Week 3 2026 - CPI, PPI, Retail Sales, SBA Rates, Mileage Rates, and what is the Corredor Interoceánico del Istmo de Tehuantepec?
The Economy in Week Three
The Consumer Price Index, or the CPI, as economists say, was up 0.3% for the month and 2.7% for the year. To be clear, that was for December, so we are caught up on that reporting.
That is the ‘headline’ rate, and it was as expected.
The core rate – the rate that excludes food and energy – came in at 2.6%, the same as the previous month, but expectations were for 2.8%. Good news.
So, inflation is steady for the consumer. For the producers, that’s another story.
In November, the Producer Price Index – the PPI – came in higher than expected.
The previous month, it came in at 0.1% for the month. For November (yes, it is delayed), it came in at 0.2%.
On an annual basis, it came in at 3.0%, higher than October’s 2.8%.
The Core PPI for October was 3.4%. For November, it rose to 3.5%.
Ouch.
The budget deficit for the month of December was a negative $144,700,000,000. Oddly enough, the YTD deficit is 15% less than the same time last year.
Even though it’s growing less, it is still growing. The national debt is over $38,000,000,000,000.
Finally, retail sales for November increased 0.6%, above the expected 0.4% and much better than October’s drop of 0.1%.
That’s really good news, but I’m curious what it will be for December.
Rate Update
The SBA is offering the following 25 year fixed rate for a purchase or refinance of your Owner occupied commercial building: 5.85%.
I’m talking the 504 loan program.
The 7(a) program is shorter term, can be used for working capital and business acquisition, but I’m looking at the 504 today.
If you are a manufacturer and you want to purchase a building, your rate is 5.61%.
There are not too many rules:
The operating company must occupy at least 51% of the property.
Sorry, no investor properties – that’s kind of the whole point. It’s to promote business.
You can finance new construction, but the occupancy must be 60%.
It can also be used to refinance an existing loan. I had a reader inquire about refinancing their adjustable-rate loan, and yes, you can.
Email me with any questions, and I’ll point you in the right direction.
Speaking of Rates…
The IRS has released the new standard business mileage rate for 2026: $0.725 per mile.
If you have an electric vehicle, it continues to be a profit center.
Corredor Interoceánico del Istmo de Tehuantepec
• You may recall that in 2023, I reviewed the problems with the Panama Canal and its difficulty in being able to meet the demand of shipping going from the Pacific side of the Americas to the Atlantic side. That was because it is mainly a freshwater canal, and a draught had lowered the level of the lake that supplies much of the water for the canal. Sorry, that’s more a paragraph than a bullet point.
Well, whenever the leader in anything exhibits a weakness, like the Panama Canal, something or someone will come in to probe that weakness.
And the Mexicans did.
They built a freight rail line across southern Mexico that is currently ramping up operations. It’s the Corredor Interoceánico del Istmo de Tehuantepec, or CIIT for short.
It is a multimodal logistics corridor including ports, industrial parks, and road networks, backed by the Mexican government.
It connects from Salina Cruz on the Pacific side, goes across the Isthmus, and connects to Coatzacoalcos on the Atlantic side.
If the Panama Canal was congested, taking weeks for ships to get through, perhaps because of a drought, the cargo on the railway could cross in two to three days.
It won’t be cheaper, but time is money…
Saks Global goes into Bankruptcy
By Saks Global, I mean Saks Fifth Avenue, Bergdorf Goodman, Neiman Marcus, and Saks Off Fifth.
My parents lived primarily in the San Francisco Bay area in the 50’s and 60’s, and my mother thought Saks and Macy’s were the best thing ever. If it was at Saks, that was the best money could buy.
So, why did they go the BK route?
Debt. Big shocker. Here is the 30,000 foot review.
In July 2024, Hudson’s Bay Company (the owner of Saks) announces it will acquire Neiman Marcus and Bergdorg Goodman for about $2,700,000,000.
The idea was to maximize luxury retail buying power and cut operating costs.
It always is…
Some of the backers were Amazon and Salesforce as minority partners to support the funding and technology aspect of the deal.
They would be the equity side, aka the down payment.
The debt side was $2,200,000,000 of Senior Secured Notes. That’s bank-speak for debt that gets paid before vendors or anyone else.
BofA and Citibank were part of a bank group that provided a $1,800,000,000 asset based line of credit.
That means the line of credit was secured by whatever assets weren’t already tied up.
At any rate, investors then buy the notes, which they did, with the deal closing in December 2024.
That’s a bummer, because in less than four months, that debt would be trading at 52 cents on the dollar. That’s not a typo.
As I have said many times in this Report, used judiciously, debt can be an excellent source of cash to grow the business and acquire assets.
I have also said that too much debt can be your downfall.
Such was the case with the geniuses who orchestrated the Neiman buyout. In 54 weeks, the whole thing imploded.
They must not have carried the 1 when they were calculating the cost savings.
OK, readers, that’s three weeks down, 49 to go. One step in front of the other and you’ll hit your production, sales, or efficiency targets. Just like an Olympic athlete would do.
The Winter Olympics are almost here, and while the sport of curling does start February 4, the opening ceremonies are on Friday, February 6. If you’re really on the ball, you can buy tickets to Curling; 50 Euros will get you in. That’s $58 US dollars. If you want to see the opening ceremonies, the good news is you’ll be in Milan, Italy. The bad news is that the tickets are 260 Euros, or $302 for the nosebleed seats. Their operations people must have interned at the Dallas Cowboys.
“If everyone is moving forward together, then success takes care of itself.”
Henry Ford
