Offshore

EndGame Macro
Home Depot Just Drew the Economic Roadmap for 2026 And It’s Not a Soft Landing

If you peel away the corporate gloss, Home Depot is basically admitting that the U.S. consumer is worn out and the housing engine isn’t ready to kick back on. Their early 2026 outlook doesn’t sound like a company expecting a smooth glide path. It sounds like a company preparing for another uneven, slow motion year.

Low single digit sales, flat comps, earnings still below where they were two years ago, none of that screams doom, but it also doesn’t scream recovery. It’s the kind of guidance you give when big ticket spending is frozen, affordability is still tight, and homeowners are doing the bare minimum because the macro backdrop feels unstable.

The Recovery Case Is Always One Step Beyond the Data

The only part of their message that feels upbeat is the scenario they call the “recovery case.” But even that lives in the future, after mortgage rates finally fall and after housing activity turns. They’re painting a rebound that arrives once the cycle resets, not something that happens just because the Fed cuts a few times.

And the part people keep missing is that if mortgage rates fall because the 10 year is sliding, it’s usually not a sign of economic strength, it’s a sign the real economy is weakening. Bond markets don’t front run housing euphoria; they front run slowing growth, rising unemployment, and the need for easier policy. Every sustained easing cycle in the modern era happened while the job market was deteriorating, not improving.

So Home Depot’s timing lines up perfectly with history. They’re effectively saying that they’re stuck in the hangover for a while, and the recovery only shows up after the breakage works through the economy.

And This Is Where Psychology Starts Driving the Cycle

Housing never moves on interest rates alone. It moves on confidence or the lack of it. If unemployment continues climbing the way it typically does once the Fed starts cutting, buyers freeze. People don’t take out 30 year mortgages when they’re watching coworkers get laid off. They don’t upgrade homes when they’re quietly asking themselves whether their job is recession proof. They wait. They postpone. They hunker down.

And the data already points in that direction with record delinquencies in key consumer credit categories, bankruptcies hitting 15 year highs, over 1.1 million layoffs announced this year, the most since 2020.
That’s not the backdrop for a demand boom; it’s the backdrop for caution.

My Read

Home Depot is signaling a long stretch of muddling through a tired consumer, cautious spending, and a housing market that doesn’t pick up until after the economy gets through whatever slowdown the bond market is already whispering about.

The recovery comes but only after the turbulence finishes working through the labor market and after households feel secure enough to take risk again.
tweet

1 view13:48