GDP rises, pending sales fall: Mixed signals for brokers

As world economic leaders join for meetings and press conferences in Davos, Switzerland, the American leadership is broadcasting a clear message: American GDP is on the rise.

The recent Bureau of Economic Analysis report from last Thursday revealed the total size of the U.S. economy growing at 4.4% in Q3 2025.

One of the Federal Reserve’s key measures of inflation outside of the normally discussed Consumer Price Index (CPI) is the PCE – Personal Consumption Expenditures.

Removing more volatile components like energy and food, the core PCE attempts to hone in on how prices are moving throughout the economy.

Last Thursday’s report shows inflation steadily below 3%, clocking in at 2.7% for both PCE and core PCE.

According to the National Association of REALTORS^® (NAR), December 2025 saw a month-over-month decline in Pending Home Sales.

The Pending Home Sales Index (PHS), a leading indicator of housing activity, measures housing contract activity and is based on signed real estate contracts for existing single-family homes, condos, and co-ops.

NAR Chief Economist Lawrence Yun explains, “The housing sector is not out of the woods yet. After several months of encouraging signs in pending contracts and closed sales, the December new contract figures have dampened the short-term outlook.”

Private credit is a growing part of the financial system that mostly operates outside of public markets. Simply put, it refers to loans that are made to companies by investment firms or funds rather than traditional banks. These loans are privately negotiated and aren’t traded on public exchanges, which is why many people don’t encounter them as often as, say, stocks or bonds. Over the past decade, private credit has quickly expanded, becoming a multitrillion-dollar market.

One reason that private credit has grown is that it can be more flexible than traditional bank lending. Because loans are arranged directly between a lender and borrower, the terms can be customized to meet a company’s specific needs. Many private credit loans also have interest rates that adjust over time, making them more appealing in today’s higher-rate environment. For companies, private credit can offer faster access to capital; for investors, it can provide a different source of income.

Changes in the banking system have also played a key role. Following the 2008 financial crisis, banks faced stricter rules for how much risk they could take on. As a result, certain types of lending became less attractive for banks, especially loans to midsize companies or businesses with more complicated financing needs. Private credit firms stepped in to provide funding in these situations, helping fill a gap that had been left by traditional lenders.

Nevertheless, banks remain closely connected to the private credit market. Rather than lending directly to companies, banks are increasingly lending to nonbank financial firms, including private credit providers. This means banks are still exposed to credit risk, just in a more indirect way. These relationships have grown significantly in recent years and are now an important aspect of the overall lending space.

As private credit continues to grow, questions around risk and transparency have become more pertinent. Because these loans are private and not publicly traded, it can be harder to assess their value or see how they might perform during an economic downturn. While private credit is often viewed as a useful complement to traditional lending, its rapid expansion highlights the need to understand how this evolving market fits into the broader financial system.

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