% (well above the sub-3% overall inflation).
• AI-driven demand and data center construction are primary culprits, along with infrastructure and disaster costs.
• Winter heating costs projected to jump 12% for electricity users.
• Quote:

  "For a long time, electric rates in the US have been pretty stable for like 20ish years. But recently...the cost of electricity in the US has been climbing way faster than overall inflation. Electric prices have jumped about 7%." (Stephen Psaha, 13:08)

C. Consumer Spending (and the Power of the Top 10%)

Presenter: Cooper Katz McKim
Segment: 14:50 – 16:38

• While consumer sentiment is historically low, actual consumer spending in 2025 has stayed resilient—driven almost entirely by the top 10% of earners.
• The richest 10% (incomes >$200k) now account for nearly half of all consumer spending, benefiting from recent tax cuts, stock gains, and home equity.
• For the broader middle and lower classes, the story is gloomier: record high auto loan delinquencies and credit card debt point to stress.
• Quote:

  "Just the top 10% of consumers account for a near majority of consumer spending according to global bank RBC." (Cooper Katz McKim, 15:24)

• Poses the question: How long can trickle-down consumer resilience last if a market correction strikes?

Notable exchange:

• Waylon: "Sounds a lot like trickle down economics. Interesting." (16:38)
• Stephen: "Yeah, it feels like we're rooting for all that spending right now." (16:42)
• Cooper: "It's fine. It's gonna trickle down. It's gonna trickle down." (16:45)

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3. Key Timestamps for Major Segments

• 00:57 – Segment begins; premise and rules introduced
• 02:57 – Consumer Sentiment argument (Kenny)
• 04:42 – Tariffs argument (Greg)
• 06:44 – CAPE Ratio/Stock Market Bubble argument (Darian)
• 09:46 – Segue into Predictions for 2026
• 10:30 – Waylon on Federal Funds Rate & Fed Drama
• 12:40 – Stephen on Electric Rates
• 14:50 – Cooper on Consumer Spending/Narrow Affluence

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4. Quotes & Memorable Moments

| Timestamp | Quote | Speaker | |-----------|-------|---------| | 03:32 | "2025 was the year we began to full on drown in bad feelings about the economy. We're sick to our economic stomachs..." | Kenny Malone | | 06:03 | "In 2024, the average effective tariff rate...was 2.5%. That number is now 16.8%." | Greg Rosalski | | 07:14 | "This indicator is the highest it's ever been apart from just before the dot-com crash. And that is as frightening as any horror story..." | Darian Woods | | 09:28 | "The cape, Fraser." (impersonating Dracula) | Darian Woods | | 11:33 | "[Trump] said on Truth Social just before Christmas, anybody that disagrees with me will never be the Fed chairman." | Waylon Wong | | 13:08 | "The cost of electricity in the US has been climbing way faster than overall inflation. Electric prices have jumped about 7%." | Stephen Psaha | | 15:24 | "Just the top 10% of consumers account for a near majority of consumer spending according to global bank RBC." | Cooper Katz McKim |

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5. Tone and Style

• As always with both Planet Money and The Indicator, the tone is fun, nerdy, and irreverently competitive—full of inside jokes, cross-talk, and playful banter (“family feud” is described as “brutal soul breaking arguments in a fashion most public”).
• Even the presentation of serious statistics and economic warnings is delivered with lightness and humor (e.g., Darian’s Dracula act for the CAPE ratio).

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6. Summary: Key Takeaways

• 2025’s defining economic stories are historic lows in consumer sentiment, a paradigm-shifting surge in tariffs, and an alarmingly high stock market CAPE ratio, all with deep links to U.S. politics and global trade volatility.
• Looking ahead, 2026 will see battles over the Fed’s independence, potential electric rate spikes (due in part to surging AI and climate costs), and a precarious consumer spending picture propped up mostly by affluent households.
• The indicators chosen all reflect underlying anxieties: economic inequality, political pressures, and the growing pains of a data-driven world.

For more, tune into The Indicator on January 2nd for the winner of the Indicators of the Year showdown, and sign up for the Planet Money newsletter for economist predictions on 2026.

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For those who missed it, this episode provided a lively but thorough recap of the year’s biggest economic signals—along with a peek at which trends and numbers could shape our financial reality in the new year.

Transcript

[A]

Hey, Erica Barris, here we are almost at the end of 2025, and there is no way to sugarcoat it. It has been a tough year for NPR and for local stations. But with your support, NPR will keep reporting the news. And here at Planet Money, we'll keep doing what we do best, explaining the economy in the most entertaining and accessible ways we possibly can. If you're already an NPR supporter, thank you so much. If not, please join the community of public radio supporters right [e-mail] signing up unlocks a bunch of perks like bonus episodes and more from across NPR's podcasts. Visit plus.NPR.org today. Thanks. This is Planet Money from npr.

[B]

Hello and welcome to Planet money. I'm Waylon Wong, normally co host of Planet Money's short daily podcast, the Indicator. Today on the show, I'm here to offer you this indicator Planet Money crossover event. We have given thanks. We've stuffed and emptied stockings. We are crossing off the last days of the calendar and spending meaningful time with loved ones. And for us, that means doing what families do, engaging in brutal soul breaking arguments in a fashion most public. We call it Indicators of the Year, a Planet Money family competition to out nerd each other with stats and storytelling. And with that, I'm going to turn it over for a bit to my colleagues who battled it out. Representing the indicator was Darian Woods. Darian, take it away.

[C]

That's right. It's time for another Family Feud. Today I'm competing head to head with my Planet Money colleagues, Kenny Malone, Bring it, you egg.

[D]

Is that what they say in New Zealand? Something like that.

[C]

That's right. And Greg Rosalski, can't we all just get along? No, not for the next nine minutes. And in case you aren't up to speed, here are the rules. Each of us has a spiel for our indicator of the year. We will each have 60 seconds or less to make our case or else. And in the end, you, dear listener, will vote on who had the indicator of 2025. Coming up on the show, we have.

[D]

Kenny Malone rightfully explaining why consumer sentiment for the third straight year is obviously the indicator of the year.

[E]

And I'm Greg Rosolski. I'm championing the idea that tariffs were the story of 2025.

[C]

And we'll have me, Darian woods, seeing terrifying signs in the stock market.

[B]

Plus predictions for the indicator of 2026. That's coming up after the break.

[C]

All right. Family Feud, Katie Malone, you are up first.

[D]

All right. Got my script here.

[C]

Ok. Tiber starts now.

[D]

It's the economy, stupid. That's the famous formula for why people vote the way they do. I am here to say no. It's what people feel about the economy, stupid. You know what? I'm accidentally reading off of my script from two years ago when I also did consumer sentiment and it won indicator of the year because you may remember back then we're all freaking out because laid out we were so, so scared. Okay, anyway, this is the right. Is this the same script right here? Now, in pre pandemic times, the University of Michigan's consumer sentiment index was hovering around 100, meaning people felt okay about the economy, but for the past year it's been down around the 70. No, you know what? This is Adrian Ma's script from last year when he also won for consumer sentiment. It's 50s. It's been in the 50s this year. Historic lows. Here, here it is. Here's the right script. 2025 was the year we began to full on drown in bad feelings about the economy. We're sick to our economic stomachs about the future of prices and inflation and, and jobs and housing. Consumer sentiment is the canary in the coal mine and it's been chirping louder and louder over the last three years. Or I guess chirping less and less is how canaries work in the coal mine. Anyway, consumer sentiment, for your consideration, you.

[C]

Might have made a good argument behind all that buzzing, but it took you a while to get there.

[E]

Yeah, I know. There was a big wind up.

[D]

Well, I kept getting interrupted by my colleagues, so I figured I might just go through.

[E]

I feel like my individual consumer sentiment was tepid after, after that display of played out material.

[C]

Some good head fakes in a row.

[D]

I'm just saying consider consumer sentiment.

[C]

I love the head fakes. Now let's go to Greg.

[E]

Okay, guys, so my economic story of the year, it centers on the most beautiful word in the English language. That is at least according to President Donald Trump, tariffs. You guys ready?

[D]

Wait, is this part of your argument? This isn't fair. You got extra time?

[E]

No, no, this is not extra time. This is the wind up. This is like, you know, okay, this is putting the ball on the T. I don't call it.

[D]

I don't know.

[C]

All right, go.

[E]

Okay, so the tariff story was huge this year. Remember Liberation Day and Trump imposing like super high tariffs on countries around the world, including like a territory whose population was largely penguins. You guys remember that? Then like the stock market freaked out and then like President Trump paused tariffs and There were like negotiations in the back and forth and the up and down and the drama. Costco just filed a freaking lawsuit against the Trump administration over them. This is the economic story that keeps on giving. And this story, it's historic. We're talking like a paradigm shift for the economy. In 2024, the average effective tariff rate that U.S. consumers face was 2.5%. That number is now 16.8%. That's the highest tariffs have been since 1935. And this story, it's not over. There are still big questions over what these tariffs are going to do to the economy and whether Trump imposing tariffs without congressional approval was even constitutional. The Supreme Court is expected to rule on this issue soon. Talk about a year end cliffhanger.

[D]

That's a good kicker. Now, one thing I have been thinking about the Costco lawsuit is do you think that they take the lawsuit and package it into like a box that was like previously used for oversized olive oil containers and that's how they deliver it?

[E]

I don't care how they deliver it, as long as hot dogs are still $1.50.

[D]

Okay, Darian, our final contender for indicator of the year. Darian's putting on a coat. A cape. What? What is cape? Tyrion's dressed as Dracula.

[E]

What is this? Are you a count?

[C]

Yes, I am Count Dracula. I've got my cape on. It's keeping my shoulders warm. And this relates to my indicator.

[D]

Okay, again, everyone's getting a little pre clock time, so I want a little generosity on my postcard.

[C]

I haven't said anything.

[D]

Well, you have to do the wind up. I did. No wind ups.

[C]

I'm talking about my outfit.

[D]

All right, here we go. All right, here we go. In 3, 3, 2, 1.

[C]

My indicator of the year is the Cape ratio. This is the cyclically adjusted price to earnings ratio. It measures how expensive share prices are relative to how much money they actually earn. The higher the Cape ratio, the more expensive stocks are. And this indicator is the highest it's ever been apart from just before the dot com crash. And that is as frightening as any horror story, because when stocks are this expensive, they tend to underperform over time. And this indicator touches so many economic stories of 2025. The AI boom, the fears of a bubble. It's data center construction sucking the blood out of investment in industries like manufacturing. Also the K shaped economy where the rich, who tend to own a lot of stocks, are getting richer and the poor are struggling. For an indicator that captures a blood curdling year, the the Cape ratio has.

[E]

No Peer, I just love that, like your mind goes to Dracula when you go to cape. Why not? Like Superman, Batman.

[D]

It's true. Is the cape draining the economy of something? Is that the implication?

[C]

The optimists would see Superman, these AI tech companies saving the world? The pessimist might see Dracula sucking the blood out of the rest of the economy.

[D]

I will say I do understand how cape ratio shows the rich getting richer, but you also mentioned that it shows low, low income people doing poorly. How does that work?

[C]

This is a bit of a stretch, I admit. Ultimately, everyday people are the ones who have to buy things so that companies can get earnings. And at the moment, earnings are not growing fast enough to keep stocks looking cheap.

[E]

So we're not like buying enough ChatGPT subscriptions or something?

[C]

Exactly. Don't make Sam Altman cry.

[D]

How many do I need to buy? Yes.

[C]

You got to prop up the AI economy with multiple subscriptions.

[D]

Darian, you can't put on that cape and not give us a little. Not give us a little Dracula. Can you give us a little.

[E]

Yeah. Where's the impression?

[D]

Just a little impression. You can do what we do in the shadows.

[F]

The Kiwi.

[D]

The Kiwi Dracula movie.

[C]

Yeah. No, that's. That's a. That's a great. That's a great movie.

[E]

All right, you're going to nail this. Come on.

[C]

My indicator here is the cave ratio.

[E]

Yes. Yes.

[C]

I'm making my pitch for the indicator of the year.

[D]

It's pretty good.

[C]

The cape, Fraser.

[D]

Okay, you know what? You may have just won my vote. Honestly, that's really fantastic. All right, so listen, those are your three options, listeners. We have consumer sentiment, we have tariffs, and we have. Say it again, Darian.

[C]

The Cape Frazier.

[D]

So good.

[B]

Thank you to Darian. Kenny and Greg, tune into the indicator on Friday to find out which indicator takes the the crown based on your votes. After the break, we'll bring on Steven and Cooper to join me. As we gaze into the future, we talk about three indicators that could shape 2026. Welcome back. I'm Waylon Wong and I'm joined today by Stephen Psaha.

[G]

Greetings, Waylon.

[B]

And our producer, Cooper Katz McKim.

[G]

Hi.

[D]

Hello.

[F]

Great to meet you.

[B]

Hello. Great to meet you.

[F]

Day one.

[G]

Come here.

[B]

We had a little break for the holidays and you just forgot who we were.

[F]

Exactly.

[B]

I'm your colleague, Waylon.

[F]

Oh, okay.

[B]

And let's talk 2026. We each picked an indicator to watch for this year and I will kick it off. The indicator I'll be watching in 2026 is the federal funds rate, aka the Federal Reserve's benchmark interest rate. So right now, the rate is between 3.5 and 3.75%. The Fed, you might remember, did three consecutive rate cuts at the end of last year, and these were not unanimous decisions. You are seeing some divisions within the Fed about what to do on interest rates. So my indicator is really about the future of the Fed and how it's going to make decisions this year.

[G]

Yeah, 2025 felt like this really big year for the Fed and feels like 2026 could be even bigger. I mean, it is the end of the Jerome Powell era.

[A]

It is.

[B]

And we had some close calls in 2025 where we thought maybe President Trump was going to fire Jerome Powell. That didn't end up happening. But Fed independence is still a really big story. So Powell's term as Fed Chair ends in May. The President has been very clear about how he wants lower interest rates. And then he said on Truth Social just before Christmas, anybody that disagrees with me will never be the Fed chairman.

[F]

So we will most likely get a Trump loyalist as chair. The President wants more allies on the committee that votes on interest rates. He already tried to fire Lisa Cook last year.

[B]

Yeah. And the Supreme Court will actually hear arguments in the Lisa Cook case early this year. But you can already see tensions in the committee from the last few interest rate decisions. Like in December, two members of the committee voted for no cut, and then one wanted a bigger reduction in rates.

[G]

Yeah, and it seems like the economic data is just really hard to parse right now. I mean, you got unemployment ticking up, but GDP growth is also looking healthy. Inflation is maybe slowing down, but it is still above the Fed's 2% target.

[F]

But also, the economic data from the end of the year got disrupted from the government shutdown.

[B]

Yeah. And so the Fed would have a pretty tricky job even without this added pressure from the President. And that is why I think interest rates and the Fed will be the economic story to watch in 2026.

[F]

Okay, Stephen, you are up.

[G]

Yes, my indicator is all about affordability, but it is a different indicator than the ones we've been, like, harping on about forever.

[F]

Okay, we talking groceries?

[B]

Yeah.

[G]

So grocery prices, they are still up, but, you know, food inflation, it is under 3% right now. There's also housing, but we have actually seen rental prices drop recently. No, my affordability indicator to watch in 2026 are electricity rates.

[B]

Oh, I think my bill's already been up this last year.

[G]

Almost certainly. Yeah. I mean, for a long time, electric rates in the US have been pretty stable for like 20ish years. But recently, like you said, the cost of electricity in the US has been climbing way faster than overall inflation. Electric prices have jumped about 7%.

[B]

Oy, okay, so 7% compared with, you know, just under 3% for general inflation. So does this have something to do with AI and data centers?

[G]

Yeah, everything has to do with Data Centers and AI in 2025 and 2026.

[B]

I knew it.

[G]

In fact, we recently did a planet Money all about how AI data centers are affecting your electric bill. So you can check that out in our show notes. What you need to know now though, is that the data centers that power AI need a lot of, you know, power. And that extra demand is leading to higher electric rates.

[F]

Yeah. And it's not like the AI race is slowing down anytime soon. So we should expect that demand and those rates to keep going up, I imagine.

[G]

Right. And again, we are already seeing rates go up. If you use electricity to heat your home, you could expect that cost to jump by about 12% this winter. That is according to the National Energy Assistance Directors Association.

[B]

12%. So that's even more than the 7% you cited earlier.

[G]

Yeah, it is not pretty.

[B]

But this can't be just about AI, right? I mean, I can think of maybe some other factors like an aging power grid infrastructure that needs replacing.

[F]

States like California have been dealing with natural disasters like wildfires. And that's meant spending more money on repairing lines.

[G]

Yes. And all these factors are why I predict electric rates are going to keep climbing and why this is my indicator to watch for 2026. Okay, Cooper, your turn. What is your indicator?

[F]

Okay, my indicator to watch this year is consumer spending.

[B]

Oh, not consumer sentiment. Huh? I feel like we've been obsessed with consumer sentiment, but this is a little twist.

[F]

I know. Sorry to Kenny, but yeah, hard data shows the American consum has actually been resilient in 2025. Which is confusing because as we've heard, consumer sentiment has been pretty bad. It sits 30% below sentiment in December of 2024 this time last year. Yeah.

[G]

And if I got it right, you know, like the highest rollers are spending so much, it's basically hiding the difficulties of everyone else.

[F]

Yeah. So just the top 10% of consumers account for a near majority of consumer spending according to global bank RBC.

[B]

And so that top 10% is basically anyone who makes around $200,000 or more a year, Right?

[F]

Exactly.

[G]

Yeah, there's that K shaped economy coming on back for us.

[F]

Yeah. And they're making money not just from working, but through assets that accrue value on their own. So these high income earners are benefiting from their home values going up and a thriving stock market.

[B]

The thing is that below that 10% are a lot of signs that show reduced consumer confidence. Like, you know, you look at auto loan delinquencies, credit card debt, these are both at record highs.

[F]

So the question is, can this overly powerful 10% keep the good times rolling into 2026? RBC, this global bank argues yes. They say, look, President Trump's tax cuts through the one big beautiful bill will keep benefiting upper income households. And as long as the stock market keeps on, they'll keep soaking in those dividends.

[G]

So basically, consumer spending is hinging on the market staying strong.

[F]

It's at least a big part of it. A stock market correction would be bad for consumer spending no matter what, but right now it would have a particularly big impact.

[B]

Sounds a lot like trickle down economics. Interesting.

[G]

Yeah, it feels like we're rooting for all that spending right now.

[B]

It's fine. It's gonna trickle down. It's gonna trickle down.

[G]

I'll have my cup out and ready.

[F]

Just keep the water metaphors rolling.

[G]

We will keep the flow going far into 2026. You know, we're excited to deliver economic stories and news for you for the rest of the year.

[B]

We will be watching all of those and so many more on Planet Money and the indicator in 2026. And if we missed one or you have more ideas you want to send us, please email [e-mail] or tag us on any social media planetmoney. And remember to find out the winner of this year's Family Feud, Tune into The Indicator Friday, January 2 Greg Rosalski's next newsletter will recap some predictions from economists generally, so you can get that by signing [e-mail] planetmoneynewsletter or click the link in the show Notes this episode of Planet Money was produced by James Sneed. The Indicator episodes were produced by Angel Carreras, edited by Julia Ritchie, engineering by Robert Rodriguez and Kwesi Lee. It was fact checked by Sierra Juarez. Cake and Cannon is the editor of the Indicator and Alex Goldmark is our executive producer. For all of us here at Planet Money and the Indicator, thank you for riding along with us in 2025. And thanks especially to everyone who shared an episode with a friend, left a review or signed up for. Plus, every little bit helps. I'm Waylon Wong. This is npr.

[E]

Thanks for listening.