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What if everyone in the world could get access to the best doctors? That was the question posed by a speaker at an AI conference I recently attended. What if someone could be met with, diagnosed, treated, and tracked after the fact by an AI physician who possessed the sum total of human knowledge inside of its processing unit. The AI doctor could synthesize millions of pages of medical research, quickly weigh all possible causes and implications of an illness or disease, and develop a tailored treatment plan based on the entire health history of that patient. Since software is replicable, AI doctors could be deployed into rural and underserved areas not only here in the United States but around the world that might have limited or non-existent medical services otherwise.

There is already evidence that AI scanners can detect cancer in patients much earlier and with far greater accuracy than can the human eye. AI tools are being used to reduce administrative burdens (and costs) in hospitals and other healthcare settings, again, often with greater accuracy than humans. AI is being used in medical research to pursue cures for cancer and the development of new medications. Scientists armed with AI can quickly identify the most promising chemical reactions much earlier in the research cycle and at much greater volume and breadth.

Healthcare is just one setting where the promises of AI are truly astounding, with all sorts of positive implications for humanity’s future. Many other industries hold similar opportunities. There are reasons to be really excited about this new world we are entering.

Today’s article is Part I of a three-part series. I have written several times over the past year about AI, and my tone has been generally cautious if not worrisome. The impacts to the labor market, not to mention the effect that all of this technology has on our brains, are impossible to ignore. But I’m not an AI doomer, by any means, which is the term for people who expect catastrophic implications for humanity due to AI, including the possibility of actual human extinction.

Part I today takes an optimistic look at AI. Part II will take the bear case for AI. I’m putting a pin in this aspect of the conversation for this week, but what happens to all the billing specialists, for example, in hospitals when their human work becomes obsolete? What happens when entry-level data analyst positions are eliminated in research labs and other scientific facilities? How do you get a PhD-level biomedical researcher if the gateways into those careers are eliminated for lack of need of human beings to do those jobs particularly at the outset? How do people provide for themselves in a world where human labor is not required, even as so many traditional industries continue on, just without the need for their human workers? These are not small questions or ones with clear and easy solutions.

But we’ll come back to those. Part III will discuss the policy implications of all of this, and why we need to be way further ahead in our discussions as a society (and, actually, as a species) about what this is all going to mean for us. And to be clear, I don’t have all the answers, and part of my writing in these three articles is just to get my own thoughts organized and onto the page. This will need to be a collaborative and thoughtful discussion over the next several years by policymakers and ordinary people alike at all levels of government and society and in all corners of the world — if we even have a few years to debate and plan.

The Glass Half-Full Future

More comprehensive medical care and accelerated research for cures on some of our most intractable diseases and afflictions are high-profile causes for optimism about the AI future. But there is plenty more to discuss here.

One of the most upbeat assessments I have seen about AI’s impact on the labor market is that these tools will close the gap between lower and upper skilled workers. Consider the organization and synthesis of data. What might have taken an experienced analyst several days to pore through and address can often be done in just a few minutes by knowing the right phrasing to submit into the AI prompt. That still requires some baseline knowledge of what questions to ask and then how to interpret the results, but the skillset needed to quantitatively digest the data is much different. And, actually, what that means is that more people, not fewer, will be able to do it.

What could be one of the most consequential results of the ubiquitous rise of AI in our lives is the democratization of expertise. I mentioned in a previous article how I heard a presenter at a conference say, “The economic value of intellectual expertise will soon be $0.” This was not just any random speaker, either; it was Dr. Anton Korinek of the University of Virginia, who is quickly becoming one of the foremost national experts on the intellectual and economic implications of the AI boom.

For most of human history, access to high-level expertise has been limited by geography, cost, and social capital. The best doctors went to elite universities and then ended up in big cities. The best attorneys and consultants charged rates inaccessible to ordinary people. Entire categories of knowledge and assistance existed behind velvet ropes that most of humanity simply could not access.

AI has the potential to radically flatten that reality. A person in rural Maine or rural Kenya may soon have access to educational support, legal guidance, medical triage, financial planning, translation services, and technical assistance at a level that previously would have been practically impossible for many to obtain.

I’ll give you a much more tangible and simple example on this. I will always believe strongly that writing, original thought, and authentic human perspective will remain enormously valuable (I hope so, anyway). In fact, they may become even more valuable in a world flooded with AI-generated slop content. But AI also lowers the floor for ease of communication. Someone who struggles to organize their thoughts into a coherent email or policy proposal can now communicate more clearly and professionally with the help of AI. This matters for people’s careers, and therefore their livelihoods.

Communication has always functioned as a form of economic leverage. AI may narrow some of those gaps by helping ordinary people express themselves more effectively. Let me give you an example: I have a colleague who is not necessarily the best writer. But part of her job responsibilities include communicating reports to upper management on all manner of key topics. So what this colleague now does is run every email and report through ChatGPT prior to sending and asks it to correct typos, improve grammar, and adjust it for a more professional tone. I doubt management knows she does this, but even if they did, they probably would not care, as her communications are unquestionably better than they were previously. She uses a completely free program (ChatGPT) that virtually anyone with access to the internet can employ, and it’s probably taken her writing level from that of a high school student equivalency to a that of a mid-career professional. AI is not threatening her job (at least not at the moment); she is using it to enhance it.

The Frustrations of Modern Life

A more subtle way that I think we will all benefit from AI is by streamlining the ordinary tasks of everyday life, or eliminating many of the frustrations associated with these responsibilities almost altogether. The most profound effects of AI may not come from robots or futuristic laboratories, but from thousands of tiny frictions disappearing from everyday life.

I think an interesting exercise would be to keep a running log of every task over the course of a week that, if it were eliminated, would make one’s life notably better. Writing routine emails. Navigating billing systems. Translating jargon into plain English. Filling out government paperwork. Waiting on hold. Will improved technology including through the use of AI agents not markedly improve the human experience when engaging with these tasks? I suspect yes. I get that we all tend to prefer human interactions in many contexts. But the ideal-case scenario with AI is that perhaps humans will still be involved, but with improved systems in place through the use of high-level technology to reduce the friction in all of these types of everyday interactions.

It’s natural to be worried about AI, particularly as the strongest proponents of this technology right now also have a specific and significant financial interest in having fairly permissive and wide-sweeping uses with limited government oversight (more on that in Part II). But the most optimistic AI case is not merely about profits or even human productivity, it’s about expanded human capacity for performance and, yes, for human thriving. It’s about reducing wasted time, widening access to knowledge and expertise, and accelerating discoveries.

Every transformative technology arrives with disruption attached to it. People have predicted humanity’s doom at the outset of electricity, of bicycles, of radios, of television, of video games, of the internet. It is at least possible that future generations will look back on this era the same way we look back on the arrival of those other new things: messy, destabilizing, frightening at times, but ultimately civilization-altering in ways that dramatically expanded human potential. And that is, indeed, a reason for hope.

Addendum - An Updated Overview of How I Use AI

As mentioned above, I have written about AI several times over the past year in The Sunday Morning Post, including in July 2025 when I wrote about how I use ChatGPT. I would characterize my own tone and temperature on AI as being at times curious, sometimes amazed, at times cautious, but generally sort of sour on our human prospects in the age of AI. I’m going to put a pin in most of that until next week, because there are a lot of reasons to be pessimistic, not least around the labor market impacts and a potential jobs wipeout. But let’s come back to that.

Even on the jobs front there are reasons for optimism, however. Industries adapt. Try explaining to someone in 1926 what the job of a computer programmer would be. It would have been impossible because the very understanding and vocabulary for what a computer was let alone the nature of software and coding were completely non-existent. Are we so arrogant in our current generation to assume that all the jobs that will ever be done by human beings have already been created? What jobs in the year 2126 will exist that we have no vocabulary for today?

I use AI almost every day, although I am still what the AI industry would categorize as a “casual user.” I am not using it to write code, or to design websites or apps. I’m not employing what most experts believe is the next and most significant phase of AI to date, which is “agentic AI.” By that, I mean that AI bots are not proactively and with discretion doing tasks on my behalf the way a true assistant or representative of me or my company would do. That is coming, though, in all types of industries and careers (and maybe even my own).

The most common (and, indeed, daily) utilization of AI for me is to have ChatGPT up on a tab on my browser virtually all day long that I use as a research assistant and sounding board, and for perhaps the beginning of some agentic roles. Just this past week, for example, I used ChatGPT for the following tasks:

How to remove duplicate rows in Microsoft Excel. I had a large spreadsheet of all of my borrower names at the bank, with each row representing a different loan. But what I actually needed was just the borrower names, and if a borrower had more than one loan with us, each loan had its own row, which led to a lot of duplication in the report. This ended up being a very easy fix, I just didn’t know where to find the correct tool to do it in the busy and jargony Excel ribbon at the top of the page. The instructions from ChatGPT were clear, however, and it took me about 30 seconds to figure out from here. Below is a screenshot of exactly what it showed me:

• What the calculations were to convert Canadian dollars into U.S. dollars. And then, how to move money from a Canadian bank account into a U.S. bank account, but also how to move money from a U.S. bank account into a Canadian one.

• What the NAICS code might be for a particularly complicated business (each industry has a distinct six-digit code that banks report as part of their lending data. It helps the banks, and their regulators, to have a sense for how heavy they are in certain categories of lending). Most of the NAICS codes are pretty easy to identify: full-service restaurants, 722511. Rental properties, 531110. Hotels, other than casinos, 721110. But what about a physician in a very unique medical care area? I literally loaded this doctor’s website URL into ChatGPT, asked what the NAICS code was, and got the answer.

• Making a small change on a graphic I was using. Interestingly, ChatGPT asked me if I had the trademark rights to the graphic before making the change for me, and when I confirmed that I did, the program made the change almost instantaneously.

The other thing I generally use ChatGPT for is casual answers and discussion around questions that I might have taken to a CPA or attorney in times’ past, but that don’t quite rise to the level of needing true professional help (at least not yet). I suspect my CPA and attorney wouldn’t have even wanted to get bogged down in these relatively minor questions, so while they may have lost some billable hours (or billable increments of 15 minutes of time, anyway, in responding to me), I suspect they also will not miss this type of work if customers are able to handle a lot more of their housekeeping inquiries and low-level tasks themselves with the support of AI.

But my point is this: using AI to help with every one of the tasks above saved me time, money, and just as importantly, frustrations. I hate trying to figure things out in Excel, for example. I probably could have searched the taskbar in Excel and figured it out eventually, or Googled it and then interpreted the steps from some Microsoft-sourced website it pointed me to, but neither of those options were as simple as typing into ChatGPT, “How do I remove duplicate rows in Excel,” getting a clear answer with visuals instantaneously, and then executing it myself. It was 45 easy seconds versus 5 frustrating minutes, and if you’re a busy person with a lengthy to do list like I generally have, saving the net amount of time in that exchange and keeping your brain fresh for other tasks is actually worth quite a lot. And with apologies to the graphic design workers out there, being able to edit a logo myself in two minutes for free saved me perhaps several days of waiting and back-and-forth with a graphics person and perhaps several hundred dollars of expense (that being said, quite charmingly, citizens of Newburgh, Maine this past week did reject a logo change for the town because it was generated by AI, and they wanted something done by an actual human who lived in the community). Plus the AI logo also had mistakes in it. Per the Bangor Daily News:

The proposed Newburgh logo shows a pine tree, barn, cropfield and the date the town was incorporated. The AI-generated logo seems to be based on the town’s current logo, which also has a field, barn and Newburgh’s incorporation date. But the proposed branding has mistakes in it. The “I” in incorporated is written with the number 1, while the 1s in 1819 are upside down.

Oops.

If the rosy tone and warm temperature in this week’s article about our AI prospects as a species felt jarring to read, please do stick around for Part II, as there is another side of the coin to the optimistic outlook. In Part II, we will look more at the labor market, more at our brain chemistries, and peer down the road this all intuitively feels like it could go down, which is one with seismic tectonic shifts in our economic and social orders, and the possibility of true instability leading to nothing short of revolution. So stick around, we’ll be right back.

Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Because I research and write about housing and the economy pretty regularly, the algorithms constantly feed me content about these topics, and a meme I chuckle at every single time it hits my feed is a video of a group of 70-year-olds dancing on a cruise ship with the caption, “How Boomers feel selling their homes for $2 million after buying them in 1969 for 11 raspberries.” I can just hear my favorite Boomer readers harrumphing in response, “Well, maybe if young people today didn’t stop at Dunkin Donuts every day on their way to work, it wouldn’t be so hard to pay a mortgage.

As an Elder Millennial myself, I hope my Boomer friends and family will appreciate that my generation is fast becoming the target of the younger generations’ meme game. I was described recently as being “from the 1900s,” which is an equally sharp and amusing jab as the “Okay Boomer” meme that was popular a few years ago, or the 11 raspberries joke from today.

But I digress. The question of how hard it is to buy a home is one of the most common sources of intergenerational friction. Several years ago, I wrote an article comparing what it was like to buy a home in 2023 as compared to 1983. This was in response to people pushing back on the complaints of the younger generation by pointing out that when they themselves got started a generation or two ago, interest rates were much higher than they are today. So while today’s problems in the housing market are significant, they look different, and people buying homes in the 1970s and 80s had their share of challenges, too.

What I concluded in the 2023 article was that the two time periods actually have a lot of comparisons:

The average monthly mortgage payment today is only slightly higher than the average monthly mortgage payment in 1983, adjusted for inflation, even though home prices are a lot higher. And mortgage payments today as a percentage of individual income are exactly the same…

But the question of prices is a major one: remember, home prices are almost double today what they were in 1983, adjusted for inflation. This presents a high hurdle for younger homebuyers, those who are just getting started out, or traditionally underrepresented demographics in the home buying market, all of whom may not have had the time and opportunity to build up a nest-egg for a 10-20% down payment or to cover the ongoing costs associated with owning a home.

The general takeaway from the above (from the vantage point of 2023), is that in terms of Americans’ monthly cash flow, a mortgage payment in 2023 had a very similar impact to individual and family budgets as it did in 1983, but the hurdle for those just getting started out was greater in 2023 than it was forty years earlier.

I thought it would be worth a look at the analysis to see what, if anything, has changed since 2023.

The Key Variables

To get a clear look at this question, you have to look at three distinct variables. The price of homes (adjusted for inflation) is just one of them. The others are interest rates and incomes. Let’s start with prices.

Prices

The median home price today per the National Association of Realtors is about $408,800. In 2023, it was actually $416,100, so there has already been a move to the good for buyers in the past three years. When you consider that most goods and services have increased in price over the past three years, the fact that home prices have not is actually quite notable.

What about the early 1980s? I’m going to stick with looking at 1983 as it’s a fair anchor for defining “the early 1980s.” If I was picking the absolute peak moment of interest rates, it would skew the analysis (it would be October 1981, by the way). I’m going to stick with 1983 as a kind of an average, typical year in this time period we are looking at.

In 1983, the median home price was $74,900. Using the Bureau of Labor Statistics calculator to compare dollar amounts from different time periods, $408,800 today would be the equivalent of about $122,000 in 1983. Looking at the reverse calculation, the median home price of $74,900 in 1983 would be equivalent to about $253,000 today. It’s therefore about 60% more expensive to buy the median home today than it was in 1983, and this is adjusted for inflation. Score one for the would-be homebuyers of today in their case that things are more challenging here in 2026.

Interest Rates

On interest rates, I always enjoy sharing the following chart, which shows the history of the 30-year fixed rate mortgage going back over 50 years:

What a story that chart tells, from the huge surge in rates (peaking above 18% in 1981!) to the steady decline in rates over the course of the nearly 40 years that followed. If you want a fun trivia question to impress your nerdy friends who are into real estate, you can ask the question of what month represented the historical low for the 30-year fixed rate mortgage. The answer: January 2021, when the average 30-year rate hit 2.65%. I thank my blessed stars regularly that my wife and I closed on the home we live in now in July 2020, when rates were pretty close to the bottom, a lucky break of timing I wrote about a few years ago in a piece entitled, Dumb Luck and Golden Handcuffs.

Today the average 30-year fixed rate is 6.30%. So if you’re looking just at rates, things are far better today than they were in the early 1980s. In fact, here’s another trivia question that only a Sunday Morning Post reader might enjoy: following the early-1980s interest rate peak of rates being close to 19%, when did rates actually get as low as 6.30% again? Answer: not until the summer of 2002! People think rates are high today, and they are high relative to the recent 2020-2022 trough, but rates were higher than they are today for the entirety of the 1980s and 1990s.

Combining Prices and Incomes

If we combine the median home prices and the average interest rates in each time period, we can calculate the average monthly payment on a 30-year mortgage for each era and then adjust them for inflation, ending up with two figures that can stand up against one another.

First, using the 1983 numbers, the median home price of $74,900 with a 10% down payment results in a loan amount of $67,410. Using a loan calculator, the monthly payment on that amount on a 30-year fixed mortgage with a rate of 13.8% (the mid-year average rate in 1983), would have been $788/month.

Now, looking at today: the April 2026 median home price of $408,800 with a 10% down payment results in a loan amount of $367,920. Applying the current average interest rate of 6.30% generates a monthly payment on a 30-year mortgage of $2,277/month.

Comparing the two figures using an inflation calculator, $788 in August 1983 would be equivalent to $2,597 today. Looking at the reverse calculation, $2,277 in today’s dollars would be equivalent to $691 in 1983. It might take staring at these two numbers for a minute to figure out how they compare, but the conclusion here is that things were actually harder in the mid-1980s than they are today, with a larger average monthly payment for a typical mortgage in 1983 as compared to today.

But there is still one key variable to look at.

Incomes

The third variable that is necessary to include, and the one that is often missed when comparing prices across time periods, is incomes. According to the Bureau of Labor Statistics, the median weekly earnings nationwide in the first quarter of 2026 was $1,235/week. That works out to a median yearly income of $64,220, sweeping away regional differences and discrepancies between male and female and different rates and educational backgrounds (more on that below, though). The average mortgage payment for a median home today at an average interest rate of 6.3% is $2,277, or $27,324/year, which represents 42.5% of the average income.

Now, looking at 1983: the average weekly earnings in 1983 was $309/week, which totals to $16,068 for the year. The average monthly mortgage payment of $788 in 1983 represents $9,456/year, which is 58.9% of the average annual income in that time. Comparing the 42.5% of today’s income for the average mortgage payment with the 58.9% of average income from 1983 suggests that the more challenging period of time to buy a house and carry a mortgage was, indeed, the early 1980s, when a greater share of one’s personal income was going towards mortgage payments than it does today.

Considerations and Caveats

I chose to compare against the early 1980s because it is the time period people most commonly think of as being especially challenging for the homebuyer market. Other time periods would undoubtedly illustrate different conclusions. For example, let’s look at the math for twenty years ago, in 1996. The median home price in the second quarter of 1996 was $139,900, and the average 30-year rate was right around 8.00%. Using a loan calculator for 90% of the purchase price ($125,910) at an 8.00% interest rate generates a monthly payment of $924/month. This would be equivalent to $1,948/month today, so over $300/month lower in today’s dollars than it would be now.

That particular snapshot suggests that it is notably more challenging today than it was in 1996. Except on the income front, the average weekly wage in 1996 was about $486/week, or $25,272/year. A $924/month mortgage payment would have been $11,088/year in 1996, or 43.8% of average income. That is very comparable with today’s figure of average mortgage payments representing 42.5% of median income.

It is important to keep in mind that statistics reporting median metrics are just that: medians. If my math is correct, there are approximately 50% of working Americans making less than the median, and 50% making more than the median (that’s a little math humor for you). And things are, needless to say, considerably harder for those who make less.

And this is where the stress is most felt. For starters, saving 10-20% for a down payment is particularly challenging for those just getting started out. This is definitely an aspect of the current housing market that is significantly more burdensome than it was in 1983. Keep in mind the analysis above was mostly about cash flow and what portion of income goes towards a mortgage. But the barrier to entry is much more challenging today because home prices are so much higher, even when adjusted for inflation. The median home price in 1983 of $74,900 would be equal to $253,000 today. But the average median home price today is actually much more than that: $408,800. That means would-be homebuyers need to be able to bring more to the table today than they did in the early 1980s, even adjusted for inflation, and for many people, that is just an impossibility.

Consider, too, that income statistics are much more complicated than just reporting the median. That same BLS report referenced above showing today’s median weekly wage of $1,235/week is the number for all working Americans. For women, however, the median wage is $1,098/week. For Hispanic workers (male and female combined), it is $984/week. For Black men, it is $1,016/week, and for Black women, it is $956/week. If you were to do the full analysis above with a Black women’s median wage of $956/week, it represents an annual income of $49,712. The median monthly mortgage payment over a year of $27,324 would represent 55.0% of income. However, a caveat upon a caveat to consider is that female and minority wages were undoubtedly also lower than the overall median income in 1983, and probably even more so, so even though things are harder for those groups today, they were also harder back then.

It’s also worth taking a look at young people. The average median wage for young men and women age 16-24 is $812/week and $723/week, respectively. I’ll spare you the math, but the portion of a median home purchase at those income levels represents 65-70% of young people’s paychecks, which makes homeownership very difficult to say the least. (I know very few 16- and 17-year-olds are buying homes, but that’s the lowest age bracket of weekly wages the BLS reports; I’d rather see the numbers for those age 21-30, but that data doesn’t really exist in the same format. So it’s not exactly a fair statistic, but I still felt it was worth noting).

Final Thoughts

Barrier of entry concerns aside, that it was, perhaps, more challenging to pay a monthly mortgage in 1983 as compared to 2026 may feel disheartening to the modern generation, who generally feel like they have it pretty tough. One silver lining is that my previous 1983 vs. 2023 analysis, which I wrote in August 2023 and which you can read here, showed that average mortgage payments as a percentage of incomes were almost exactly the same in 2023 as they were in 1983. This means that things were harder for homebuyers just three short years ago than they are today. Things have gotten better! That should be a sign of hope for beleaguered buyers.

Things might get even better for buyers if interest rates continue to come down and if home prices continue to ease. The 2023 analysis showed challenges for buyers relative to today because the average interest rate in August 2023 and the one I used in that previous analysis was 7.2%, and the median home price was $416,100. Both of those numbers have moved to the good (6.3% and $408,800 today, as noted above), which has resulted in a more positive homebuying market. Incomes have also improved, albeit modestly, from 2023 to today.

Another reason to believe things are actually better today relative to 1983 is that, generally speaking, homes are nicer today. They are larger, more energy efficient, and typically have more amenities. This is part of the problem, some might fairly say, as not everyone wants a larger home with greater amenities. Countless buyers would much prefer a smaller home for $253,000 (the equivalent dollar amount today to the 1983 median home price), but that type of home simply doesn’t commonly exist on the market these days, particularly in higher-priced areas of the country. That is a policy problem as much as it is a financial one, as it is just too hard (and not profitable enough) for builders to construct starter homes that can be sold in the $200,000-$300,000 range. There are not enough homes being built to accommodate buyer demand in this price band, particularly from young people and others who have been historically underrepresented in the homebuying pool.

The other big consideration that is worth its own article at some point is to compare the carrying costs of home ownership today versus other time periods. I suspect property taxes and insurance have gone up considerably relative to inflation (especially insurance). However, there are likely some other areas of homeownership that cost less, like the cost of appliances and other fixtures, which have generally come down in price over time, adjusted for inflation. A final consideration is that the general “cost of life” is higher now, as there wasn’t anybody paying a monthly internet bill in 1983, for example, but today having internet (and having to pay for it) is essentially a requirement for life.

Lastly, another difficult thing to quantify is how tastes have changed over time. I would like to research this topic further, as it comes up from time to time from readers. Do homebuyers today have more demands, even if said demands are beyond what their budget should reasonably entail? It’s possible, although I still think the primary problem is a lack of inventory at all price points, and that buyers are generally pretty rational, even if expectations have crept up over time even if incomes and budgets, adjusted for inflation, have not.

To close, however, and to reiterate a point above, the real stress in the housing market is in the low and middle tiers of the spectrum. The main challenge is this barrier of entry issue, where home prices have risen in value so far beyond what the typical person who makes less than the median income can afford. To improve that reality for millions of Americans, home prices have to fall or incomes have to rise more substantially than they have over the course of time, and lower interest rates certainly wouldn’t hurt either, even if they are relatively low at the moment, historically speaking.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Greetings from Newburyport, Massachusetts, where our family is spending the tail end of school vacation week. The big highlight was a Saturday down-and-back to the Franklin Park Zoo.

I have drafts of several deeper-dive pieces in the works, but for today, I wanted to draw out some data I was working with this past week that I think shows just how sensitive the buyer pool is to the current economic winds, which in the case of the past 10-14 days, have been generally favorable to the homebuyer market. This may feel surprising with such gloom and anxiety out there in the headlines, but there have actually been some signs that the spring buying season may be salvaged after things were looking pretty dismal in the late winter and early spring.

We’ll see what happens over the next 30 days, though. At the very least, moves in the data over the past three weeks underscore just how sensitive people are to seemingly small moves, but ones that actually represent some pretty big levers in the economy. It’s always worth remembering that every piece of data represents real people making real-life decisions. It’s easy to get bogged down in the quantitative metrics of it all, but you can see how significant the human impact is when you consider the actions and behaviors taking place (or not taking place) as the numbers move. Consider the following:

• For all the inflationary pressures from the rising price of gas, interest rates have actually come down over the past two weeks. The average 30-year fixed rate mortgage hit its recent peak of 6.64% on March 27th, but has since settled at 6.32% to end this past week, per Mortgage News Daily. This key rate has been quite stable over the last week, fluctuating only slightly within a narrow range of 6.29%-6.33%. On a $400,000 mortgage, this seemingly small interest rate change represents a difference of about $80/month, or about $1,000/year, which is real money, especially to those just getting started out.

• In response to falling rates, after four straight weeks of declines in March, mortgage applications have increased each of the last three weeks: +1.8%, +7.9%, and about +10.0% (with data for the most recent week estimated, but still being finalized). The fact that mortgage applications have so closely correlated with interest rates (i.e. as rates went up in March, applications dropped significantly; as rates have fallen over the past three weeks, applications have gone back up), shows just how closely would-be buyers monitor rates, and how sensitive buyer behavior is to changes in rates.

• After some notable declines in January and February, pending home sales actually increased in the month of March, per data released this past week from the National Association of Realtors. This provides some momentum to the market as we enter the peak buying months of May through August. The home market was completely dismal in the first two months of the year, so the March number provides a little bit of optimism including to sellers looking for buyers, and for real estate agents and others in the real estate world looking to facilitate sales.

I think what has happened this winter and spring has almost been a mini-cycle within the cycle. Buyers froze up with spiking rates, yet inventory among sellers continued to increase as more homes got listed for sale. This resulted in an equilibrium shift in the market whereby a small glut of supply relative to demand combined with a pressure valve release on interest rates (i.e. the drop from 6.64% to 6.32%), plus just the normal seasonality of the housing market brought buyers back from the sidelines. It’s interesting to watch this dance between buyers and sellers, and fortunately for sellers, buyers seem to be reengaging after sitting out for a while.

It’s worth pondering why interest rates have come down. The inflationary pressure from rising gas prices has ripple effects through so many different areas of the economy, so you would think interest rates would be rising. The counter to this, however, is that in a risky economic world, there is often a flight to quality, and investors out there still see U.S. Treasury bonds as the safest and most secure investment around, so they have been pouring money into U.S. bonds in recent weeks. This has had a muting effect on key indicators like the U.S. 10-Year Treasury note, which has subsequently had a corresponding dampening effect on mortgage rates as banks and mortgage companies often price mortgages as a cushion above the 10-Year Treasury.

What Happens Next

What happens from here depends a lot on the status of a fragile ceasefire in Iran and the potential re-opening of the Strait of Hormuz.

People should be aware of that chart below, and of its far-reaching implications. The chart shows the daily number of ships passing through the Strait of Hormuz. The obvious drop-off at the outset of the Iran War is clear, with an average of 90-ish ships per day crossing through in normal times and often as many as 120 or more. The number of ships passing through dropped immediately when the war began, and has been mired in a daily average of 5-7 ships for the past eight weeks with sometimes barely any ships making it through what is now a double blockade of both Iranian and U.S. ships limiting traffic.

As we saw during COVID, when global supply chains are impacted so significantly, the availability of goods and therefore their prices are altered all over the world. No doubt we will be seeing similar impacts in the weeks to come, and indeed we already are. Gas prices are the obvious one that impacts virtually everyone, but the impacts carry into other areas, too. Fertilizer prices, for example, have skyrocketed 30-50% since the end of February; about one third of all fertilizer passes through the Strait of Hormuz annually. Prices have also risen on certain agricultural goods that pass through the Strait, including corn, soy, wheat, and dairy products.

I don’t have any greater conclusions this week other than noting that the whole butterfly-flapping-its-wings analogy is real, but at this moment in time, there is more than just a butterfly flapping its wings, but a full-on conflagration in the Middle East. These things are hard to predict, to say the least. But as we’ve seen just recently, even modest moves back in the direction of stability like an extended, albeit fragile, ceasefire, help move things in a more positive direction, as with the move to the good on interest rates just recently. We’ll see what the next week has in store, however.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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As we look ahead to the summer tourism season throughout the United States (and especially in particularly high-tourism areas like from where I write here in Maine), the variables at play represent a real microcosm of the larger economic forces we are dealing with right now. Bifurcated consumer confidence reflective of the K-shaped economy, consumer anxiety in the face of high costs including gas prices, political tension and international friction: it’s all there, and it could combine together for a fairly tepid tourism season.

Even if you are not directly involved in travel and hospitality yourself, the state of the tourism landscape impacts us all because of the multiplier effects, or lack thereof, based on how much spending, or not, there is in this space. The travel and tourism sector in the United States supports 15 million jobs annually and generates $3 trillion in spending.

So what’s in store for the season ahead? On paper, the travel industry still looks resilient. Key data aggregators like Deloitte and McKinsey report consumers are still spending and, somewhat surprisingly, younger generations are increasingly likely to see travel as a “non-negotiable” expense. Experiences carry a premium in the post-pandemic psyche, particularly to younger people (my own theory on this is that young people sense their lives have become overly algorithm-ized, and spending on travel is a way to break free from digital malaise).

But the composition of travel spending illustrates a more complicated story. Deloitte’s most recent travel outlook points to a clear bifurcation: higher-income households continue to anchor demand, filling planes and booking resorts. Meanwhile, middle- and lower-income consumers are behaving much more tactically, including shortening trips, choosing drive-to destinations, or selecting down to lower-priced options. A family that still travels, but spends 20% less once they arrive, has a very different economic impact on the local economy of that area than one that comes without feeling as bound by spending restrictions.

This is the K-shaped economy at play. Premium and “ultra-luxury” travel continue to be extremely strong, whereas there is pressure in the middle of the market. Mid-tier spending, vacation add-ons, and ancillary spending on restaurants, extra excursions, etc., are all setting up to be softer in 2026 than they were in 2025.

One area that could show stability as consumers select down from mid-tier price options to lower tiers is in budget hotels, campgrounds, and the like. If you combine the millennial sensibility that travel is non-negotiable with the mathematical challenge of traveling in a high-cost landscape, and you will get travelers self-selecting down a tier or two in terms of accommodations and experiences.

However, this is where a more recent headwind provides a potential wet blanket on the travel sector, and that is the high price of gas. I’ve written a lot about gas prices over the past few weeks, in part because it is one of the most important topics on everyone’s minds, so I won’t dwell on it too much here, other than to state the obvious: when the price at the pump is so high, people pull back on driving, especially on long trips. Plane travel is typically more expensive, too, as airlines pass along as much of the cost as they can to consumers without breaking the demand. The average price of a gallon of gas nationwide closed this past week around $4.06/gallon, up close to 40% since the start of the Iran War.

The International Component

A recent BBC report predicts that 2026 will be a record year for the global tourism market. Destinations are changing, however. Europe has long been the most popular travel destination, but less sought-after locations have been surging of late. Per the report:

The destinations recording the fastest growth were not the usual headliners. Brazil saw arrivals surge by 37%, Egypt by 20%, Ethiopia by 15% and Bhutan by 30%. Even the Seychelles, a tiny archipelago off East Africa, recorded a 13% increase.

“More travelers are now drawn to distinctive culture, landscapes and the possibilities of discovery, so countries with a strong identity and decent access are clear winners,” according to Steven Vigor, CEO of travel advisory firm Revigorate.

One place that is not seeing a surge of inbound tourism is the United States. According to the World Travel & Tourism Council, although global travel was up in 2025 and boosted economies throughout the world, the slowest-growing region in the world was North America, with the United States itself growing its travel and tourism market by just 0.9%. The number of visitors to the United States was down by 5.5% in 2025 as compared to 2024. The big winners in 2025? China and the rest of the Asia-Pacific market. Tourism was up 9.9% in China in 2025. Malaysia and the Philippines were also up by double digits, with India and Indonesia both up just over 7.0%.

It’s not just leisure travelers and vacationers who are skipping the United States either. Business travelers and worker visas are also down, declining steadily for the past year, per the National Travel & Tourism Office.

Why? It’s not that travel overall is falling; in fact, as the statistics earlier on point out, global travel is actually up. Per Business Insider, just looking at travel by Australians, for example, global travel is back to pre-pandemic levels:

Australians travelling to Canada rose 4% in the last year, 10% more visited India, and visits by Australians to China and Japan rose 20% and 21%, respectively, but 3.2% fewer booked a trip to the US.

So we have to address the question head-on of why fewer people are choosing to travel to the United States right now, and it comes down to negative views of American politics, resentment of economic policies like tariffs, and just a general sense of unease if not outright fear that some people have about traveling to the United States right now, especially those of different racial backgrounds who feel hostility when they look towards our country right now.

Overall, many people are simply choosing to boycott travel to the United States due to the general sense of hostility and resentment that is out there. Amid bitter trade disputes, the former Prime Minister of Canada, Justin Trudeau, called on Canadians to stay home this year rather than come to the States. Indeed, travel by Canadians by car into the United States is down by 35% over the past two years. There have been impacts here in Maine, for sure, with a general sense that the hotel, restaurant, and hospitality sector in general was softer last summer and likely will be again this summer.

For sure, there are other factors at play right now, too, including a stronger U.S. dollar and a more fragmented global environment. Even modest percentage declines in international visitors can translate into meaningful revenue losses because those travelers tend to stay longer and spend more per trip. That is why the season ahead may feel, in many places, like a season that is not quite flourishing.

There may be a glimmer of hope over the past week as gas prices did slightly ease down with news that the Strait of Hormuz may be opened back up, but it may also take some time for meaningful price declines to hit the pumps. The broader question of international perception towards the U.S. will undoubtedly take more time to reset.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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I’ve never wanted The Sunday Morning Post to be a current events newsletter. There are plenty of places you can go to get the economic facts of the week (actually, I’ll share links to some of the resources I use as an addendum at the end of this week’s article). I think I also went about two years in the early days of The Sunday Morning Post barely ever writing the names “Donald Trump” or “Joe Biden” because I didn’t want this to be a series of political articles, and quite honestly it gets exhausting to include the political overlay even though I know it’s often relevant. There are plenty of places you can go to find that type of analysis, though.

But nonetheless, current events have far-reaching impacts, as do the rantings, ravings, and ramblings of whoever is in the White House. Sometimes I think it would all be a lot more interesting if it wasn’t real life. It’s hard to write about interest rates and gas prices when it feels like the world is on fire. This is also the third time I’ve written about Iran lately (here and here), so I wouldn’t blame you for getting tired of the topic, although it really is the thing that touches on all other topics right now.

So we press on. Because actually, interest rates do impact people in significant ways, as does the price of gas, for that matter. I saw and heard anecdotal evidence from some of my business owner bank customers that March was a tough month. People just were not going out and spending money, no doubt burdened by high prices on all manner of goods and services and, in particular, the cost of filling up the tank. When people can’t afford the normal things of life, it doesn’t just have real-world implications — it’s actually the real world.

A Brief History on Oil Shocks

Things are structurally different today than they were in the 1970s, but it’s still worth a quick comparison. In 1973, there was a coordinated cutoff of oil supply by the OPEC nations, which resulted in dramatically higher prices. Prices quadrupled, in fact. A similar supply shock occurred in 1979. The jumps in oil prices sparked economic recessions here in the United States in both 1973-1975 and in the early 1980s. Both recessions were marked by steep increases in inflation and muted economic growth.

The 1970s was not the only period of disruption in the oil market. The price of oil peaked at $147/barrel in June 2008, for example. We all know what happened next: a massive financial crisis more significant than anything since the Great Depression. Oil prices also peaked because of the supply chain crisis during the pandemic. That rise, too, was part of a massive inflationary upswing.

If you look at the chart for the price of oil, you can see just how notable these upswings have been (data is only available from this source going back to 1986, so the oil shocks of the 1970s are not shown):

The rapid rise in oil prices over the past 45 days is clearly evident on the far right side of the chart. Almost every other time prices have spiked like that, it has preceded an economic recession, which are all the vertical grey areas of the chart.

Does that mean we are marching towards a recession? It depends on a lot of things, including how quickly, or not, things are resolved in Iran. Certain key data points are flashing red warning signs, though:

• The average price for a standard gallon of gas at the pump has increased from $2.93 on February 27th to $4.12, an increase of 41%.

• The average 30-year mortgage rate was 5.99% on February 27th, and closed this past week at 6.39%.

• The monthly CPI reading jumped from 2.4% in February to 3.3% in March, which is a pretty big move in the wrong direction, and creates some serious headwinds against further interest rate cuts in the months ahead by the Federal Reserve. Early readings on April inflation have it tracking towards 3.6%.

• Consumer sentiment has declined in both March and April. Per the University of Michigan report:

  Consumer sentiment sank about 11% this month, extending a decline that began with the start of the Iran conflict, and is currently about 9% below a year ago. Demographic groups across age, income, and political party all posted setbacks in sentiment, as did every component of the index, reflecting the widespread nature of this month’s fall.

In fact, Friday’s consumer sentiment report recorded the lowest reading… ever. “Open-ended comments show that many consumers blame the Iran conflict for unfavorable changes to the economy,” said Joanne Hsu, the survey’s director, as part of the data release.

What Happens Next?

I’m not a Trump whisperer by any means, and needless to say it is hard to predict what he is going to do or say. But I know he must care about the political realities of the current moment. We are headed for crucial mid-term elections this fall, and Democrats are poised to make big gains regardless of what happens with the crisis in Iran. But the situation has made Republican prospects even bleaker, and for better or worse, the president’s future is tied to the Republican Party’s success or lack thereof in the upcoming election. If Democrats retake control of the House and the Senate, they will not only be able to effectively block the president’s agenda for the next two years, but they will probably be able to launch all manner of investigations into what Trump and others have been doing or not doing over the past two years.

So far this year, Democrats in special elections have been vastly outperforming expected results, and Democrats lead in a generic ballot against Republicans by 5.5%, per Nate Silver. Local issues and the candidates themselves matter, but Democrats are feeling optimistic, and Trump and his people have to be seeing this in the numbers themselves. The rules of political survival suggest that this alone may be enough motivation to find an off-ramp in Iran. In other words, the political realities of the Iran War and specifically its impact on gas prices and interest rates will force President Trump and his team to find an off-ramp. In fact, you could see the beginnings of this over the past week, with a two-week ceasefire being declared on Tuesday. The ceasefire is fragile at best, but you can already see the results in the data just since Tuesday:

• Per GasBuddy, prices have come down about 10 cents a gallon since Tuesday.

• Per Mortgage News Daily, the average 30-year mortgage rate eased down about 5 basis points (0.05%) this past week.

• The stock market surged this past week, recovering a portion of the recent losses.

• Even the Michigan Consumer Sentiment survey that showed all-time low feelings noted in its narrative, “Economic expectations will likely improve after consumers gain confidence that the supply disruptions stemming from the Iran conflict have ended and gas prices have moderated.”

The movement in the data over just the past few days shows just how significant market reactions can be to shifts in tone, rhetoric, and policies even if, as noted previously, the current ceasefire does feel a bit tenuous.

What Comes Next

Historically speaking, after a sharp rise in gas prices, one thing that often does happen is that they, well, drop back down. In July 2007, for example, the average price of a gallon of gas at the pump was about $4.12 (almost exactly what it is today). By December 2008, it was down to $1.61. Gas peaked at just over $5.00/gallon during the pandemic in June 2022, but in only six months’ time it had dropped to just over $3.00/gallon. Sometimes that price drop is due to a falling off of demand, which is a reflection of a poor economy that finds itself in recession, and that is problematic itself, and other times it is just a case of supply catching back up. But the point is, things do normalize after a while, which I suspect is what will happen here. As for the election, as James Carville said in 1992, "It’s the economy, stupid,” and you can bet whichever party Americans are feeling will better care for their wallets this November will carry the day (and the next two years).

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Addendum

Here are a few research tools I have in a folder on my Favorites bar. Just passing them along in case you want some things to follow.

Gas prices: GasBuddy and AAA have live trackers of gas prices around the country. GasBuddy updates in real-time all day long, while AAA updates its average each morning.

Interest rates: Mortgage News Daily is a site I frequently reference, and it has a good aggregation of mortgage rates from multiple sources. I also have a link to the U.S. 10-Year Treasury Live Rate and U.S. Treasury Daily Rates.

University of Michigan Consumer Sentiment Survey, referenced frequently in The Sunday Morning Post for a read on how people are feeling out there.

The Cleveland Fed has a Nowcast Inflation tracker, which updates the CPI statistic throughout the month and tracks pretty closely to what the official CPI Report will show, which is only released monthly.

Just this week, I started following two tracking sites for traffic through the Strait of Hormuz. Over the past few days, there have been 7-10 ships making it through. Usually, the average is 120-140 ships per day. You can find these trackers here and here.

Have a great week, everybody!

Nearly five years ago, I wrote an article entitled, “2021 is Different than 2027.” I was writing in response to concerns that the housing market was getting overheated. There is sometimes a “what goes up, must come down” mindset to things in the economy, and people were starting to get worried that the run-up in prices at the time would precipitate a corresponding drop, if not an outright crash. As I predicted in that August 2021 article, a housing crash did not happen, and, in fact, home prices have continued to rise.

But half a decade later, the housing market is different. The average 30-year fixed mortgage rate in August 2021 was about 2.9%. This was actually almost the exact all-time low. Today, the average rate is around 6.50%, down from its 2023-2024 highs, but up about a half a percentage point since the start of the Iran War five weeks ago.

The Chief Economist for the National Association of Realtors (NAR) said in February (even before the recent run-up in mortgage rates) that we were entering a “new housing crisis.” The 2008 housing crisis is still fresh in many people’s minds, so when someone credible throws around language like that, it’s worth a closer look. Are we headed for a housing crisis? Are we already in one? If yes, what does that mean? If not, what would a true crisis look like? Let’s dig in.

The Roots of the Perceived Crisis

I sometimes think of writing a book to try to explain the many layers and variables at play in the 2010-2025 housing market, but then again, who would read it? I can assure you that I’m not going to write a full book in the paragraphs below, otherwise who would make it to the end of this article? Low interest rates, an undersupply of new housing due to low rates of construction, sociological changes related to the pandemic, a changing economy: there is a lot to this story.

But here we are at the outset of Q2 of 2026. Let’s look at the stats today. In January, the number of existing homes sold was 4.02 million on a seasonally-adjusted, annualized basis. This was about a 6% drop-off from December and a tick down from the 4.08 million homes sold one year prior in 2025.

New home sales (as opposed to the statistic above, which is already-owned/existing homes) are also down this year. In January, the rate of new homes sold was 587,000, a sharp 17% drop from December, and about 13% below the rate one year prior in January 2025. The data for new home sales for February is now delayed (I’m guessing due to everything that is going on within the federal government); we won’t get fresh data on this statistic until May.

But put the existing and new home sales data together, and you get a housing market that has many fewer transactions happening today than it should in a normal, healthy market. In January 2020, which was the last comparable pre-pandemic (just barely) January, there were 5.46 million existing home sales and 764,000 new home sales for a total of about 6.224 million. January 2026’s combined total of 4.607 million, by comparison, is about 26% lower, which shows just how much the market for home sales has slowed.

Keep in mind, too, that the NAR crisis quote was given in early February, and conditions for homebuyers have only deteriorated since then with a recent rise in interest rates. The chart below shows weekly changes in mortgage applications via the Mortgage Bankers Association (courtesy of Trading Economics). Mortgage applications were up four weeks in a row in February, but have subsequently declined by 10.9%, 10.5%, and 10.4% over each of the past three weeks (the three downward yellow bars on the far right of the chart):

The State of the U.S. Homeowner

What the data above suggests, for sure, is that the number of home transactions is going to continue to be tepid if not drop in the weeks ahead. Fewer applicants for home loans in March means fewer transactions in April, May, and June. I can understand from the perspective of a realtor how this could, indeed, feel like a crisis. It is entirely a different question, however, as to whether the housing market is actually in crisis territory.

The big problem in the 2008 housing crisis was that financial peril among U.S. homeowners triggered not only their own serious financial issues, but also systemic stress. Massive banking losses, which threatened to (and, indeed, did in many ways) rip through the economy with contagion speed led to an outright financial collapse second only to the Great Depression in magnitude in recent history. When people’s variable interest rates increased and their property values declined, many homeowners suddenly found themselves upside down on mortgages they could not afford. Defaults spread through complex collateralized debt securities, and, essentially, all hell broke loose.

Today, however, the situation is much different. True, turn on the TV or scroll your phone and there are a million reasons to be fearful in the current economy and with the state of the world right now, but any sort of systematic problems or perils in the housing market are just not showing up in the data, at least not yet.

Delinquency rates

Existing U.S. homeowners are remarkably stable, at least as far as their homes are concerned (lots of people are struggling in other areas with rising costs, particularly with gas prices in recent weeks). The delinquency rate on single-family home mortgages in Q4 of 2025 was 1.78%, a historically healthy number, and essentially where it has been for the past three years. Delinquency rates peaked recently at 2.83% in Q3 of 2020 (the heart of the pandemic), but even that was nothing compared to the 10%+ delinquency rates we saw from the end of 2009 to the middle part of 2012. I didn’t work in banking at the time, and I’m glad I didn’t. If you were to extrapolate a 10% delinquency rate onto any bank’s current loan portfolio, needless to say it would be pretty devastating after operating in the 1.0-2.0% range for the past several years.

This data shows that homeowners are generally able to keep up with their payments. However, there are also some causes for concern deep in the data. Delinquency rates are higher, for example, for less well-qualified borrowers. This is to be expected, but the numbers are fairly stark. For Non-QM/Non-Prime 2.0 loans, which is a jargony way of saying mortgages to borrowers who may not typically fit a bank’s traditional underwriting model including those who are self-employed, high-net worth borrowers with irregular cash flow, or those with irregular credit issues like a recent divorce, the 30-day delinquency rate is all the way up to 7.26%, per Fitch Ratings. That is pretty high. Delinquency rates are also higher on mortgages booked from 2023-2025, which were generally done at higher price points and with higher interest rates. There is an important story here about the K-shaped economy, and how much harder the housing market is for people who have just been getting into it as compared to those who have been there for awhile.

One reason why American homeowners are, generally speaking, not in any type of peril comparable to 2008 is that homeowners today have stronger equity in their homes, again, generally speaking. Only about 3% of homeowners are seriously underwater (i.e. they owe more than their houses are worth), per the researchers at ATTOM. By comparison, 44.6% of homeowners are what ATTOM calls “equity-rich,” which means their loan balances are half or less than half of their estimated home market values. Home prices would have to drop pretty substantially for most homeowners to be upside down, and, indeed, about 40% of all homes are paid off, which makes those homeowners particularly stable, needless to say. It’s harder to have contagion peril spread through the banking system as mortgages blow up when 40% of homeowners don’t even have a mortgage to begin with. In 2008, on the other hand, 68.4% of homeowners had a mortgage, oftentimes with variable rates which were moving in the wrong direction on them.

Is There an Actual Crisis?

I do not think the sentiment behind the “new housing crisis” quote is accurate. I wrote five years ago that 2021 was not 2007, and neither is 2026. But that doesn’t mean there aren’t some major issues out there that represent some real risks to the broader U.S. economy as a result of what is happening in the housing market.

The portion of GDP that is attributable to the core housing market (e.g. new home construction, renovations, brokers’ commissions, etc.) is about 4%. But the impact to GDP gets bigger when you factor in banking, furniture, utilities, and housing-related services; it’s in the 15-18% range. When things slow down in an area of the economy that touches nearly 20% of things, it’s going to be felt more broadly.

The threat to the economy in the current housing market is not a massive drop in prices and the contagion effect of busting mortgages, but rather that a damp blanket is put over everything as housing slows down. When fewer transactions take place, there is less money flowing and multiplying through the economy. And that is probably what the National Association of Realtors is reacting to, and why their Chief Economist is warning of a crisis. Again, I think crisis is probably a hyperbolic term to use at the current time and the NAR certainly has a vested interest on behalf of its members of juicing the wheels of things, but it’s also fair to wonder how the economy is going to look if the sluggish housing market doesn’t pick back up.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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In Memoriam

Sadly, a regular reader and subscriber to The Sunday Morning Post, Andy Molloy, passed away last week after a battle with cancer. Regrettably, I only got to know Andy in recent years. I wish I had met him sooner. We would get together every few months for breakfast or lunch at the A1 Diner in Gardiner, Maine and he’d tell me everything that was going on in the Maine media scene, state government, and more. He would pick my brain about banking, and wanted to know what every community bank in Maine was up to. I will miss our conversations greatly, and always appreciated how much he supported me and my own experiment here in journalism. Rest in peace and thank you, Andy Molloy. Read more about Andy here and here.

From 2006-2010, I lived within a stone’s throw of Fenway Park, first off of Beacon Street just a short walk across a large parking lot to Yawkey Way (since reverted to its original name of Jersey Street), and then down the road in Brookline for two years. I worked for the Boston Red Sox for those years, and my job, my apartment, my grocery store, my gym, and my other favorite spots were all within about a half-mile radius of one another. I counted once in the summer of 2006 that I worked at Fenway Park 42 days in a row, which was not a bad way to spend a summer at all. It’s hard to say this to people who think of working for the Red Sox as a dream job (it was!), but eventually you do get the challenges and frustrations of any job the way you would working that much, and once the 2006 regular season ended (unceremoniously, that particular year), I forced myself to start at least taking Sundays off. I did love working for the Red Sox, but I always knew I wanted to move back to Maine, which is what came to pass, so my Red Sox career ended in 2010.

Now back in Bangor, Maine, I might make it to Fenway Park once a year, give or take. The truth is, I barely recognize the area that surrounds the ballpark. I’m sure the apartment I paid $800/month for in 2006 on Aberdeen Street across that big parking lot is three to four times more today. Most, if not all, of my favorite spots from those few years are gone: Boston Billiards, Baseball Tavern, Il’s Deli, Boston Beerworks, the Chicken Bone — none of them exist today.

I don’t mean to claim there was some massive gentrification process around Fenway Park only after I left. Gentrification is a loaded word, most relevant in the context of people getting priced out of their homes in longtime neighborhoods due to economic development and the general evolution of things. Losing my gym that happened to be right on the other side of the Green Monster is cause for nostalgic pause, but it’s not lifechanging. Even when I was living there, the area from Kenmore Square to the Longwood Medical Area had already been pretty well-gentrified as compared to its earlier grittier days before my time.

By the way, one of today’s primary topics is about the real estate around professional sports venues, but the advancement of the Longwood Medical Area, which includes Harvard Medical School, Dana-Farber, Brigham and Women’s, Boston Children’s Hospital, Beth Israel, and others, is just as much a reason for the massive development in this area over the past two decades as anything — it’s one of the largest concentrations of top tier medical institutions in the country if not the world.

But regarding the topic at hand today, real estate development is big business. So, too, are professional sports. And increasingly, the two are intertwined. Real estate development is being done by sports franchises themselves (or at least their ownership groups), who recognize that their own investments in professional sports team can amplify the value of all of the surrounding real estate, so why not own that real estate themselves?

Professional Sports as an Investment

Few people will ever be in the echelon of investors who can afford to acquire a professional sports team or to be a part of an ownership group that does so. In 2002, the Boston Red Sox were purchased for roughly $380 million. Today, people who track these sorts of things estimate the value of the franchise at nearly $5 billion, which puts them third in Major League Baseball behind only the Yankees and the Dodgers in terms of value. I’m biased, but in my opinion these are clearly the three most beloved brands in Major League Baseball (you might also throw in the Chicago Cubs), so it’s no surprise they are the most valuable. But even the Tier 2 teams are now generally all worth over $1 billion. The Baltimore Orioles, for example, were the most recent MLB team to be sold. The value? Nearly $2 billion.

In the NFL, valuations are even higher. The Denver Broncos sold for nearly $5.0 billion in 2022, and the Washington Commanders sold for just over $6.0 billion one year later. The Dallas Cowboys, a team that is often cited as the most valuable franchise in all of sports, is purportedly worth approximately $13 billion. Even a less iconic team (despite winning this past year’s Super Bowl) like the Seattle Seahawks will likely sell for $7.0-$10 billion. In fact, the Seahawks are actively for sale right now.

I know $10-$13 billion for a sports team might seem obscene to some people, but you have to remember these are actually businesses. A $13 billion valuation would put the Dallas Cowboys roughly equivalent to the Hasbro company. The DocuSign company, for example, is worth about $9 billion, as is Zillow. Which would you rather own? The Seattle Seahawks? Or DocuSign. I’d take the Super Bowl champs.

The main reason why professional sports teams sell for so much is that, simply put, Americans have a deep and abiding love for professional sports, and these teams generate a ton of revenue. The Cowboys comfortably gross nearly $2.0 billion per year. In an attention-driven economy where our focuses are split in so many different directions, sports still draw people (and their dollars in).

There is, of course, the prestige factor. Who wouldn’t want to be an owner of a professional sports team? The number of opportunities is scarce (30 MLB teams, 32 NFL teams, and about the same in the NBA and NHL), so when a team does become available, the pool of qualified and interested buyers becomes more like a feeding frenzy. Even in the comparatively upstart WNBA, news broke just this past week about the owner of the Houston Rockets NBA team, Tilman Fertitta, purportedly trying to acquire the Connecticut Sun team for $300 million. He would then move the Sun to Houston.

In any of these leagues, if you want to own a franchise, you can’t just start one up; you have to acquire one from an existing owner (or be approved through a complicated, lengthy, and expensive league expansion process). But once you are in, you get to participate in media rights profits. Because we love sports so much and because of the unique nature of sports as live action activities (i.e. you basically have to watch it in real time), the media rights, which are shared between the leagues and their owners, are incredibly valuable.

Each team in the NFL, for example, receives a roughly equal share of the league’s national media rights revenue. People who watch professional sports are incredibly valuable to advertisers because they are often in key demographics and they are willing to actually sit down and watch a screen for 3-4 hours without interruption. They will then watch highlights later, sometimes over and over again through multiple screens (i.e. TV, phone, computer, etc.). Advertisers will pay big bucks to reach these audiences.

Just look at football, for example. The current set of television and streaming contracts covering CBS, FOX, NBC, ESPN/ABC, and Amazon totals about $110 billion for the NFL over 11 years, or roughly $10 billion per year for the league as a whole. When divided among 32 teams, that works out to approximately $310–$320 million per team annually from national media rights alone. And this is just the national media share; teams also earn additional income from local TV contracts, not to mention ticket sales, sponsorships, merchandise, and stadium revenue, which pushes total annual revenue for most franchises well above $500 million.

The Real Estate Angle

Factor in media revenue, other sources of team-related income, and the prestige factor of owning a team (plus, I would imagine/hope for most team owners, the fun of it all!), and you get a very rewarding and profitable enterprise. But there is another way professional sports franchises (or their ownership groups, at least) are maximizing their returns on investments, and that’s through real estate — specifically, owning and developing as much of the real estate around their stadiums, arenas, and facilities as they can.

Consider the Atlanta Braves, for example. In 2017, they moved into Truist Park, but the stadium was only part of the vision. Surrounding the ballpark is The Battery Atlanta, a mixed-use development of restaurants, offices, apartments, and retail that operates year-round, not just on game days. Who is the owner of The Battery? Atlanta Braves Holdings, Inc. Essentially, the Braves don’t just sell tickets anymore; they participate in rents, leases, and an entire ecosystem of economic activity at The Battery, making them one of the largest real estate developers in Cobb County, Georgia and a vertically integrated conglomerate.

NFL teams are doing the same. The Los Angeles Rams took the concept to another level with Hollywood Park, the sprawling development surrounding their recently constructed SoFi Stadium. Far beyond simply a sports venue and stadium, it’s a master-planned mini-city with residential units, office space, entertainment venues, and public parks. The stadium may be the centerpiece, but it’s one of countless revenue streams within the development. The New England Patriots have done the same, massively developing the area in Foxborough around Gillette Stadium into Patriot Place. Rather than partner with a developer on this project, the whole thing is owned by the Kraft Group, which also owns the team.

One advantage many of these teams have had, particularly the Patriots, is in building their stadiums and adjacent developments in less dense areas. The Patriots are not in Boston or Hartford, for example; they are in Foxborough, population 18,400. It is common now when a new stadium is built that it is done out in the suburbs somewhere, and the reason is that ownership groups do not want to be constrained in their real estate development opportunities. The Chicago Bears would like to launch a massive mixed-used development along the lines of what the Braves, Rams, and Patriots, have done, and so are looking to Arlington Heights, an easier area to build in 25 miles out of Chicago than where they are now (there are also rumors they could be lured across state lines to Indiana; no word on whether they would become “The Indiana Bears,” a moniker enough to make even the most casual Bears fan sick).

But long-time franchises in iconic locations have been figuring out this real estate thing, too. Take the Red Sox, for example. Part of the joy of being a Red Sox fan is Fenway Park itself. The oldest ballpark in Major League Baseball, Fenway is one of the top tourist attractions in Boston (and, indeed, all of New England), and many people will go to games just as much for the ballpark as the team itself. Years ago, there were rumors the Red Sox might try to move from the historic site, motivated largely by wanting to have a new stadium with development opportunities around it (plus increased modern, premium/luxury seating, which is also a big revenue driver for a team). The fans revolted. Instead, the current ownership group, which bought the team in 2023, has invested heavily in the ballpark itself to keep its historic charm, while modernizing many of its amenities (and revenue lines).

The Red Sox (through Fenway Sports Group) have also invested heavily in the periphery around the stadium by acquiring and redeveloping numerous properties. They have also reimagined the former Yawkey Way and Lansdowne Street as more pedestrian-friendly, year-round destinations. Fenway Park was built in 1912, but over 110 years later, it’s part of a broader, modern commercial strategy.

Lessons for the Rest of Us

The large numbers associated with professional sports ownership economics can boggle the mind. 99.99% of us will never be in that echelon. If the Red Sox do eventually sell for $5+ billion, if you could somehow negotiate a 1% stake as part of a broader ownership group, you’d still need to pony up $50 million.

But there are lessons here for anyone doing real estate development in their own way. Location matters, first and foremost. I mentioned above about all the development in the Longwood Medical Area of Boston with hospitals, laboratories, and scientific research centers. Residential rental and retail properties alike within several miles of a hospital setting like that, for example, will never lack for tenants. And vice versa, if you are investing in a rural area of the country, for example, where the hospital is experiencing intense financial stress and at risk of closure or at least a significant reduction in capacity, your real estate is at real risk of losing value if that hospital were to actually go down because many of the would-be tenants for the rental properties and other commercial spaces don’t necessarily stick around once the hospital closes.

But the opposite is true, too. Many successful real estate developers have made a career out of investing in properties, including land, in areas that are ripe for development. Location matters, but also in the greater context of what complementary development might take root in the future. Maybe if you get lucky, you’ll own some land in a suburb that catches the eyes of a team owner looking to build the next sports, retail, and entertainment campus.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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I was deep in the data this week, and while I was there, I happened upon three different data points that, when taken together, could foreshadow some real downward pressure on home prices. This would provide welcome relief to beleaguered buyers who feel priced out of the market after the significant rise in prices from 2020-2024, while offering some dose of caution for would-be sellers. If you’re thinking about selling, is this the time? Perhaps, if you believe what the data may portend. Let’s dig in:

New Home Sales

We’ll start by looking back to January. The start of the year is typically a slow time in the homebuying and home construction seasons, but this January was even weaker than normal. On Thursday of this week, the U.S. Census Bureau released its report on new single-family home sales in the month of January (note: new homes means just that, newly constructed homes. There is a separate dataset for existing home sales. Both are worth monitoring).

The number of new homes sold in January was 587,000 on a seasonally adjusted annualized basis (note: seasonally adjusted and annualized means they are adjusting the numbers to account for the typical seasonal changes, and the 587,000 number is more of a “pace” for the year and not the raw number of actual transactions; these adjustments are meant to allow for the comparison of the state of the home market between say, January and July).

The January new homes number was low — really low. In December, new home sales on a seasonally adjusted basis were 712,000, so the January number of 587,000 was a drop of 17.6% month-over-month. You might expect to see the number decline due to normal seasonality, but not when both numbers are already adjusted for typical seasonal changes. The number of new home sales one year ago in January 2025 was 662,000, so the January 2026 number was also lower than that to the tune of about a 15.6% decline.

New home sales have not declined because there are fewer new homes available, either. In fact, according to this same Census report, the number of new homes for sale in January was up, albeit modestly, 0.4% from December to January. It was also up 4.0% from January 2025 to January 2026. In other words, there are more new homes for sale, but significantly fewer sales.

The sales data for existing homes for sale has been similar in recent months to the data for new home sales. Per the National Association of Realtors, the number of existing home sales on a seasonally adjusted annualized basis in January was 4.27 million. But in January? The number was down to 4.02 million, a drop of 5.9%. A preliminary report for February shows a modest bounce back to 4.09 million existing home sales (again, seasonally adjusted and annualized), but those numbers are still pretty low.

Mortgage Applications

The drop off in home sales is reflected in another data point, as well, this one from the Mortgage Bankers Association (MBA). Per this week’s MBA report via Trading Economics, home loan applications are down:

US mortgage applications dropped 10.9% in the week ending March 13, 2026, marking the sharpest decline since September 2025, as borrowing costs climbed to their highest level since late last year and dampened refinancing activity. The average rate on 30-year fixed mortgages with conforming loan balances up to $832,750 rose by 11 basis points to 6.30%. Rising Treasury yields, partly driven by elevated oil prices and inflation risks linked to the Middle East conflict, pushed mortgage rates higher across the board.

It should be said that one caveat to the bear case here is that the 10.9% decline represents refinance applications and new purchase applications. Refinance applications were particularly dismal in the early part of March, which is largely a reflection of interest rates; when interest rates rise, it makes less sense to refinance. Purchase applications were essentially flat, which is not ideal for a thriving housing market, but it’s not as dismal as the 10.9% drop-off may sound, which, again, was largely driven by a notable drop-off in refinance applications to banks and mortgage brokers. Still, though, as we enter the spring buying season, you would expect purchase applications to be rising. The fact that they are not suggests the spring buying season could be a bit more muted than usual.

Interest Rates

Lastly, as noted in the MBA report above, interest rates continue to be a dampener on home activity. The average 30-year fixed rate per Mortgage News Daily started the month of March at 5.99%. It closed the week on Friday at 6.53%, which is a pretty sharp jump in just three weeks. The recent rise is evident in the chart below, which shows rates over the past year (the blue line is the Mortgage News Daily dataset, which is based on their own surveys, and the orange line is Freddie Mac data; the two sources have slightly different methodologies, but the data correlates quite closely):

I wrote last week in the context of the Iran War about why interest rates are rising, so I won’t dwell too much further on that today, other than to say in the past week nothing has really improved. A swift and/or decisive end to the war seems unlikely. That is why interest rates have continued to rise. Due to inflationary pressures, markets are now betting there is about an even chance that the Fed will actually hike interest rates as compared to cutting them this year, per Reuters.

What It All Means

Admittedly, I’ve written about the likelihood of price drops in the home market over the course of the last few years several times, and there hasn’t been a sharp drop-off yet (although I’ve never predicted a crash, but more of a deceleration and an easing down). It has taken longer than I thought it might, but I believe the easing has begun. In fact, that same Census report on the new home sales referenced above makes note that the median sales price of new homes sold in January was down 4.5% from December, and down 6.9% year-over-year from January 2025. The existing home sales data shows a similar, although slightly more muted, easing down in prices. This may not be the case in every market as local conditions matter a lot in the price and demand for homes, but prices are certainly not rising the way they did from 2020-2024. The median home price in January 2025 was $429,600 and the median price in January 2026 was $400,500, which is not an insubstantial change to the good for buyers.

Prices rose significantly from 2020-2024 as a basic symptom of roaring demand and limited supply. But what has happened in the past two years? Supply has stabilized due to increased inventory from the construction of new homes and the listing of existing homes for sale, and demand has notably declined. Now that supply is higher and demand is lower, it should result in lower prices (a basic principle of Econ 101). Practically speaking, that will come through things like price concessions from sellers who need to get their homes sold and incentives and discounts from builders to attract buyers for newly constructed homes. I think we can expect price declines of 10-15% throughout 2026. Again, this may not be the case in every market, but based on nationwide averages, I think prices will continue to ease down.

If you are thinking about selling, and provided you have plans on where to go, this is probably a good time to make the move. Inventory may continue to increase and as long as rates stay elevated, buyers are likely to stay on the sidelines. Increased competition from other sellers as homes get listed and stay on the market for longer could lead to further price reductions.

What Will Get Buyers Off the Sidelines

Two and a half years ago, I published an article entitled Homebuyers are Giving Up, in which I wrote:

Home ownership is a fundamental tenet of the American Dream. It not only provides stability in where one lives, but it also helps to build equity and wealth, wealth that is often shared and passed on between generations. If ladders to this aspect of the American Dream are not available to younger Americans today and those looking to purchase their first home in general, it raises the fundamental question about whether the dream is even attainable. For the next year or so, the situation for would-be homebuyers is not likely to improve, which has many simply giving up while they wait things out.

Some time has passed since that August 2023 article, and would-be buyers are still on the sidelines. This is even as buying conditions have improved, with interest rates down from their 2023 highs (despite the move higher in the past three weeks). Wages have outpaced inflation, on average, over the past two years, too, so in theory buyers should be feeling more financially secure.

It is my belief that buyers are on the sidelines not because of the acute conditions of the housing market, but because of their own sense of financial insecurity. People are hunkering down. The general sense that AI could spell doom for countless jobs and industries, lingering financial stress due to rising prices and lagging inflation, and overarching uncertainty with the state of our politics and now the Iran War: it has people pulling back on spending, including both discretionary things like eating out and travel, but on big life purchases like a home.

I do not think we are due for a major housing collapse a la 2008, however. The underlying conditions in the economy and specifically with regard to homeowner health are comparatively stronger than 2008. Delinquency rates on home loans continue to be very low and homeowners generally have a lot of value in their homes relative to what they owe, which is a major difference from 2008 (although that could change if home prices do drop in a significant way).

This latter topic of homeowner health is probably a topic worth of its own separate article at some point, in part because it does speak to the K-shaped economy phenomenon — it’s very hard for people getting started out to get into the home market, but those who are already there are generally pretty secure and stable.

Ultimately buyers will come back to the market once interest rates stabilize and, ideally, drop. And further, once they start to feel more economically secure. If prices for new and existing homes-for-sale come down, which I expect they will in the year ahead, it will also lure buyers back into the market, and we will go through another cycle of adjustments to supply, demand, and prices as things evolve.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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As the old saying goes, a butterfly that flaps its wings in Brazil can cause a tornado in Texas. As millions of Americans (and people around the world) have experienced when pumping gas over the past two weeks, the Butterfly Effect is real in today’s global economy, although the catalyst for the updraft in gas prices has been more than just a butterfly flapping its wings, but the sudden and intense bombardment of Iran by joint U.S. and Israeli forces starting on February 28th. Whether you call it a war or an excursion, as President Trump has labeled it, the aerial attacks have launched a conflagration with uncertain aims and questionable odds for quick resolution.

Gas prices are a particularly visible quantitative metric of the impact of these events, and that impact has been suddenly and intensely experienced by people and businesses around the world. About 20% of the world’s crude passes through the Strait of Hormuz, which has long been one of the world’s most important 100-mile stretches of water (about 24 miles across at its widest point), and only the more so today.

According to AAA, the average price at the pump closed this past week at $3.63/gallon, up about 23% since before the war/excursion began. Morgan Stanley has estimated that just a 10% rise in oil prices results in a jump in the Consumer Price Index (CPI) of 35 basis points (for all intents and purposes, 0.35%). For a CPI index that has been slowly and stubbornly inching its way back down to the goal-level of 2.0%, a potential boomerang up 0.35% or more would be a frustrating move in the wrong direction.

It may seem trite to talk about interest rates as bombs are flying and, sadly, as American service members are now coming home in caskets (with at least 140 injured so far), but the events unfolding now in Iran really do have a significant impact on life here at home, so they are worth addressing.

The price Americans pay for gas is, as mentioned, one of the more visible metrics. But it is the ripple effects of high oil and gas prices that really impact things. When Americans are paying more at the pump, they have less money to spend elsewhere. For better or worse, we are a consumer-driven economy, and when people don’t go out to eat or shop or travel, the multiplier effect from spending is much more muted.

As a quick aside, I was never able to pull all the data together, but a project I wanted to do at one point was to compare attendance at my state’s local high school basketball tournament each February with gas prices. Maine is a rural state, and people need to travel pretty far to make it to one of three centrally located tournament sites in Bangor, Augusta, or Portland. I spoke with the G.M. at one of these sites years ago, and he told me when gas prices are high, they see less attendance. People are sensitive to the price of gas. That means fewer ticket sales at the venues, but less spending in the area restaurants, hotels, and shops. For many years, it was thought that the high school basketball tournament week was the best week for car sales in the Bangor area of the entire year. I’m not sure if that’s still true, but you get the point.

Businesses, too, are sensitive to energy prices, of course. Oil itself is a production cost in virtually every tangible product. Plus, think of every business that has a travel component, and not just tourism related entities, but companies that ship lots of products or make deliveries or have to move one thing from one spot to another. If your input costs are higher due to the higher cost of oil and gas, you are either going to be less profitable or you have to pass that cost along to the consumer, which results in rising prices.

And, that, ultimately, is one of the big concerns about the Iran War, which is that it is going to lead to higher prices here at home. If prices are higher, it will give the Federal Reserve pause on lowering interest rates further along the same trajectory they have been doing for the past 18 months.

The Federal Reserve meets this coming week. A few months ago, there was roughly a 50-50 chance that interest rates would be dropped by a quarter point at this exact March meeting. Today? The odds are greater than 99% that rates will not be decreased, and the odds aren’t looking that good for the next several meetings either for those looking for rates to come down. According to prediction markets, the most likely odds are now for only a single rate cut in 2027, and there may not be any.

Mortgage Rates in the Last Two Weeks

Markets have reacted sharply to what is happening in Iran. The stock market is down about 3.5% since February 28th. Oil has spiked, as noted above. You can see what has happened to home mortgage rates over the past two weeks in the chart below, which have jumped too:

Things had been going in generally an advantageous direction for would-be homebuyers or those looking to refinance; the nationwide 30-year fixed rate dropped to just a hair below 6.00% at the end of February, which was the lowest rate in over three years. But the average rate closed this past week at 6.41% according to Mortgage News Daily, which is a pretty significant jump in such a short period of time. Mortgage rates are now back to being the highest they have been since the end of last summer.

This jump in rates is bad news for buyers, but equally bad for homebuilders. A homebuilder stock index I track for insights on the general mood and outlook in the industry is down 17% in the past month, which is sizeable. Homebuilders (and those who invest in them) are feeling quite pessimistic about a potential rise in rates, as it will likely mean less construction and fewer sales:

A Possible Counternarrative

The quantitative reactions in the market to what is happening in Iran are decidedly negative. There may be one positive alternative outcome at least as far as interest rates are concerned, however. In a turbulent investment environment, there tends to be a flight to safety. For all that is happening here in the United States politically, U.S. Treasury notes are still considered to be one of the safest investments in the world. You can own 10-year U.S Treasury Note that will yield 4.28% annually right now, which in an unstable environment is very attractive to many people. The yield had been 3.94% just prior to the first attacks, which shows that the Treasury market, too, has jumped along with oil and mortgage rates. However, the longer the Iran situation lasts and the more fearful investors become, the greater the demand will be for U.S. Treasuries, and the buying up of said notes could actually bring those yields down.

There is a pretty complicated dynamic in which banks and mortgage companies tend to price their home loan rates around things like the U.S. 10-year Treasury rate. If that yield does come down, so too should mortgage rates. So in a backwards sort of way, there has been this jump in Treasury yields in the immediate aftermath of the initial attacks, but yields could ease lower in the weeks and months ahead as investor dollars pile into this safe asset, which could then have a direct relationship with home mortgage rates also coming down. At the moment, however, the immediate catalysts for rising rates (mostly due to inflationary pressures related to oil and gas) are outweighing the flight-to-safety counter-possibility.

So What’s a Person To Do?

I’ve offered some seemingly conflicting thoughts on the trajectory of future rates, and the truth of the matter is, no one knows exactly where things are going. Treasury yield rates and the rates set by the Federal Reserve often correlate with one another, but are, in fact, different things. The former is based on more supply and demand, while the latter is based on inflation, the unemployment rate, and the moods and insights of the Federal Reserve board of governors. It is highly possible that the Fed will keep rates high to fight inflation, while U.S. Treasury yields may simultaneously come down in a flight to safety by investors.

What should you do as an investor in the face of all of this? The correct answer is almost always to stay the course. But people need to be sure the risk level of their portfolios matches their own risk tolerance and objectives. We are bound to have some volatility in all types of markets — stock, oil, interest rates, Treasuries — in the weeks ahead. Investors should be mindful of this and hold the line accordingly, or adjust to a risk tolerance that matches their goals.

From my perspective, we are in for an up-and-down stock market for the next few months, with an inflation rate that inches higher from its current level of 2.4% to something closer to 2.7-3.0%, which, unfortunately, may limit the opportunity for rate declines in the borrowing sphere. That said, if the Iran War can reach a swift conclusion, there may be a snapback effect of oil and gas prices dropping significantly, which would ease these new inflationary pressures we have been experiencing over the past two weeks. Time will tell.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Greetings from Boston, where I have been spending the weekend with my 12- and 7-year old sons. We went to the Celtics game Friday night to cheer on the Celtics plus Maine’s own Cooper Flagg, and then we spent Saturday at the Museum of Science and riding the T around town.

I’ve been planning some more comprehensive “AI in Banking” articles, but I haven’t had the bandwidth to fully think on them yet. So please consider this week’s article an appetizer of sorts.

Six to twelve months ago, when I would write about an anecdotal example of AI disruption hitting the workforce in these articles, I would call it a “canary in the coal mine.” Today, the analogy that comes to mind is that of the first waves of a tsunami reaching the mainland. Here we are, living our lives on the shore in blissful harmony with one another (stick with me, it’s just a metaphor), when meanwhile, hundreds of miles out to sea there has been a tectonic shift or a volcanic eruption deep underground, the energy waves of which are just starting to hit the beach.

That’s what it felt like this past week reading a slew of stories about AI implementation in banks and other financial firms around the country.

I wrote last week about how we are in a “low-hire, low-fire” job market, and I think that will remain true for a while. Businesses are not laying people off en masse because talent retention (yes, human talent) remains critical to operations, and, further, many workplace leaders just don’t know how to implement AI yet. CEOs, boards of directors, and other leaders know there are efficiencies and cost savings to be had; it’s just this super tangled mess of how and when to cross the Rubicon. There are complicated questions about the human impact of AI-related job cuts, but perhaps just as relevantly, much of the new technology is just hard to implement upon the actual technological frameworks and infrastructure that exist now.

We as a society are better at incremental changes rather than fast, monumental shifts. And yet, I keep thinking of that tidal wave metaphor. Here were some of the early ripples from just recently:

Jack Dorsey, founder and former CEO of Twitter, announced on February 26th that his new company, Block, which is the company that operates Square and Cash App, among other brands, would cut approximately 40% of its workforce. Rather than shy away from the technological impetus or try to hide it or cloud things over for the sake of P.R., Dorsey said, yes, AI would be doing more of the work that humans once handled, saying, “A significantly smaller team, using the tools we’re building, can do more and do it better. And intelligence tool capabilities are compounding faster every week.” Dorsey also said the company preferred to make one large, difficult cut now rather than a series of smaller cuts over the course of time, which would be more damaging to morale. Block shares soared 24% on the news, with investors cheering the move.

A more traditional financial titan also announced job cuts this past week: Morgan Stanley, which is reportedly cutting 3% of its workforce. While not explicitly referencing AI in the announcement, it is notable that the company is not particularly distressed or in any sort of financial peril. In fact, Morgan Stanley is coming off of a record year across its many divisions, with profits being up 50% in its investment banking space. And yet, still it is making notable cuts in personnel.

And yet, the Block and Morgan Stanley examples aside, there was a counternarrative out there this past week, too. Economists at the European Central Bank noted in a blog post that companies heavily investing in AI are, at least for the moment, often hiring more workers, not fewer. New tools require engineers, data specialists, compliance teams, implementation consultants, and all manner of support staff. In the early stages of technological revolutions, the pattern is often expansion rather than contraction, so note the economists at the ECB, so there is a gleam of hope in the financial services industry that it may not be all cuts and, in fact, there may be new jobs created.

For now, many banks and others in the financial services sector are still experimenting. They are testing AI copilots in research departments, for example, and trying out automated customer service responders. Some employees may be using (authorized by their employers, or not) learning models to review materials and to provide recommendations. For now, much of this is either in pilot phases or anecdotal one-offs by employees or departments that are particularly keen to implement AI tools.

It would be easy to close the tsunami metaphor by pointing out that after the early ripples comes the crushing crash of it all. And maybe that is what will happen here. For now, though, it feels a little bit more like a whirlpool. There are scattered (though often significant) layoffs, some contradictions in the data, and anecdotal experimentations. These things are increasingly noticeable, but not yet overwhelming. All that being said, I can’t resist noting that tsunamis also often start with strange behaviors in the tides, including a pullback before the full force arrives.

My recommendation to anyone who works in banking and, indeed, most workers in general, is to at least become AI-aware, or even more specifically, AI-competent. Even if AI doesn’t eliminate jobs, it will become a part of virtually every job whether that’s in a bank, a medical office, a retail shop, or many other office settings.

The comparison I think of (even though it largely unrolled before my own professional career began) is the internet. The internet certainly did destroy many jobs and quietly obliterated entire industries, but it created many others and, on net, the internet was explosive for job growth and economic growth more broadly. But workers who did not adapt to the internet as it became a normal part of the workplace and of the economy in general were basically left behind. So, too, will it be with AI tools. The Industrial Revolution, the Computer Age, the Internet, and now AI: these are the four big waves humanity has experienced over the past 200 years — and we are just starting to learn how to ride this most latest.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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See you next week for more Sunday Morning Post content. Thank you for being here, and thank you for reading.

Two weeks ago, I wrote about how AI fears are hitting the consumer, but AI is not the only thing that has people feeling on edge these days as far as the labor market is concerned. Consider the chart below of job growth over the past three years. There is still some fuzziness in the 2025 data and the numbers may change as things continue to be analyzed, but the downward trajectory of new jobs in the economy and the fact that job growth was essentially flat to negative in 2025 are clearly evident:

The past year was not just anemic as compared to recent history, but was actually the worst year for job growth since 2009. There were really only three major sectors that showed job gains in 2025: healthcare, social services including eldercare, and hospitality, which includes travel, hotels, and restaurants.

Other major sectors were down for the year, including manufacturing and warehousing (continuing a multi-year trend). Construction was mostly flat. Federal workers were down notably. In fact, in the chart above, the large decline in the October report was mostly reflective of federal job cuts. There were modest job increases in other areas of government including at the local level, such as police and public works, and in schools and education, but not enough to counteract large job losses at the federal level.

White-collar jobs including office work, banks/finance, and IT/tech were down in 2025, as well, particularly in the latter half of the year. Traditional white-collar jobs represent about 20% of all jobs in the economy and about 40% of GDP, so when there is a pullback here, it can ripple through, for sure.

As economist Heather Long of Navy Federal Credit Union put it recently, “In many ways, 2025 was both a white-collar and a blue-collar jobs recession.” That should have people on alert. A decline in both traditionally blue-collar and white-collar jobs at the same time typically happens at the outset of broader economic drops.

What were the reasons behind the weak job market in 2025? I see three major ones, some of which I have already alluded to above:

• DOGE/Federal cuts: the Federal workforce shrank by about 220,000 employees (about 10% of the overall total) in 2025. This represents a mix of buyouts, retirements in positions that were not refilled, true layoffs, and people just getting the heck out of there.

• Immigration: it is hard to pinpoint an exact number in terms of the reduction of immigrant workers who have either been deported or detained or who have simply left the workforce over the past year, but Fed economists have noted, “On average, places experiencing the biggest slowdowns in unauthorized immigration saw the biggest slowdowns in employment growth in construction, manufacturing, and other services.” Beyond construction, the impacts have been particularly notable in the agriculture, hospitality, and caregiving industries.

• AI/automation. I have written a lot about this lately (and will be doing so again soon), so I’m going to let this one mostly sit for now. Safe to say, millions of jobs are at risk through technological changes and the implementation of AI in the months and years ahead. We started to see this in earnest in the last half of 2025, which, I believe, is the main reason why job growth numbers were so low in the chart above from May onward. Some employers are either already starting to implement AI and cut jobs, or are preparing to do so.

Keeping all of the above in mind, there is also a case to be made for changes from the normal business cycle impacting the job market. Many of the large tech companies and perhaps some other traditional office-type employers overhired during the pandemic in a chase for talent and due to significant industry growth during this time. Some of the layoffs we have seen over the past year may simply be reflective of so-called “right-sizing” of workforces. That being said, right-sizing is also a convenient euphemism that a CEO can use when they want to cut workers for cost savings or because the jobs have become either partially or totally obsolete due to automation and AI, and it seems less cold and calculating.

I do also think higher interest rates over the past 2+ years have limited job growth. It is harder for businesses to grow and less likely that they will invest in themselves when the cost of financing is more significant. This is, of course, one of the reasons why the Fed actually hiked interest rates in 2023-2024, which was to actually slow things down and not allow the economy to overheat.

Low-Hire/Low-Fire

It’s not all bad news in the labor market, however. There are some enigmas, for sure. The unemployment rate of 4.3% is still at a historically healthy level, for example, and the rate is actually down a tick from December and November (if you can trust the data). People who want to work can generally find jobs, even if frustrations abound about mismatches of skills and wages. A lack of available employees is still one of the top frustrations I hear from business owners I work with, and there are plenty of concerns out there about the work ethic and skills of the next generation coming of age (which is, to be fair, a tale as old as time).

Another positive data point is that wages rose by 3.3% last year. That is nothing to write home about in the great scheme of things, but it is notable that wages outpaced inflation, which ran at about 2.7% last year. Workers therefore made slight gains relative to the rising cost of goods and services.

All in all, we are in this very strange moment where the unemployment rate is low, wages are modestly rising, there may be a jobs wipe out coming due to AI, and yet many employers say they still can’t find the workers they need.

You’re (Not) Fired

There have been plenty of anecdotal stories of companies initiating large-scale layoffs over the past year. But more broadly, however, it does not appear that companies are laying people off, en masse, at least at this point. Many companies are not necessarily hiring, but they are also not firing. This has led to what I have recently heard described as a “Low-Hire/Low-Fire” labor market.

Other than in the tech space, which is going to always be quicker to react to significant technological changes, what I am seeing right now is a subdued market for hirings and firings. Everything has basically slowed down. Instead of the normal churn of people retiring, quitting, switching jobs, or being laid off, everyone is just treading water. Hiring is weak, but layoffs are also low (other than in certain high-profile tech examples), and workers are generally staying put. People are trying to hold onto the jobs they have, and fewer workers are moving.

This treading-water mentality includes companies, too, by the way. No one wants to over-hire right now and be left with unnecessary personnel costs. Many employers are also not over-firing, because they also recognize how hard it is to attract and retain good people right now. Many others know that AI and automation are likely to provide massive efficiencies and cost-savings over time, but they don’t necessarily know what that means or how to implement it yet, so they are holding off on reducing their headcounts as there is just still so much that is unknown.

What It All Means

In researching this topic on the labor market this week, I have started to see an odd parallel to the 2020-2024 housing market. One of the major themes during that period of time was that people were essentially staying put. In the housing market, it was a combination of the interest-rate lock-in effect and rapidly rising prices that had people not wanting to give up what they had in order to move into a higher-priced market at notably higher interest rates. The effect was that the market basically froze; prices stayed elevated, but fewer transactions took place, and there was not the usual churn you need in a housing market of people coming and going, upsizing and downsizing, etc., that leads to a healthy rate of new listings and transactions. You need some movement to create opportunities for people, especially those just coming of age into the market.

A similar phenomenon is unfolding today in the labor market. Whereas a few years ago, it seemed like people were switching jobs all the time and constantly trying to move “upmarket” in terms of salary and title, today it feels more like people are increasingly trying to just hold onto the jobs they’ve got.

This is actually bad news for the labor market, particularly certain areas of it. Just as the housing market needs some healthy turnover, so too does the labor market. If people hold off on switching jobs when perhaps they otherwise could have or should have made a move, or if they delay retirement due to their own financial worries or lifestyle anxieties, if effectively “blocks” someone else from stepping into their job. And then if that person remains stuck where they are, it is a sub-optimal situation for them marked by professional frustration and financial stagnation, and also blocks someone a rung down on the ladder from moving into that spot (and so on and so forth).

The situation right now is particularly dire for entry-level workers. Not only did this generation (born roughly 1995-2010) come of age with the pandemic massively impacting their high school, college, and early professional years, but they are now trying to launch careers into perhaps the most challenging job market for entry-level workers in history. People ahead of them are not switching jobs as much and therefore creating opportunities for them, and many others are not retiring, which has down-ripple effects all the way to the entry-level. Layer on top of that a potential white-collar entry-level wipe out due to AI, and you’ve got some real pressures in this part of the labor market, which also means real problems for society. How do people grow and excel in a career if the first rungs on that ladder are not available to them? I don’t know the answer, and I suspect collectively we as society don’t know either. More on this topic to come here in The Sunday Morning Post as we try to figure it out together ourselves.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Some of the most interesting political questions are ones that cut across partisan lines in unique or unexpected ways. Business owners are more typically thought of as conservative on economic issues, for example, and yet many depend on permissive immigration policies. A devout Christian might be anti-war, anti-gun, in favor of an expanded social safety net, and pro-life. Gun owners are more commonly thought of as being on the political right, and yet many have great respect for nature and environmental conservation (I have sometimes heard these folks be described as “Green Republicans;” here in Maine, we have a lot of these types).

To me, these are not psychological inconsistencies, but rather reflect the nuance and complexity of a mature worldview. I wish more people would be open about their own beliefs that cut across the lines of the traditional political spectrum in unexpected ways. I think it would make for a healthier democracy and a more respectful political discourse.

The Rising Credit Card Consternation

One issue I have been monitoring lately that is making for some strange political bedfellows is the question of credit card interest rates. Long-time Sunday Morning Post readers may recall previous pieces acknowledging how Americans’ collective credit card debt is like a ticking time bomb. Not only is the amount of credit card debt at an all-time high, but credit card interest rates are also at all-time highs, which is quite the worrisome combination. The average credit card interest rate per the Forbes weekly tracking report this past week was just over 25%!

As one might expect with those mathematical inputs, credit card delinquency rates are on the rise; delinquencies rose to a rate of 2.98% in the third quarter of 2025, which is the most recent quarter for which data was available. This delinquency rate was up from a multi-year low of 1.53% in the third quarter of 2021, and up modestly (although closer to on par) from a pre-pandemic low of 2.60% in Q3 of 2019. I suspect when data becomes available for Q4 or 2025 and Q1 of 2026, the credit card delinquency rate will probably have pushed higher.

It’s just hard to get out of debt when interest is accumulating at a rate of 20% or more. That much should be obvious. I’m not here to judge those who accumulate a lot of debt and can’t keep up with it, and it’s not part of the scope of today’s article. What is interesting, however, is the cast of characters stepping up to the plate to take a swing at this simmering issue.

Consider, for example, the President of the United States. In January, President Trump said that he would like to see a one-year cap on credit card interest rates of 10%. “We will no longer let the American Public be ‘ripped off’ by Credit Card Companies,” the President posted on Truth Social.

Allied with the President on this particular topic is none other than Massachusetts senator Elizabeth Warren, a person the President has attacked, criticized, and ridiculed for years. The two apparently had a productive call on the topic and may have identified some significant common ground.

Senator Warren is just one member of Congress calling for action on credit card rates. Another is Senator Bernie Sanders from Vermont, who frequently rails in favor of populist economic politics and against corporate malfeasance, so it is no surprise that he is a supporter here. What is more interesting, in my opinion, is who the co-sponsor is with Senator Sanders on a bill to enact the 10% cap that Trump is supporting: Josh Hawley, a deeply conservative Republican senator from Missouri, who has called high credit card interest rates “exploitative.”

The fact that President Trump and Senators Warren, Sanders, and Hawley can all agree on an issue like this is quite notable. In a weird way, even setting aside the specific details of the proposed credit card cap, it almost gives you a glimmer of hope in this godforsaken political mess the country finds itself in that maybe leaders of vastly different political stripes can still come together.

What the Banks are Saying

Who is not as keen on a credit card cap, however, are the banks and credit card companies. It’s unclear if the Sanders-Hawley bill will get traction, even with the President’s support. But the banks and credit cards companies are certainly opposed. Of note, the American Bankers Association in conjunction with the America’s Credit Unions released a statement saying that the proposed 10% cap would harm the very people it intends to help:

This bill would eliminate access to credit cards for millions of consumers and drive them to sources of credit which are far more costly and less regulated. Many consumers who currently rely on credit cards would be forced to turn elsewhere for short-term financing needs, including pawn shops, auto title lenders, or worse– such as loan sharks, unregulated online lenders, and the black market.

The reasoning here is that a 10% cap would cause banks and other creditors to simply not offer as many credit cards. The interest rate that is offered on cards, the banks would say, is a reflection of risk, and not purely a profit play. Since many credit card borrowers are high-risk, it would be preferable to the banks and credit card companies to simply not offer cards at a 10% rate rather than absorb all of that increased risk of lending money at a rate that is not commensurate with risk.

The further argument is that by restricting credit cards, it would either push consumers into much more detrimental means of borrowing like high-rate payday lending, or it would cause people to pull back on spending altogether, which would have negative ripple effects through the entire economy. The statement further reads:

Research demonstrates that when consumers lose access to credit, they often reduce spending on essentials such as healthcare, education, and food, and are more likely to fall behind on bill, mortgage, and rent payments. Lack of a credit card would also likely reduce their consumption of items like furniture and clothing which not only negatively affects consumers, but also negatively affects the broader economy.

In response to a question on the topic in January, JP Morgan CEO Jamie Dimon said of the 10% cap, “It would be an economic disaster” that would result in a loss of access to credit cards for 80% of Americans. Dimon added, “The people crying the most won’t be the credit card companies, it’ll be the restaurants, the retailers, the travel companies, the schools, the municipalities, because people miss their water payments.”

The banks, credit unions, and credit card companies are all aligned on this point of view, although very few have been willing to speak out individually for fear of incurring the wrath of the President (and, perhaps in many ways, the public).

Funnily enough, Jamie Dimon suggested in jest that the credit card cap could be rolled out on a trial basis in Massachusetts and Vermont, the home states of Senators Warren and Sanders (not sure why he left out Missouri for Senator Hawley…). In response to this quip, Senator Warren doubled down, saying that, yes, in fact, states should be able to decide their own credit card interest limits. She then publicly called for the JP Morgan Chase CEO to support the idea.

What Happens Next

So where does this go from here? Other lawmakers including Speaker of the House Mike Johnson have expressed skepticism over a credit card interest cap. Reasons include an acknowledgement of the bankers’ statement that the proposed limit would actually reduce the availability of much-needed credit to millions of Americans, and the general laissez-faire view that the government should not have that level of control over business activity.

When President Trump brought up the credit card cap idea in January (and declared a January 20th deadline for compliance, by the way), he was largely ignored. I am sure most of the banks hope the idea goes away. With multiple senators supporting the notion, however, time will tell. I personally doubt the measure will get very far, but we are living in strange times, for sure, so I suppose you never know.

The larger context here that is particularly interesting to me is that link between the progressive left (i.e. Warren and Sanders) and the populist right (i.e. Trump and Hawley). It is almost like the traditional political spectrum becomes a circle — when you get to the very far left, you actually connect back to the very far right on some issues.

I’m seeing this in other areas right now, too. Look at the response to aggressive ICE actions in Minnesota, for example. The progressive left is clearly inflamed by what has happened there, but I’m starting to see anger from certain segments of the right, too. Those on the traditional right may not be coming from the perspective of wanting to protect their immigrant neighbors in the way that those on the left may be. Instead, many on the right are instinctively apprehensive of paramilitary troops patrolling the streets who are detaining people (including some lawful U.S. citizens) and entering people’s homes without a warrant. These images are just starting to roil some on the right the way those on the left have been feeling (although for different reasons, perhaps), creating the same “political circle” phenomenon that is evident on the much different issue of credit card interest rates.

I think it’s worth watching how many political issues over the next year or two play out through this lens of the populist wings of both of the traditional political parties coming together in unexpected ways. In its most optimistic light, this may be a source of hope for our politics — that maybe things are not so far gone that we can’t find common ground.

In a more cautionary way, however, when economic and political conditions are such that populist anger can bubble up and find unifying strength from many different points in the political sphere, history shows that this is often the kindling of revolutionary fervor. Some would say, yes, that is the point. But as I wrote about recently with regard to what is happening in Iran right now, revolutionary fervor is rarely calm and not often predictable, to say the least. Fair, it may be a stretch to say that calls for a 10% cap on credit card interest rates is the stuff of revolutions, but even large storms start with tiny raindrops, and a unifying issue between the populist left and right is something to keep tabs on.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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I was at a conference in Washington D.C. this week, and the morning keynote on the first day was given by an economics professor who specializes in AI. I am paraphrasing slightly because I wasn’t taking hard notes, but he said, essentially, “The economic value of cognitive knowledge in 5-10 years will be zero.” All of us very knowledgeable people in the room shifted in our seats uncomfortably.

The premise is this: AI technology is accelerating so rapidly that any cognitive task will be able to be completed faster and with more accuracy by bots than by humans in the very-near future. Any cognitive task. The human brain may be able to master a particular topic in, say, a year (and “master” is a loose term here), but AI can master almost any subject area in a matter of hours or perhaps a few days of complex calculations. OpenAI is said to be soon rolling out a $20,000/month AI agent that can work for your business, academic institution, or non-profit organization to the level of a PhD scientist.

I am in the early stages of drafting a two-part article series on 1) the most optimistic case for future AI impact on our country and world and 2) the bleakest case. So let me put a pin in those parts of the conversation for now, and we’ll come back to them soon.

What I am seeing anecdotally in my conversations with regular people, and what is beginning to hit the actual quantitative data on consumer confidence and American spending habits, is that people are starting to become fearful of the impact of AI on their jobs, and therefore on their own economic security. According to a recent report from Mercer, “Employee concern about job loss due to AI has surged from 28% in 2024 to 40% in 2026.” I predict that this level of concern will double again by 2027.

This comes even as there are relative signs of strength in the labor market. For example, wages were up about 3.8% in 2025. While that increase is nothing to particularly write home about, this level of wage growth did actually outpace inflation by about 1.0% last year. So on net, workers gained a bit relative to the cost of overall goods and services last year. This was not the case from 2021-2023, a period of time in which inflation generally outpaced wage growth; in those years, workers lost ground relative to costs (particularly in crucial areas like rent, housing, groceries, and utilities). So the fact that wages outpaced inflation in 2025 (they also did, modestly, in 2024), is a good thing.

The unemployment rate also remains at historically attractive levels, so people who want to work generally are able to find it (although maybe not at the wage level they want or need, to be fair). When you combine modestly rising wages with a low unemployment rate, it suggests a labor market that is relatively stable. But this is not what people are feeling.

Why? I think one main reason is that although wages did outpace inflation in 2025, people are still reeling from the inflation-fueled 2021-2023 period. Costs haven’t come down in any sort of meaningful way, and it takes a while for people’s psychological relationship with the cost of, say, a week’s worth of groceries to become re-anchored to the new income-price relationship.

But I think a big part of the story right now are fears about AI. People read the news, they see stories of layoffs starting at big tech companies, and they are starting to see AI implementation in their own workplaces. Consider the following:

• A recent Forbes report found that 75% of workers are concerned about AI causing job losses within the next 12 months. “These results suggest that, as AI becomes more integrated into various industries, the fear of job displacement presents a significant concern,” the report says.

• A Pew Research report found that people are more worried than hopeful about AI, with only about 6% of poll respondents thinking that AI will provide them with more opportunities in the workplace.

While the monthly University of Michigan consumer sentiment report does not ask respondents specifically about their thoughts on AI, there are some clues. The current readings from the report sit near all-time lows. Since the survey began in 1946, there have been only three times when the consumer sentiment reading was lower than it is today: 1) during the 1980 period of extremely high interest rates and a tough economic recession, 2) during the 2008 financial crisis, and 3) during the 2022 period of maximum recent inflation. Consumers are not feeling good right now, especially in the middle and lower parts of the wage/spending spectrum.

The January 2026 Michigan report notes that while consumer sentiment is up modestly from six months ago, it is down significantly (about 20%) from a year ago, which is a big decline in one year. The report says:

On net, modest increases in current personal finances and buying conditions for durables were offset by a small decline in long-run business conditions. While sentiment is currently the highest since August 2025, recent monthly increases have been small—well under the margin of error—and the overall level of sentiment remains very low from a historical perspective. Concerns about the erosion of personal finances from high prices and elevated risk of job loss continue to be widespread.

I’ve added the bold emphasis on the last line, which I believe is indicative of AI fears. As mentioned, there have been plenty of stories in the news over the past six months about AI and the automation and consolidation of jobs, and people in all walks of life are fearful right now that their jobs could be eventually eliminated. If the economist who I heard speak earlier this week is correct, many of us are right to be afraid of what the labor market will look like not just 5-10 years from now, but perhaps even 1-2 years from now (more on that in an upcoming article).

What It Means for Spending

When people are feeling uncertain about the economy and about their own place in it, they tend to pull back on spending, particularly on big-ticket items like home purchases and other significant life moves. And for better or worse, we are a consumer-driven economy. If people pull back on spending, it will have negative ripple effects through everything.

What does this look like today? Look at the housing market. The average number of existing homes sold nationwide over the past decade has been about 5.2 million per year. But in both 2024 and 2025? The number was just over 4.0 million, a notably low amount by both recent and historical standards. Those years mark the lowest levels of home sales since the mid-1990s, made all the more notable in that the population is higher today than it was back then, so on a nominal basis, there should be many more sales today than there were back then.

A large portion of the decline in new home sales can be attributed to higher interest rates, especially in 2024. But what is all the more notable about the low home sale totals in 2025 is that conditions for homebuyers have actually improved over the past year: interest rates are lower, prices have eased off and even dropped in some markets, and there are greater options and less competition in the market. Buyers should be coming back to the market now and not staying on the sidelines, at least based purely on quantitative conditions out there.

The National Association of Realtors is certainly hoping so, having flagged in their monthly report this past week that existing home sales in January were down 8.8% from December, which is a notable drop even in this cold time of year. Home sales were down 4.4% as compared to January 2025. This comes even as prices have stayed relatively flat (up just 0.9% nationwide year-over-year). The Realtors noted that wages are now outpacing home price increases by a somewhat healthy margin, further evidence that buyers should be coming back into the market, and yet they are not, at least not yet. We will see if they start to this spring as the weather and, perhaps, the housing market thaw.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Weekly Round-Up

Here are a few things that caught my eye this week:

• The New York Times had a podcast about prediction markets (last week’s topic here at The Sunday Morning Post) that provided a great overview. Listen to it here or wherever you get your podcasts.

• Aziz Sunderji wrote a piece for his Home Economics Substack series about condos losing value relative to single-family homes. The reasons? Harder financing terms and rising insurance costs, among others. You can read “The Condo Crisis” here.

• Homebuilders in South Texas are asking Trump to lighten up on immigration enforcement at construction sites. A key line from the article in Politico:

  Construction executives have held multiple meetings over the last month with the White House and Congress to discuss how immigration busts on job sites and in communities are scaring away employees, making it more expensive to build homes in a market desperate for new supply. Beyond the affordability issue, the executives made an electability argument, raising concerns to GOP leaders that support among Hispanic voters is eroding, particularly in regions that swung to Trump in 2024.

  Representative Henry Cuellar (D-TX) reported out of his meetings with the South Texas Builders Association, “They started off with, ‘hey, we were all Trump supporters, and we thought he was going to secure the border and then kick out criminals, we just never thought that they were going to be coming after our folks, our workers, on that.’”

You can read my prediction article of this reality that I wrote one year ago, when I said:

The impact of mass deportations of immigrants, not to mention the anticipated declines in new migrants coming to the United States, will be devastating to the home construction market. I don’t care what your politics are on immigration, illegal or otherwise; the home construction market depends on immigrant labor. This is a fact…

…Now comes the part where politics meets policy, which then intersects back with political reality. There are many wealthy donors, for example, particularly on the Republican side, who own real estate firms, construction businesses, and farms (which, as noted above, are also specifically and significantly dependent on immigrant labor). Where will their support of Trump and his hard line on certain topics like immigration run afoul of their own bottom lines? It’s worth following, and is likely to lead to political and economic fireworks in the months ahead.

And so it has come to pass.

One of my favorite movies is the 1994 cult classic comedy Dumb and Dumber, and one of my favorite jokes in that movie is when Harry tells Lloyd he doesn’t gamble, and Lloyd tells him, “Twenty bucks says I can get you betting by the end of the day…I’ll give you 3-to-1 odds.” After some back-and-forth, they shake on the deal, and Lloyd immediately starts scheming in his head about how he is going to get Harry to bet with him. “I’m going to get you. I don’t know how, but I’m going to get you!”

Gambling in America has a long and sordid history. From riverboat card games and backroom bookies to Las Vegas ballrooms and neon glows to state-run lotteries and horse tracks, betting has always existed in a strange moral gray zone. Gambling is simultaneously condemned, tolerated, regulated, quietly encouraged, and much beloved by many.

For most of the 20th century, gambling was officially frowned upon, driven underground by law but sustained by demand. Even when states began legalizing certain forms of gambling, the public posture remained cautious, as though gambling was a vice best kept to the edge of town and out of public view (and sometimes literally underground).

Now, in many states, you can gamble on virtually any professional or college sporting event around the world at any given moment from your living room, bedroom, or breakfast table. Gambling provides entertainment to millions of Americans, but also destroys lives in the same ways it always has.

Legal sports betting has become the vice of choice for millions of Americans, particularly young men. This a country that loves to bet, and has spent decades becoming more comfortable with which bets are acceptable and how those bets can and should (or should not) be regulated. The impact of sports betting on how Americans consume sports is worth its own article at some point.

That said, as we approach the pinnacle event of the American sports world, the Super Bowl, betting on sports has reached an all-time apex. With sports gambling now legal in 39 states plus Washington D.C., nearly $2 billion will be bet (legally) on the Big Game. Millions of Americans will be watching the Super Bowl not just to see who wins the game (or what the best commercials are), but whether Sam Darnold will throw an interception, whether Rhamondre Stevenson will run for more than 61 yards, or whether the game will end with an odd or even number of points. There are over 2,000 different unique things you can bet on in this one game, including countless live bets within the game that evolve and adjust based on how the game itself is unfolding.

Even as the bets roll in in record numbers, however, the sports betting market is facing some unexpected pressures. “Gambling” in the United States, and, as we will see, the term “gambling” is evolving, is entering a new phase with the sudden rise of prediction markets.

The “Bet On Anything” Era

First, a primer: what are prediction markets?

At their core, prediction markets allow participants to buy and sell contracts tied to the outcome of future events. A contract generally pays out $1 if an event occurs and $0 if it does not. If that contract is trading at 63 cents, the market is effectively saying there is a 63% chance the event will happen. If you bet and win, each “contract” you have purchased for 63 cents is worth $1 at the end, a profit of 37 cents per contract. Alternatively, if your pick loses, your 63 cent bet on each contract becomes $0 (i.e. worthless). Prices move as new information enters the system, and the collective judgment of thousands of participants, each with money at stake, produces a real-time probability forecast. For the Super Bowl, for example, you can buy contracts on the Seattle Seahawks to win for 69 cents, and you can buy the New England Patriots for 33 cents. This reflects the fact that the Patriots are underdogs, and you can buy them to win for less than you can buy the Seahawks.

The concept of prediction markets has existed in academic and experimental forms for decades, often quietly outperforming polls and expert forecasts. What is new is their migration into the mainstream, fueled by better technology, regulatory openings, and a public newly comfortable with wagering on events and circumstances far beyond the playing field. People want to bet, and they don’t just want to bet on sports.

You can now bet (or “purchase contracts,” to use the technical/regulatory term) on who will be the Democratic and Republican nominees for president in 2028. You can bet on a range of prices of where the S&P 500 will close the year. You can even bet on things like whether the Supreme Leader of Iran will be out by certain dates (contracts are trading at 9 cents that he will be out by March 1st, 20 cents he will be out by April 1st, and 38 cents that he will be out by September 1st). You can bet on which movie will win Best Picture as the Oscars later this month, and even who will attend the Oscars (Taylor Swift is currently an available bet at 22 cents, reflecting the market’s likelihood that she will not be in attendance; if she were expected to attend, her price would be something like, say, 80 cents). You can bet on what words and phrases the announcers will say on-air during the Super Bowl, or what Donald Trump will say in his next interview on Fox News.

The most prominent regulated prediction market in the United States today is Kalshi, founded in 2018. Kalshi is notable because it operates as a federally regulated exchange, overseen by the Commodity Futures Trading Commission (CFTC). Instead of positioning itself as a gambling platform, Kalshi frames its contracts as event-based derivatives. This jargony regulatory status gives Kalshi a legitimacy that few others can claim, even as it continues to test the boundaries of what counts as a “financial” event. Kalshi CEO Tarek Mansour has said, “The long-term vision is to financialize everything and create a tradable asset out of any difference in opinion.”

Then there is Polymarket, launched in 2020, which has exploded in popularity despite being technically unavailable to U.S. users. Polymarket operates offshore and uses cryptocurrency-based settlement, allowing users to wager on everything from geopolitical outcomes to cultural events. It is fast, liquid, and remarkably comprehensive, but it exists largely outside the American regulatory framework, and has drawn scrutiny from U.S. authorities. Odds are high that Polymarket will be fully available in the United States eventually, however. The NHL, MLS, and UFC have all done promotions with Polymarket, and live Polymarket odds were recently included on-screen at the Golden Globes on a trial basis. Again, this is a country that likes to bet, and you can bet on the fact that you’ll be hearing a lot more about Polymarket and Kalshi in the months and years ahead.

This is where the definitional debate begins to matter. Are these platforms gambling? Or are they tools for aggregating dispersed knowledge about the future (i.e. information markets)? The answer depends less on economics than on law and culture. Sports betting is regulated by gaming commissions. Prediction markets, when allowed at all, fall under financial regulators. The same act (i.e. risking money on an uncertain outcome) becomes something entirely different depending on the label attached to it.

And that distinction is becoming harder to maintain. As prediction markets expand beyond interest rates and elections into increasingly granular questions about the world, they begin to look less like niche forecasting tools and more like a new kind of betting ecosystem, one where you can wager not just on who wins the Super Bowl, but on how the future itself will unfold.

Of note, by the way, Kalshi, in my opinion, clearly provides a technical workaround for people who want to wager on sports but where sports betting is not legal. Sports betting is legal in 39 states, but, surprisingly, in my opinion, is not allowed in California and Texas (and nine other states), where voters and policymakers have rejected previous attempts to allow sports betting. But you can use Kalshi in Texas and California alike, and plenty of people in those states will certainly be betting on the Super Bowl through prediction markets. It’s quite a wide-open loophole, at this moment in time.

I think of my own state of Maine, where sports betting has been long debated and where there have been lengthy deliberations in the Maine Legislature and, more generally, in the court of public opinion. Sports betting is legal here, but is limited to only certain platforms like DraftKings and Caesars. But then, all of a sudden, Kalshi comes in, and anyone can “bet” there with very little regulatory oversight. It sort of makes you wonder. The burden of proof was so high for DraftKings to get into the market, for example, and then a prediction market like Kalshi comes in almost seemingly overnight with very little oversight or resistance.

The Promise

Despite the fuzzy legal framework and eyebrow-raising ethics of wagering money on world events (like the downfall of a world leader), proponents of prediction markets would tell you these “markets” actually play an important role. We live in an age where individual expertise is not valued as much and often not trusted or even respected. Newspapers have been doing away with editorial and opinion pages, with the belief that readers do not care as much anymore what subject-matter experts or social commentators have to say on important matters. There is also just a belief that these so-called experts are not often right, or that they are so biased towards one political view (and often getting paid to have that point of view) that it is impossible to trust what they are saying. Prediction markets, on the other hand, broaden the expertise and democratize the predictions.

How have prediction markets done? In the days leading up to the 2024 U.S. Presidential Election, for example, most media pundits and political observers pegged the Donald Trump-Kamala Harris race as essentially a 50-50 toss-up. Prediction markets starting tipping towards Trump in the last few days, however, providing a signal that there were some out there watching and analyzing the data in a way that the mainstream media and so-called experts may have missed or couldn’t see showing Trump with traction leading up to Election Day.

Politics and the presidential election aside, however, the real value in prediction markets is that they aggregate wisdom and insight from a broad pool of observers, or market participants. Decades of evidence to previous non-corporate prediction markets (which were largely in the academic fields) suggest they often outperform polls, expert panels, and forecasts made in isolation. That makes them useful not just for sports or elections, but for economics, public policy, science, and business planning. At their best, prediction markets reward being right rather than being loud, partisan, or persuasive. They don’t eliminate uncertainty, but they quantify it, and in a world drowning in overconfident (and often bombastic) takes, that alone is a public good, many would say.

The Perils

The rise of prediction markets does raise some important questions and concerns. First and foremost is that many people will certainly lose a lot of money betting on these platforms. According to one analysis of Polymarket users, 70% of users generally lose money, and the vast majority of gains go to a very small sliver of the market; 0.4% of users take home 70% of the profits. This is, in many ways, not too dissimilar from other betting platforms like DraftKings.

There is also just the concern, as alluded to above, that it feels uncomfortable to see people betting on world events that impact hundreds of millions or even billions of people, often detrimentally so. Prediction markets have offered “bets” around questions of whether certain areas of the world would experience famines or flooding, for example. It feels morally or ethnically suspect to bet on such a thing.

Proponents would flip these questions on their heads, however, and say that actually a broad market of localized, specialized expertise on environmental questions is quite valuable in that it can help policymakers and businesses plan and react to such crises. There are anecdotes of people in California looking to prediction markets to get an understanding of when wildfires would be fully contained as a way to know how much danger their neighborhoods were in. Prediction markets were seen (by some) as more accurate in these complex, high-pressure situations than talking head expertise on TV or in the government.

Ultimately, the Venn Diagram of prediction market supporters overlaps quite heavily with those with a libertarian sense of allowing people to do what they want, bet what they want, and experience the consequences of those bets as they unfold. In fact, the rise of prediction markets has largely been fueled by technologically savvy, libertarian leaning users who don’t have a problem putting their digitized and data-centric points of view up against the world. Many of these people just don’t care about the ethnical perils or pitfalls of betting on world events, for better or worse, or they can justify it by pointing out the actual value in such markets, as noted above.

The Insider Problem

There is one other reality of betting on these platforms that is not yet resolved, and may not ever be, and that is the problem of insider betting. Consider the following: in early January, a Polymarket bettor with a username of “Burdensome-Mix” suddenly bet over $30,000 that the president of Venezuela, Nicolás Maduro, would be removed from office before the end of January. That outcome came to pass when U.S. forces mounted a surprise operation and captured Maduro.

When the bet resolved, the trader walked away with a windfall of more than $400,000, roughly a twelve-fold return on their stake. One of the interesting things was how sudden and unexpected the Maduro bets were, and that they came from an unknown newly created account. That setup has led legal and financial experts, as well as lawmakers in Washington D.C., to speculate that the bettor may have had access to non-public or classified information about the planned operation. Such access, if true, would resemble insider trading (i.e. exploiting confidential knowledge for financial gain) albeit in a prediction market that operates with far lighter regulation than traditional stock or futures exchanges.

The event has ignited debate over how prediction markets should be regulated, with some lawmakers pushing proposals to bar government employees and officials from placing such bets when they have access to sensitive information. Critics argue that platforms like Polymarket lack the guardrails that exist in regulated financial markets, making them ripe for abuse if insiders take advantage of privileged intelligence.

The Maduro bets also raise the clear and simple concern of whether people with privileged, sensitive information about military operations are using that information to make a profit and, with it, risk revealing government secrets through their betting patterns.

For the integrity of the platforms, the insider risk is relevant to many other types of bets, too. You can bet on what Bad Bunny’s opening song will be during the Super Bowl halftime show. There are probably several hundred people who actually know what it will be; they have to plan these shows out, after all. And all of those hundreds of people have family and friends who might try to get inside information from them, any one of whom could then bet on these platforms. But, I suppose, from the libertarian perspective on this, that’s just how it goes.

The Future of Prediction Markets

The trend in gambling (or “contract purchasing,” to be technical) is in more permissive and expanded use. With that in mind, prediction markets are only likely to become more ubiquitous over time. Americans like to gamble, and, increasingly, they want to bet on more than just sports. I put some money into Kalshi this week to test it out, and it was fun. I did not “bet” anything I could not afford to lose, but it was fascinating to follow sports in real time on the platform, and also to look at some of the key political races in Maine this year, which have all types of odds (some of which I intuitively agree with, and others of which I do not).

I think what is most likely to come eventually is that the regulators will catch up with prediction markets, and tighten up on how these things are run. It may not happen immediately, though. If anything, the Trump White House has been generally permissive of prediction markets. Whereas the Biden Administration essentially banned Polymarket from operating in the U.S., the Trump Administration has eased enforcement against such entities, essentially clearing a path for Polymarket to eventually return. Richie Torres, a member of the U.S. House of Representatives from New York, has introduced a bill that would limit federal officeholders and staff from using prediction markets, but it is unclear where this will go.

Ultimately, my belief is the prediction markets are not going away, and will probably become more prominent in the months and years ahead. Sports betting companies like DraftKings and others, are, in fact, trying to find ways to get into the prediction market space themselves, which is a fascinating twist over the past year, and evidence that the foundation underpinning any business model is subject to rapid change at any time. A year ago, prediction markets operated at the fringe of betting and academia; now they have just about become mainstream with the mainstream sports betting sites not trying to figure out how to chase them.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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I’m experimenting with Kalshi for the Super Bowl and I don’t mind sharing my picks with you. These are for entertainment purposes only. The real question is can I write off the losers as a business expense! Here we go:

• Will Seattle win by 4.5 points or more. My pick: NO (49 cents).

• Will Seattle score more than 28.5 points. My pick: NO (62 cents)

• Total Points Scored over 43.5. My pick: YES (58 cents).

• Drake Maye touchdown (has to be rushing or receiving; passing TD does not count for this bet). My pick: YES (24 cents).

• TreVeyon Henderson 20+ rushing yards. My pick: YES (53 cents).

• Will Jaxson Smith-Njigba have the most receiving yards in the game. My pick: YES (62 cents)

• Will there be 2+ successful 4th down conversions. My pick: YES (54 cents)

• Will the announcers say “Robert Kraft” during the broadcast. My pick: YES (89 cents).

• Will Taylor Swift attend? My pick: NO (70 cents).

• Will the Halftime Show last at least 14 minutes. My pick: YES (64 cents).

• Will a QB win the Super Bowl MVP: My pick: YES (73 cents).

• Will the Patriots win the game. My pick: YES (33 cents).

Let’s go Pats!

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The conventional wisdom out there is that interest rates are likely to come down in 2026, and that the downward momentum may continue right into 2027. This sentiment comes as welcome relief to beleaguered borrowers and would-be homebuyers who have been fed up with the higher interest rate environment over the past two years. But is it true? Are rates going to continue going down? Let’s take a look.

How Far We’ve Come

From a pure rate standpoint, the absolute “worst” time to lock in a home mortgage rate would have been October 2023. The average 30-year fixed rate nationwide peaked at exactly 8.00% that month. It has dropped fairly steadily ever since to just a tick over 6.00% today, as shown in the chart below:

On the commercial side of the borrowing world, rates have also come down. Banks often peg their rates for business loans at a certain margin above a set index, such as the Secured Overnight Financing Rate (SOFR) or the Fed’s Prime Rate. These rates are not subject to the same degree of fluctuations as home loan rates, but the peaks and trajectories have been generally the same as those on the residential side over the past two years. These indexes (and therefore the commercial loans that they are priced around) generally peaked in the summer and fall of 2023, and then stayed elevated for a full year until the fall of 2024, when rates started to gradually step downward. The chart below shows the Prime Rate, which peaked at 8.50% and has since dropped to 6.75%. This means, generally speaking, that it is cheaper to borrow for a business loan today than it was from the summer of 2023 through most 2025:

You can also see in the five-year chart above just how low Prime Rate was from 2020-2022 (the far-left side of the horizontal X-axis). Prime Rate bottomed out at 3.25% for several years during the pandemic before starting its climb, which made for some very cheap borrowing during that time period.

A brief word on savings rates before we look at the months to come: As a commercial lender myself with an eye on the real estate market, I tend to focus on interest rates on loans. But there is another side of the interest rate equation, and that is the interest rate yield for savers. The trajectory of savings rates generally matches the charts above for borrower rates, in that for most of the 2010s and early 2020s, interest rates on savings accounts were very low. Rates rose from 2022-2024, but have been easing back down over the past 6-12 months. The national average money market rate peaked in May 2024, and has been steadily declining since, per data from the Fed. While borrowers may be pleased with falling rates, savers undoubtedly are not, especially with sticky inflation eating into much of that savings yield.

The Year Ahead

To pull a joke from an Econ 101 textbook, what is the answer to any economics question? “It depends.” The trajectory of interest rates for the rest of 2026 certainly does depend on a few key factors, some of them economic and some political.

First, on the question of economics, it is worth a quick review of what the Federal Reserve is charged with doing. The Fed has a dual mandate: to promote a labor market with maximum employment (i.e. anyone who wants a job can reasonably find one), and to keep inflation low and stable so that money holds its value. On the latter question, the Fed’s general goal is an annual inflation rate of 2.0%.

These two mandates sometimes run in conflict with one another, especially once politics gets layered on top of things. You could have a poor labor market where unemployment is rising, economic growth is tepid, and inflation is high, a condition known as stagflation and something the U.S. suffered through in the 1970s and early 1980s.

What is the Fed to do in such a scenario? Bring rates down to boost the economy, which raises the risk of further inflation? Or clamp down on inflation by hiking interest rates, which risks tightening the overall economy and making the labor market even worse. In the 1970s and 80s stagflation era, the route the Fed took was to raise rates dramatically while simultaneously limiting the money supply, which eventually crushed inflation in the process. The cost was two painful economic recessions in the early 1980s and an interest rate environment in which people were borrowing for houses at rates of nearly 20%, but the economy did eventually get back on track and the Fed gained credibility after the painful, but ultimately successful, process of taming inflation.

So where does the Fed find itself today? On one side of its mandate, the labor market (at least on paper) is moderately strong by historical standards. The December 2025 unemployment rate of 4.4% is not bad, although it has been ticking up for the past two years, slowly but steadily, as shown in the chart below:

As a quick aside, it is always going to bug me that there will be gaps in these graphs due to the government shutdown this past fall, in which data collection and analysis ceased for several weeks. I don’t think I’m an OCD-personality type completely, but that gap in the line on the far-right side of the graph is really driving me nuts.

But back to the lecture at hand: Ask anyone you know out there who is looking for a job or feeling job-insecure, and they will probably tell you that labor market is not strong. For starters, some of the pandemic-era over-hiring that happened is normalizing through attrition and layoffs, which has some people feeling pressure. And second, and quite notably, there is tremendous awareness out there all of a sudden of the massive threats that AI has to the traditional workforce. We are starting to see layoffs all over the place, particularly in the tech field, as tasks and responsibilities are increasingly moved to AI bots and algorithms. That is understandably making people nervous (and it should).

But I would submit that the other reason the job market feels so weak to people actually has more to do with inflation than jobs. People are feeling unstable at their jobs because the purchasing power of their dollars they are working so hard to earn has declined by so much over the past few years. You might be working (and most Americans of working age are), but it might not feel stable when your dollar just doesn’t go as far as it used to. And that’s a problem for the Fed’s other side of its dual mandate, because inflation has just not gone away.

Remember above when I mentioned the Fed’s goal is an annual inflation rate of 2.0%? We have not actually seen a single month where the year-over-year inflation rate was 2.0% or less since nearly five years ago in March 2021, when the inflation rate was 1.7%. In the 57 months since, inflation has been over 2.0% every single month. Sure, it is down significantly from the 2022-2023 peaks, and inflation has been running at a comparatively cooler rate of 2.5-3.0% for much of the past year, but it just hasn’t quite been stamped out. People are feeling it.

What Will the Fed Do?

So, faced with an employment market that, again, on paper at least, looks okay, but an inflationary environment that is still a bit too hot, what will the Fed do? Those who closely watch the Fed are divided on this question:

• JP Morgan recently forecasted no rate cuts at all in 2026, unless inflation eases more than expected.

• Analysts in a Bankrate survey project two rate cuts this year.

• Independent forecaster Mark Zandi has predicted three cuts this year, likely of 0.25% each.

• One tool I watch closely myself (the CME Group FedWatch tool) has a 7% chance that the Fed will keep rates the same this year, a 24% chance rates will drop by a quarter point, a 33% chance rate will drop by a half point, and a 23% chance rate will drop by even more than that. In other words, it’s kind of a muddled picture. Of note, however, while I have heard a lot of people speculating that the Fed would hold rates even in their January meeting (which they did), there has been a belief that they would drop rates again in their next meeting in March. The CME FedWatch tool has only a 13.4% chance that rates will drop in March, and an 86.6% chance rates will be held the same.

The Federal Open Market Committee, which is the body that makes decisions on rates, has twelve voting members, with four members rotating on and off annually. The Fed Chair always gets a vote. According to an analysis by Wells Fargo, the current group of twelve includes four voters who are relatively neutral, six who are likely to be more inclined to rate cuts, and two who are more inclined to hold the line (or even raise rates). That combination suggests, on net, a gradual easing of rates throughout 2026.

But there are a lot of politics involved here, for sure. For starters, Fed Chair Jerome Powell’s term ends in May. President Trump, who gets to appoint his successor, has clearly indicated regularly and aggressively that he wants to see rates come down. Just this past Friday, he announced his pick of Kevin Warsh to lead the Fed. Warsh was a previous Fed Governor so he has plenty of experience in this area and, in fact, has been seen by some as relatively hawkish on rates, suggesting maybe he won’t be as aggressive in bringing them down as people might think. Nonetheless, it’s hard to imagine Trump appointing him if he were not going to be inclined to do so. All that being said, the Fed Chair alone does not get to decide rates, and he would need support from other Fed policymakers in order to be able to do so.

We do have some data and comments from others on the Fed’s Open Market Committee that provide some insights into their thinking. For starters, when the Fed met this week, they voted 10-2 to keep rates the same. The two dissenting votes were both in favor of lowering rates now and not later in the spring, so there is already a toehold of interest in bringing rates down.

But there is a clear mix of opinion. On Friday, for example, St. Louis Federal Reserve President Alberto Musalem noted he does not see a need for immediate further reductions in rates, saying, “With ‌inflation ‌above target and the risks to the outlook evenly balanced, I believe it would be unadvisable to lower the rate into ⁠accommodative territory ⁠at this ​time.”

On the other hand, U.S. Federal Reserve Vice Chair Michelle Bowman said on Friday that she sees a possible need for three rate cuts this year of 25 basis points, saying, “The labor market is fragile…we should not imply that we expect to maintain the current stance of policy [i.e. keeping rates where they are] for an extended period of time.” Bowman did vote this week to keep rates the same, so she was not one of the two votes against the current stance, but it is clear she is open to cutting rates as soon as the Fed’s next meeting on the topic, which will be in March, or soon after that.

What Comes Next

The question of what the Fed will do ultimately comes down to economic conditions (i.e. employment and inflation) with this layer of politics over it. It is, of course, highly plausible that economic conditions do call for rate cuts and that being what the president himself wants does not preclude the Fed from making that decision. It is regrettable that in some circles, no matter what the Fed does, it will be seen as political. If the Fed holds back from cuts, it will be interpreted by some as a rebuff of Trump. If the Fed cuts, it will be seen by others as giving in to Trump. Hopefully whatever happens, the Fed can articulate through its statements, tone, and general temperature that it is striving to guard its independence.

If I had to call it, I would say the Fed will cut rates by a quarter point 2-3 times this year. That is just based on my general feel of how the labor market, inflation, and politics of it all will blend together. But, of course, it depends. There is a lot going on in the world, lots of it bad.

There are major tail-end risks here, too, that savvy observers and investors should be mindful of. One of these risks is that rates do come down significantly, which would give a boost to the economy (exactly what President Trump wants leading into the mid-term elections). But the risk is that this boost is a sugar high, and not real systemic economic improvement. The possible outcome of just such a sugar high is a relapse of that very same inflation that we have been fighting our way through for the past several years.

The other tail-end risk is that it is just impossible to know what the labor market is going to look like one year from now, three years from now, five years from now, etc. I wrote several times about AI last year and the impact on the ways we think and do business, and I have some real worries. If we get a workforce wipeout along the lines of what some have suggested is possible (e.g. the CEO of Anthropic has said the unemployment rate could reach 20% due to traditional workplace jobs being done by AI), that will result in an economic landscape well-beyond the tools of the Fed to react to. It may require legislative and executive action for our country (and, indeed, the world) to successfully navigate.

Home Loan Rates

Lastly, I regret to inform you, especially if you or someone you love is trying to buy a home, that even if the Fed does bring rates down in a notable way in 2026, it does not necessarily mean that home loan rates will continue to drop. Quite positively for the market, home loan rates have come down pretty notably in the past two years, as shown in one of the charts above (i.e. from about 8.00% to about 6.00% on the average 30-year fixed mortgage). But home loan rates are not based entirely on what the Fed is doing, but rather on how banks themselves price their loans, which is based on supply and demand, competitive pressures, and the bank’s outlook on future rates and inflation.

Home loans are generally sold and repackaged on the open market as investments. If the investment market believes inflation will be higher in the future than it is today, it will demand higher rates on these home loans now as investments. We don’t like to think of home loans as being investable assets and, believe me, I get that, but that is how the bank home lending market generally works. If an investor can get, say, 5% on a U.S. Treasury Bill, which is virtually risk-free, they will demand a higher yield on a pool of mortgage loans, which are not risk-free. That is why if inflation persists and even starts to rise again, home loan rates aren’t likely to come down much farther than where they are now. The best thing to get home loan rates to fall is a continued cooling off of inflation, and a more stable economic environment in general. The Fed has a role to play in that, but so too does the President and Congress.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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We tend to think of revolutions as principled historical events, born out of virtues like freedom, equality, liberty, and all the rest. Revolutions are disruptive, yes — there’s bound to be bloodshed, turmoil, and collateral damage when the world gets turned upside down. But a successful revolution creates something new out of the old, with lasting and meaningful aspirations like those articulated in the Declaration of Independence or the Declaration on the Rights of Man and of the Citizen (France, 1789).

But there is another variable inherent in virtually every major revolution in human history: economics. Taxes and banks are not as much fun to talk about as life, liberty, and the pursuit of happiness (other than that bit about throwing all the tea into Boston Harbor), but even the most high-minded revolutions in history burn from the grassroots of economic turmoil. Runaway inflation, currency devaluation, the questions of who pays for what: these are generally core prerequisites for revolutionary fervor. The first seed of the American Revolution wasn’t Thomas Jefferson’s flowery prose; it was the Stamp Act of 1765, which placed a tax on all manner of colonial goods.

As a quick aside, I included Aaron Ross Sorkin’s book 1929 in my list of top book recommendations for 2025, and it is indeed a very good read. Contrarians, pessimists, and stock-market bears often look to the 1920s for comparisons to today, and there are, of course, many. But I think an equally apt historical parallel is the French Revolution. Widening inequality, elite control of institutions paired with popular distrust, hostility toward stale and out-of-touch leadership, and an uneasy mix of theology and politics — the more one reads about the French Revolution, the more familiar (and uncomfortable) it all starts to feel.

The Price of Bread

The French Revolution is understood historically as a true people’s revolution. We think of the Bastille and the guillotine, and of soldiers and barricades in the streets a la Les Misérables. But much like on the American side of the Atlantic, the French Revolution unfolded against a backdrop of tax revolt, currency instability, and inflation. Isn’t one of the most famous lines associated with the era (which may or mat not have been actually uttered), Marie Antoinette’s alleged response of “Let them eat cake!” This classic statement from history was a reaction to peasant frustrations with the rising cost of bread.

I thought of this line earlier this week while listening to a podcast about the current turmoil in Iran, where ordinary Iranians are suddenly struggling to afford things like, well, bread. Food prices of all types in Iran, including staples like bread, have skyrocketed over the past few months. Iran’s overall inflation rate in 2025 reached roughly 43%, higher than anywhere else in the world other than Venezuela and Sudan. Much of this deterioration came in the closing months of the year, as Iranian leaders found themselves in rapidly disintegrating political and economic turmoil. How did Iran get here? And what comes next?

I should acknowledge that I am not an expert in the structure of the Iranian banking system. But my reading of the current landscape is that, for years, Iranian banks have not functioned as neutral financial institutions. Instead of operating like utilities (i.e. dull but dependable), they have extended credit to favored firms, state-linked enterprises, and well-connected borrowers with little regard for the ability or propensity to repay these loans. Bad loans have been rolled forward with good money chasing the bad, losses have been obscured, and solvency has been maintained only through government support and creative bookkeeping rather than proper capital management.

Sanctions from the United States and others turned a fragile banking system into something combustible. Iranian banks lost access to international capital. Investment dried up. There were no external lifelines beyond what the government was willing or able to provide. And for all the current global flirtation with isolationism, participation in the international financial system imposes a kind of discipline on institutions that want to be taken seriously. None of that discipline is operating in Iran today.

The more acute danger now is behavioral and psychological as much as it is financial. Ordinary Iranians and wealthy elites alike recognize that many banks are effectively insolvent. Capital ratios are thin, non-performing loans are widespread, and survival depends on centralized government support that may or may not arrive. Iran has entered a familiar spiral: bank runs, flight to hard assets, currency depreciation, rising prices, deepening mistrust, and political instability (i.e. the ingredients for a revolution).

The Ayandeh Bank Failure

Those of us in the West sometimes mistakenly think of Iran and other Middle Eastern countries as existing in a completely different time, as though they are frozen in the past. In reality, the pressures for modernization and social freedom (especially among young people who glimpse life in more open societies) are among the primary engines of today’s unrest. Even in an isolated country where internet access is sometimes strictly controlled, young people are still sometimes able to get an idea of what life is like for their generational peers in other countries, and they want aspects of that lifestyle for themselves.

Yet Iran is a modern country, and that reality was driven home for me this week while reading about the crisis at Bank-e Ayandeh. Ayandeh became almost a caricature of what has gone wrong in Iran’s banking system, thanks in large part to a massive bet on a politically connected shopping mall in Tehran. The bank tied a significant portion of its balance sheet to the project, betting that rising real estate values would compensate for weak cash flow. When international sanctions hit, consumer demand collapsed, inflation surged, and revenues from the mall fell far short of covering debt service. What had once been booked as a long-term asset became dead weight to the bank.

The Iranian central bank repeatedly injected liquidity to keep Ayandeh afloat. The result was a gleaming mall, one of the largest in the world, propped up on the rickety scaffolding of a financial system on the verge of collapse. The mall remains open. Ayandeh Bank does not. Its liabilities have largely been absorbed by state-run banks, where results and reporting are opaque and questionable.

What Comes Next

I mentioned the revolutionary fervor among young Iranians above, which is a true catalyst for what is happening in the country now. But one of the distinctive features of the current protests in Iran is the participation of thousands of merchants and small business owners, in addition to the young people. This is not simply a youth movement, nor is it confined to any single class or ideology. It is not a labor-only uprising or a narrow political revolt. It is cross-generational, multi-class, and economically rooted, precisely the kind of movement that regimes historically have struggled most to suppress. Change is coming to Iran.

To be sure, Iran’s banking crisis is not the sole catalyst for the country’s current upheaval. Much of the immediate economic damage was triggered by last year’s devastating 12-Days War, during which Israeli strikes destroyed hundreds of Iranian targets. Many of Iran’s deeper problems long predate that conflict, rooted in decades of political decisions made both inside the country and abroad. It would be simplistic to pin Iran’s current crisis entirely on its banks.

But banking systems are accelerants. When they fail, they compress years of bad decisions into months of lived reality. Inflation becomes visible and acutely felt by ordinary people and businesses alike. Savings evaporate. Trust collapses.

There are lessons here, even for countries that like to imagine themselves as immune from destabilizing revolts, political, economic, social or otherwise. In the United States, regulatory skepticism is often treated as a sign of seriousness or sophistication. But Iran offers a reminder of what happens when banks cease to operate with a fiduciary mindset. When lending decisions serve political power rather than economic (or mathematical) reality, and when losses are hidden instead of resolved, things can easily spiral.

Equally important is independence. Banks require a regulatory framework, but they also require distance from direct government control. Once credit allocation becomes a political tool, confidence erodes. And once confidence is gone, it rarely returns easily, quickly, or without turmoil.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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I would be surprised if there are many lenders in the Northeast who booked more rental property loans than I did from 2017-2023. It helped that I work for a bank that was particularly aggressive on these types of loans during that time period, but my bank also did them particularly well, with an ease of doing business that made us an attractive partner for real estate investors. We are still a great partner to our borrowers, in my opinion, and we are a fantastic bank. The landscape on rental property financing has changed quite a bit, though, over the past two years.

Rental property loan requests do still come across my desk. But the velocity of these inquiries has lessened dramatically. There was a time when I might have been working on 30+ active rental property deals at once. At any given point these days, on the other hand, I might have one or two rental property deals in the active pipeline and a handful of ongoing conversations with some of my regular borrowers about irons they may or may not have in the fire for later in the year.

Why the change? To answer this question, you have to understand that the 2017-2023 timeframe (and, indeed, the 5-10 years that preceded it), was a once-in-a-generation, perfect storm of variables to the good for the real estate investor that made purchasing or constructing rental properties extremely attractive. Consider the following:

• Rates: real estate investors were generally borrowing in the 4.0-5.0% range (especially from 2020-2023), and occasionally even in the 3’s. Money was historically cheap for commercial borrowing.

• Prices: much like single-family homes, rental properties have appreciated in value considerably over the past 7-8 years. But there was a time when prices were lower, and those investors that got in before the surge have benefitted from both rent growth and organic property value appreciation. This is purely anecdotal to my own market in Bangor, Maine, but when I started working as a commercial lender in 2015, I feel like the average per unit price of a rental property was about $40,000-$50,000 (yes, I know, low by national standards and by the standards of today). That would make a typical four-unit property cost approximately $160,000-$200,000. Today the per unit cost for a standard rental property in my area of Maine is around $120,000 per unit, making the average four-unit property go for around $480,000. The actual price of a property, of course, depends on many variables including condition, location, amenities, etc., but these are generally the averages for what I have seen over the past decade. It is a lot harder to cash-flow a property you bought for $480,000 as compared to one you bought for $200,000.

• Inflation (or lack thereof): the 2010s was generally a period of low inflation. The annual CPI inflation rate typically ranged from 1.5-2.5% for the entire decade. Inflation started popping in 2022 and was particularly painful to people in 2023 before easing its way down to a more moderate (although frustratingly sticky) level today. Why inflation is relevant to the real estate investor is that it impacts virtually all of the expenses involved in owning a property. Insurance, property taxes, the cost of repairs, utilities — it was all comparably less expensive a few years ago, sometimes notably so, as compared to today.

Put these variables together — a low cost of borrowing, organic market growth, and a lower inflationary environment (prior to 2023), and you have a great formula for the investor.

Looking Back at Supply and Demand

Last week, in writing about the housing market, in which I was focusing primarily on single-family homes for individual and family use, I talked about how supply and demand are still the basic drivers for prices on something even as complex as a home. The same holds true in the rental market.

In that 2017-2023 timeframe, the supply and demand forces were both strongly tipping the market in favor of rental property owners and investors, to the detriment of tenants. On the supply side, there was a nationwide period of underbuilding from 2009-2015 in the aftermath of the Great Recession. The chart below shows the average rate of multifamily home construction (i.e. rental properties with 5+ units) going back 25 years. The red line indicates the trough of construction in the early part of the last decade:

The country was not building at a particularly robust rate leading into the 2008 Financial Crisis to begin with, but the multi-year drop-off significantly constricted the supply of new rental units, the ripples of which were felt several years later. By the end of the 2010s, the rental market was lacking several million units that were meant to have been built, but weren’t. By the way, the chart above is for construction of properties with five or more units; the chart for construction of rental properties with 1-4 units looks similar and the stories are essentially the same.

There were other restrictions on supply, too. For example, 2017-2023 also saw the rise of Airbnb and the more ubiquitous use of short-term and vacation-rentals as consumers caught on to this type of overnight stay, and property owners got keen to the cash flow opportunities. Properties that might have been rental properties (or single-family homes, for that matter), were converted to short-term rentals instead, thereby contracting the supply of long-term rental units. This was particularly common in communities with a large amount of tourism, where numerous properties have been converted from long-term to short-term use in recent years.

The Supply-Demand Mismatch

The main reason why rents rose so significantly from 2017-2023 was that the limited supply was overrun with roaring demand.

Where did this demand come from? For starters, the economy was reasonably strong during this period (acute and lasting pressures of the pandemic, aside). Unemployment was low, and when people are working, they are more likely to have money to spend including on the necessities of life, such as rent. Inflation hadn’t taken hold yet, so price pressures were generally manageable.

Second, a cultural shift has taken place where renting among older and more affluent people has become more commonplace. People don’t want to be anchored to one spot, especially in retirement. Many others simply do not want to have to care for their own property, so they are renting instead. Older people with more assets entering the rental market helped pulled rents higher as landlords and property owners realized they could charge more.

It may feel trite to talk about the influence of affluent renters on the market when so many renters are living close to the line, but I believe the influx of non-traditional renters into the pool of those seeking apartments, single-family rentals, and other types of leased accommodations is a key reason why prices have risen. I also think many property owners simply realized they could charge more and more on rents. Once the overall economy found itself in an inflationary mood, I think a lot of real estate investors realized they could price higher and the demand would still be there, so they simply started raising rents.

Lastly, I think many people also wanted to live alone or with fewer people during the pandemic, which separated out the tenant pool into more and more households, which was a catalyst for increased demand, as well.

So What About Today?

Let’s look at each one of these variables for a look at what the landscape looks like today.

• Rates: the interest rate environment is not nearly as attractive for borrowers as it was a few years ago. The picture has eased in a slightly better direction over the past 6-12 months with some interest rate reductions by the Fed, but still, the cost of borrowing was around 4.5% five years ago; today it is around 7.5% (give or take), and sometimes higher depending on the source of financing (I still see hard-money and national non-recourse lenders putting money out there for 10-12+%).

• Prices: I mentioned above how per unit costs (and, therefore, the total cost of the property) have risen dramatically over the past few years. That is good news for those with a current portfolio of properties, but bad news for those who are trying to get into the market. It’s just harder to cash-flow an investment when your starting cost is $450,000 than when it was $200,000, as noted above. I fear for some of the younger investors who are just getting started out today, who may be chasing a playbook that worked better with lower acquisition costs (and lower rates), and is not as viable today.

• Inflation: price increases have decelerated a bit, but prices certainly have not fallen in any sort of meaningful way. Take insurance, for example. According to a Federal Reserve research paper from this past September, “The average monthly cost [for multifamily property insurance] increased from $39 per unit in 2019 to $68 per unit in 2024 in real terms, an increase of more than 75 percent.” Interestingly, the Fed researchers report in their analysis that the majority of this increase is simply eaten by the property owner, while only a portion is able to be passed along to the tenant. Although the average monthly premium has increased by $29/month, the Fed finds evidence that only $7-$12/month of this is passed along to the tenant; the remaining amount just erodes the property owner’s margins. The same is probably true for property taxes, which are rising virtually everywhere, and other expenses like repairs.

One key point to reiterate about inflation: real estate investors benefit from inflation only when rents rise faster than costs. That relationship has broken down over the past four years, though. Costs have risen faster than rents, which has tightened the margins or, for some, even eliminated margins altogether. And as much as real estate investors believe they can pass along the higher costs to their tenants, they can really only pass along what the market will bear.

What About Supply and Demand Today?

On the supply side, construction of new rental units has actually eased down a bit over the past two years. The chart below illustrates the decline since 2023, which I believe is largely a function of increased interest rates (which mean higher costs to the builder who is financing their construction projects) not to mention other increasing costs like permitting, engineering, and, of course, building materials and labor. At the recent peak in October 2023, the country was building at a pace of 600,000 new units/year. In October 2025? A rate of just 347,000 new units/year.

Still, there were many new units that did come online from 2020-2025. Keep in mind the chart above is for housing starts, and not completions. A unit that was started in 2023 may not actually have hit the market until 2024 or even 2025 depending on the length of the construction process. The impact of the supply surge that did happen is playing out now, with the result being a deceleration of rising rents and even rent decreases in certain markets (more discussion on this below) as tenants have more choices and property owners must price units in order to attract tenants.

On the demand side for rental units, unemployment remains fairly low, although as has been a general theme in The Sunday Morning Post over the past year, the view on the economy depends a lot on where you sit. Many people are struggling with high costs at the grocery store, with utilities, and yes, with high rents. The general uncertainty and economic malaise that many people are experiencing (not to mention outright frustration and anger) has a lot of people frozen in place and wondering how they are going to get by. I talk to a lot of landlords and property owners weekly (granted, mostly only in my local market), and the general sentiment is that in this climate, they are keeping rents flat. There is certainly not a frenzy of raising rents to the upside. Again, the market will just not bear it.

Where Are Rents Going Nationwide?

There are several different aggregators of rental data with different methodologies that all show generally the same thing: nationwide rents are moving sideways and are even starting to decline, particularly in certain markets. The Zumper Rent Report has shown flat rents for five straight months through November. The greatest rent increases were in San Francisco (+15.9%) year-over-year, while rents are down in the Southwest (e.g. down 7-10% in Phoenix and Glendale). Rents are down in the D.C. area. Per the report:

D.C. rent slid sharply in November, pushing the city out of the top 10 rankings, as one-bedroom rent fell 5.7% year-over-year, one of the steepest declines among major coastal markets. The city had already been modestly cooling following the DOGE cutbacks, and the recent government shutdown added another headwind to a supply-demand dynamic that was already weakening earlier in the year. Neighboring Arlington wasn’t immune either, with one-bedroom rent down 2.1% annually, reflecting broader downward pressure across the D.C. metro area.

Flat rents in an environment where inflation over the past year was close to 3.0% actually means that comparatively speaking, rents are down. As incomes increase relative to flattening rents, affordability will improve.

The Apartment List Rent Report for January 2026 found similar data. Per Apartment List:

Rent prices nationally are down 1.3% compared to one year ago. Year-over-year rent growth has been slightly negative for more than two full years, and the national median rent has now fallen from its 2022 peak by a total of 5.9%.

This data generally matches other sources, as well, which all show flat rents nationwide, and falling rents in areas that generally had the most construction of new units over the past few years.

One of those areas is Austin, Texas. I wrote about Austin almost two years ago as an example of a community where rents are falling the most, which uncoincidentally corresponded with a massive construction boom in the creation of new rental units. At the time of that writing in March 2024, there were nearly 50,000 new rental units under construction in the Austin metro area, which represented a massive influx of new supply.

I spoke to real estate investor David Pio this week to talk more about Austin. David is based on the midcoast of Maine, but has experience investing in Austin. He told me:

Austin rents were some of the highest in the country going into 2022. At the same time Austin had some of the most permissible zoning and virtually nothing governing the addition of new supply through development. The development story was further supported by the influx of new residents to Austin and Texas for a variety of reasons during and after the pandemic. With companies moving to the area, new jobs were being created and new housing was needed. As is usually the case with development, especially in boom-and-bust markets like Texas, the market got overbuilt. What was at first the darling of the investment world, Austin is now performing the worst. Rents across the board are down anywhere between 15-20% and current occupancies are hovering between 80-85%.

Indeed, rents in Austin are falling dramatically, and are doing so faster than virtually anywhere else in the country. David Pio added in a comment to me, “From the perspective of Maine (or anywhere else for that matter) wanting to lower housing costs and rents, the best way to do that is by adding supply and a lot of it.”

It Is Still a Good Time to Invest in Rental Properties?

So, this rental market preview for 2026 article turned more into a rental recap of the past few years, but the question still needs to be answered: is it a good time to invest in rental properties. It depends a lot on the market you’re in, the price you can acquire a property for, and the rents you can achieve. This may sound obvious, but it is the case that each investment opportunity is going to be different. Investors should not plan to achieve year-over-year rent growth of 5%, which is what I see on a lot of models and pro formas that come across my desk. Your model has to work if rents are flat and, indeed, even if they fall and while other expenses rise. Investors should be particularly cautious to buy in a market where that has been a lot of new construction in recent years, or a lot of new units permitted to be built in the year ahead. That being said, although certain markets like Austin are now overbuilt at the moment, the rate of construction of new units nationwide has actually declined over the past two years, as noted in one of the charts above.

On the construction side, I think virtually the only people who are having cash-flow success in the construction of new rental units right now are people who are either doing much of the work themselves, which allows them to save on some of the costs, or who have found subsidies through government programs or local and state housing initiatives. There should be more support for housing construction in this way, which is a topic that I will try to take on in a future article. After all, the challenging thing for the rental market over the next few years is that, at least from the tenant’s perspective, if we want to see rents continue to become more affordable, you need a much more robust rate of construction. But as noted above, construction is slowing down rather than ramping up. So this may be a place where government needs to step in to support further development.

Summing up the 2026 rental market preview discussion: I see rents staying basically flat this year in aggregate nationwide, and that rents will continue to fall in places that have seen the most construction over the past several years. A softening labor market could put a wet blanket over any potential rent increases, as the market might just not bear any sort of meaningful rise from where we are now on rents. Some of this is on a pendulum, though, and all of these variables are connected. With home prices for purchase remaining high and mortgage rates still a bit elevated, it may keep more people in the renter pool for longer, especially as rents drop relative to overall inflation. This might boost rents back up. That said, the top overarching variable is the health of the economy, and that is a topic that is both tied to everything I write about here, and too complicated for any one single topic.

Addendum - Alternative Yields

One factor I believe has been underappreciated in the big rise in rental property investing in 2010-2023 timeframe is that investing in real estate became a viable and sought-after alternative investment strategy to more traditional routes like putting money into stocks, bonds, and certainly savings and money market accounts. The stock market had a very good decade-plus, that’s for sure. But yields on traditionally safer investments like bonds and bank accounts were next-to-nothing for over ten years. You could literally not get pennies on the dollar on a money market account for many years. That is one reason, I believe, that so many investment dollars flowed into real estate — people were chasing yield. Real estate filled the yield vacuum.

Today, that vacuum no longer exists. You can earn decent returns in a money market account with daily liquidity, absolute safety, and no tenants to manage (although, to be fair, money market rates have generally declined over the past six month as interest rates have come down). But Treasuries offer comparable yields, and don’t require responding to any maintenance calls at midnight. Even investment-grade bonds now provide income that investors would have drooled over in that 2010-2023 range.

Pension funds, insurance companies, endowments, and family offices all chase yield, and what they particularly like is non-correlated returns from the stock market as it makes for a more well-diversified and safer portfolio. There are trillions of investment dollars out there chasing yields — much of it flowed into real estate, which drove up prices — but who knows where it will go now that returns on real estate are more moderate and yields in other areas are higher. When that amount of money starts flowing, it is bound to have an effect on prices and returns, though.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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The frenzy of the housing market was one of the top economic stories of the first half of the 2020’s. Rapidly rising prices, fierce bidding wars, cash offers sight unseen, houses sometimes not lasting on the market for more than a few hours let alone a few days or weeks — the U.S. housing market has never seen anything quite like it.

There were several catalysts for the surge, including, most notably, low interest rates, but also abnormally high demand during the pandemic. This demand was fueled by the rise of remote work and the movement of people around the country, but also because millions of Americans started focusing more inwardly on their homes for satisfaction and fulfillment during the pandemic.

This surge in demand ran smack into a glut of supply following a period of underbuilding from 2010-2020. Acute supply chain issues during the pandemic for everything from lumber to bathtubs to garage doors didn’t help the situation, either. The result was higher prices for homes and frustrating delays for construction and renovations.

The housing story shifted in 2025, however. The home market moved somewhat sideways last year. That’s not to say things were at a perfect equilibrium — frustrations abound on both the buyer and seller sides of the home equation. But it’s fair to say that as we begin 2026, there is more balance in the market, even as prices remain elevated. We will take a look at the year ahead, but first, a quick review of the data for 2025…

The Year That Was

There are several key researchers and aggregators of data that I follow, each of which has a slightly different methodology with regard to home prices and, therefore, will show modestly different results. But they all showed the same basic pattern in 2025: home prices are leveling off and even starting to fall, especially in certain markets. Consider the following:

• The Federal Housing Finance Agency found single-family home prices to be up 1.7% from October 2024 to October 2025 (the most recent month for which data is available). Price gains year-over-year (the bottom row of the chart below) were the most robust in the East North Central region (+5.1% — this includes Illinois, Indiana, Ohio, Michigan, and Wisconsin), and the Middle Atlantic (+5.3%). Home prices actually dropped year-over-year in the West South Central region (-0.7% — this includes Texas, Louisiana, Arkansas, and Oklahoma), and in the South Atlantic (-0.5%, which is largely dragged down by price drops in Florida).

• The Case-Shiller Index calculated the data quite similarly, finding an increase in home prices nationwide of 1.36% from October 2024 to October 2025 (data is not available yet through the end-of-year).

• Redfin calculates home prices up 0.7% in November year-over-year with the median home price at $433,261.

• HousingWire, which is reporting data through the end of the year, shows prices up 0.2% in 2025 (i.e. essentially flat).

• Data from the Federal Reserve showed the median home price at $410,800 in Q2 of 2025, down about 1% from the $414,500 price it saw in Q2 of 2024 (although down about 7% from a recent peak of $442,600 from Q2 of 2022). The chart below shows the median home price, per the Fed, going back to the early 1960s:

The big run-up in prices during the pandemic is evident above, as is the easing since. You can also see the drop in home prices during the 2008 financial crisis, which was quite major at the time, but seems pretty far in the rearview at this point.

Beyond prices, certain other metrics also show signs of normalizing. The inventory of active listings nationwide crested over the one million mark this past summer for the first time since December 2019. The Federal Reserve data below shows the number of listings going back ten years; note the interesting wavelike rise and fall in the data each year — this is the seasonality of listings, which typically increase in the spring and summer and then drop in the fall and winter:

The November 2025 listing count of 1.07 million homes for sale is about 12.5% greater year-over-year than the 952,000 listings in November 2024. And while we are still below the number of active listings that were common to the market before the pandemic, the number of November 2025 listings was more than double the 512,000 listings the market saw in November 2021, which was near the low point.

With listings up, the number of transactions was also up for the year, although only modestly and perhaps not as much as you might think given a decline in mortgage rates. Per Zillow and Statista, the number of home sales in 2025 once all the data is aggregated was likely to have been in the 4.1-4.2 million range, a negligible increase over the 4.06 million transactions in 2024.

The Year Ahead

Housing is, of course, a unique “widget” to use an economics book term, but like any other widget you might analyze, home prices are still based on the basic principles of supply and demand. So let’s look at both.

First, on the supply side, the data above shows that the number of homes for sale is increasing. If the wave pattern in the chart above continues as normal in 2026 (which it almost certainly will), and continues to elevate out of the 2021-2022 overall trough, we could see close to 1.2 million homes for sale by the summer. That increased supply of inventory gives buyers more choices, and serves to help depress prices (or at least continue to take the top off the frenzy).

I believe this increase in supply represents a normalization of the market and a catch-up of all the listings that were meant to have taken place over the past few years, but didn’t. Let’s say the decision to buy or sell a home is basically on a bell curve where a “normal” number of Americans will choose to sell their homes each year just due to the variables of life (e.g. downsizing, upsizing, moving geographically, changing family dynamics, etc.). There has been a great artificial muzzle over this normal bell curve of behavior over the past five years, and that has been the interest rate lock-in effect (plus the low inventory, which has been part of a self-reinforcing cycle; low-inventory leads people to have fewer options, which induces them to stay put, thereby limiting the normal churn of inventory there should be in a healthy market). People have self-selected out of moving because 1) where are they going to go with so few choices on the market and 2) they don’t want to give up their pre-2023 interest rates, which are often 3% or better, to move into a market with higher prices, fewer choices, and higher rates. As such, there has been a great artificial (but rational) limitation on moves.

However, many of these variables continue to shake themselves out. Interest rates are lower (more on this below), inventory is climbing (as noted above), and the wheels of life just continue to turn. There has been pent-up demand to sell. If you believe, like I do, that over the past few years there have been several million moves that were meant to have happened on the normal bell curve of life but didn’t, well, a lot of these moves still need to happen and will over the next few years. This creates new demand in the market (more on the demand side below), but it also creates more supply of homes as people list their own properties in preparation for a move. Increased supply (even with a corresponding increase in demand), I believe, will lead to a further easing of prices as buyers have more options and sellers find themselves competing with one another to attract buyers rather than the other way around. If you’re selling a home and yours is the only one on the block for sale, you are more likely to get a higher price. If the house across the street from you is also for sale, that competition is going to limit how high you can go (assuming the homes are comparable).

What About Construction?

The other piece of the supply puzzle is new construction. From the perspective of a buyer looking for further normalization of the market and perhaps a reduction in home prices, the construction story as it pertains to prices is not quite as rosy as the discussion above about new listings.

New construction of single-family homes has fallen off considerably over the past year. As of October, there were 1.3 million homes under construction (on an annualized, seasonally-adjusted basis), which was the lowest rate since March 2021. The number is down from 1.462 million in October 2024, a decline of about 10%, as shown in the chart below:

Why is new home construction slowing down? There are several reasons. First, costs have continued to rise. Although the rate of inflation in building materials has slowed down, costs are still about 40% higher than they were before the pandemic. Some items, like lumber, have normalized a bit and even declined. Others, like steel, aluminum, and electronic components, have continued to rise notably over the past 18 months. Rising costs have been a result of supply chain issues, tariffs, and global trade policies. The National Association of Homebuilders has estimated that tariffs add an average of $7,500-$10,000 to the cost of building a new single-family home.

Other costs to the builder have risen too, which then get baked into the price and passed along to the buyer. These include the higher cost of builders’ insurance, plus all the normal costs of engineering, permitting, and other local and state expenses associated with the approval process. As these costs continue to rise, it has a damping effect on new construction.

The labor shortage is a major part of this, too. The United States has an older workforce to begin with, with fewer young people choosing the trades (although I see anecdotal evidence of a swing back on this in my own community over the past few years, with technical high school course options rising in popularity). Many of these older workers are retiring, and there are just not enough people coming up behind them to meet the home construction needs of the country. With fewer workers, prices are going to be higher because the workers that are in the industry can command higher rates.

Immigration is a part of this, too. People don’t come to The Sunday Morning Post for politics, but the truth of the matter is that with less inbound migration to the United States, a crackdown on illegal immigration, and the fear that so many legal migrants are living with, which leads many to be less active in the workforce, the labor pool for construction has been significantly dampened. Just this past week, ICE detained four immigrant day-laborers from a Home Depot parking lot in Phoenix who were there looking for work, as is common in Home Depot parking lots around the country each morning. Situations like this are going to have a massive chilling effect on immigrant labor, which, for better or worse, is crucial to the U.S. construction industry, particularly in fields like roofing, drywall, and painting. Fewer immigrants means fewer workers, which means delays and higher prices.

Interest Rates

The interest rate question cuts to both the supply and demand sides of the equation. Builders, too, are subject to the same interest rate environment that buyers and sellers are. With rates rising from 2023 until the early part of 2025, the costs of financing construction were also higher, so less construction took place. Not coincidentally, the recent peak of new home construction was in October 2022, when over 1.7 million homes (on an annualized, seasonally-adjusted basis) were under construction. That was just before interest rates started to spike. Rates then remained particularly elevated for the next 12-18 months. With these elevated rates, construction slowed down considerably.

It is an unfortunate irony in the housing market that at the time when new construction was most sorely needed to help ease price pressures, it became that much more difficult to build due to the rising interest costs and all the other higher expenses noted above. That being said, Fed Chair Jerome Powell was asked and responded many times saying that the health of the housing market is the responsibility of Congress and others, not the Federal Reserve.

So what’s in store for interest rates in 2026? It’s hard to say. The rate story was a positive one for would-be buyers in 2025; the average 30-year fixed mortgage rate dropped from just over 7.00% at the beginning of the year to just over 6.00% by the end of it. This reduction made for thousands of dollars a year of savings for many homebuyers. The conventional wisdom is that rates will continue to ease downward in 2026. I think this will be true on the commercial side. I expect rates for businesses and for things like rental properties and other types of commercial real estate to come down by half a percentage point to a point over the next 12-18 months (more on the rental market in next week’s article).

The story is more complicated on the residential side, however. Traditional 15- and 30-year home loans are not subject exactly to what the Federal Reserve is doing with interest rates. The Fed can lower rates all it wants (and it may do so later this year with Chair Powell’s term running out and Trump, who has stated numerous times that he wants rates to be lower, choosing a successor who will likely be amenable to this), but home loan rates from banks and mortgage brokers are based on market forces of supply and demand and competitive pressures, but even more importantly, are based on the market’s expectations of future inflation. I have written about this before and probably will come back to it again soon as it is a complicated topic worthy of more exploration, but home loans are typically packaged by banks and sold to investors. If investors believe that rates will be higher in the future than they are now, they will demand greater yields from these mortgage-backed securities. That makes rates go up. And right now, although inflation has come down pretty significantly from its 2023 peaks, it hasn’t come down all the way, and there are still quite a few potential inflationary triggers out there, not least of which is who Trump picks to lead the Fed.

So What’s Ahead?

What I see in the housing market for 2026 is a continuation of the trends we saw in 2025: more listings, an easing off of prices, and a relatively flat number of transactions. The other key variable in these questions about the housing market (indeed, maybe the key variable) is the strength of the economy. One significant reason why home prices surged so much from 2020-2024 is that the unemployment rate was very low. People were working and the economy was relatively stable (despite the global turbulence of the pandemic). Stimulus programs and massive business relief programs helped bolster things, too.

But now, here at the beginning of a new year, Americans are feeling increasingly uncertain. I’ve mentioned tariffs and the uncertainty of global trade, but on top of that, there are massive unknowns with the rapid rise of AI and automation technology that could make entire career fields obsolete over the next few years. When people feel uncertain or unstable, they delay big life decisions including whether to buy a home or to move. The collective uncertainty out there is bound to have a dampening effect on transactions. On top of that, many people continue to struggle with prices at the grocery store, rising insurance and utility costs, and just the general expenses of life.

Crash?

One final note: you don’t hear a lot these days about a potential housing market collapse. I remember there being some talk of a housing bubble in the 2021-2022 timeframe, but there is scant reference to such a thing today. The typical American homeowner is in pretty good shape financially, especially those with pre-2023 mortgages. Delinquency rates are quite low. I’ll come back to this in a future article. While credit card debt is flashing some troubling and worrisome signals, mortgage debt by comparison is stable. I think this is a result of the fact that so many mortgages have attractive interest rates and the economy has been relatively strong despite the current uncertainty. Additionally, many of the tightened banking standards following the Great Recession have led to a more well-qualified pool of borrowers. Plus 40% of American homeowners don’t even have a mortgage, so that is a large portion of the homeowner pool that is not at risk of default.

Final Thoughts

So final predictions for 2026? I expect home prices nationwide to drop by 3-5%, and more in certain markets, especially in the south and southeast. I think the 30-year fixed rate will remain frustratingly elevated (although the current rate of just over 6.0% is not bad by historical standards). Listings will continue to increase, giving buyers more options. Buyers should remain patient, as I think the general environment only becomes more attractive for them over the next 12 months, even if rates do stay up. Sellers should be mindful that not only is the market more in balance now, but momentum is shifting notably to the buyer side. Sellers should be prepared to offer concessions on price, and be patient as homes are likely to sit on the market for longer.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Some of the ambitions of the May 2024 article have been realized, while others have not. Most positively, The Sunday Morning Post beat goes on. By my tally, I have posted an article for 246 straight weeks going back to April 2021. I know “I can’t believe it” is the standard thing to say after declarations like that one, but, well, I truly can’t believe it. April will mark five years of writing. It certainly hasn’t felt like five years, and it hasn’t felt like I have clicked publish nearly 250 times in putting these articles out into the world.

The State of the Post

I love writing these articles and I plan to continue to do so. With all of the above in mind, however, The Sunday Morning Post faces two critical issues if it is to survive long into the future. The first is that I have become increasingly aware that there are two distinct (although probably overlapping) audiences for Sunday Morning Post content. These articles originally began with a primary focus on banking, real estate, and the economy. There was a particular focus on the housing and rental markets early on. A certain portion of Sunday Morning Post readers, I believe, are here primarily for those discussions. And yet, in more recent years (especially in 2025), I have started to write about other topics beyond just real estate, including AI and the future of work.

Does the active real estate investor who came to The Sunday Morning Post in its early days care about these other topics? I think yes, to a certain degree, but it’s also fair to say that the data-centric articles about trends in the housing and rental markets are no longer the exact primary focus of The Sunday Morning Post. I do not want to abandon the reader who is primarily interested in these topics, however.

The inverse is also true. Do the readers who subscribed after reading The Looming Critical Thinking Crisis in August, for example, which was one of my most popular articles of 2025, care about my upcoming rental market preview article for 2026? Maybe. But also, maybe not.

I do think the expansion into some broader topics this year, particularly AI and its impacts on not just the economy but society in general, has been a good thing for The Sunday Morning Post. One can only write (and read) about multifamily construction in the Federal Reserve data so many times before the momentum starts to fade a bit. I think the expansion to new topics has helped to keep things fresh.

What I would really like to do someday, perhaps, is split The Sunday Morning Post into two separate series. One would cover the original topics of housing, real estate, and construction, while the other would cover the more expansive topics like AI, the future of work, and all the “palate cleanser” topics, as I like to call them, like the articles I wrote this year about the marketing campaigns of Coca Cola and The End of Late Night. People could then choose if they want to receive one publication, the other, or both.

That brings me to the second critical issue for the future of The Sunday Morning Post, which is the question of my own bandwidth. There are definitely times when I wonder if I can keep these going. It’s not a question of not wanting to do the writing, it’s about having the time to do it. I will spare you the details of just how busy I am because it will feel indulgent or self-aggrandizing, but suffice it to say, there are only so many hours in a week and I only have enough bandwidth, mental and otherwise, to get everything done. You can call it a side project, a hobby, a gig-economy job, or just a labor of love, but writing The Sunday Morning Post is just one of my many commitments, including family, of course.

All that being said: As of today, the start of 2026, I do not have specific plans or a timeline to stop writing. I may continue forever. But I also may not. I wanted to at least put this on the radar so I can mentally prepare people if The Sunday Morning Post were to someday end. If it does, I will give people advance warning and a full explanation. For now, however, the series will go on!

Let’s Talk Financials

As a good old-school New Englander, I know it’s not polite to talk about money, but I also believe in transparency. I do not have a huge following on Substack. That doesn’t mean I don’t appreciate the readers who do show up here. In fact, I think it makes me appreciate you all even more. But my audience is modest by any account, and it would be a microaudience to some of the largest and most influential writers on this platform.

I think in terms of earning money from writing on Substack, the ones who do fairly well at this are the writers who brought large audiences to the platform with them by virtue of having existing national name recognition or through many years of writing on another platform or with a larger media outlet before coming to Substack. I, on the other hand, started from scratch.

The true value for me in writing on Substack is that it has given me the opportunity to develop my subject-matter expertise, which has undoubtedly been good for my professional career in many ways. I am not compensated by my employer for writing these articles, and yet my doing so is part of the “total package” of having me as an employee, I think, so writing The Sunday Morning Post has been good for my career, for sure. I am very grateful that my employer does allow me to write and publish these each week, that’s for sure.

Apart from that, developing professional relationships and personal friendships with many of my readers over the past 4.5 years has provided many opportunities, financial and otherwise, that are not necessarily quantifiable or definable, but are a part of the total picture of personal and professional development that I have experienced through writing The Sunday Morning Post.

The other value, which I explained more in the May 2024 article, is that The Sunday Morning Post keeps my brain fresh, and requires me to think, study, and puzzle things out each week.

As a reminder, people can read The Sunday Morning Post entirely for free every week. They can also pay to subscribe, which gets them….the exact same package that they could otherwise get for free. Quite a salesman am I, offering people the option to pay for the same thing they can get for free.

Why would I set it up that way, some might ask. There are several reasons. First, I don’t want to write for a smaller audience where the mark of entry is the ability and propensity to pay. I have had a lot of opportunities in life, many of which have developed me into the writer I am today. Keeping the articles free is, I guess, a way for me to pay it forward.

In addition (and this is the truth, too), I have a lot of bank customers who are on my subscriber list, and it feels wrong to ask them to pay me for something that is sort of a blended role with me as their commercial banker. It feels like too much of a conflict of interest to have my bank customers on my weekly subscriber list and then ask them to pay (although, some do, for which I am very grateful).

So what do I actually make in hard dollars for writing The Sunday Morning Post? Let me tell you: this year it was $4,406. Here is the actual data showing the growth in revenue that Substack provides me through my own writer portal. The paid subscription only started in May 2024, which is why there is the leap at that point:

What this data means is that I have 1,236 total subscribers — that is the number of people who get my articles in their inboxes each week — with 42 paid subscribers. In 2025, those 42 paid subscribers paid $4,406 in total. Substack then takes about 10% of the revenues for their own services, which is how they get paid. As a writer, I don’t necessarily think this is a bad deal because I get a lot of value out of the platform, which I find to be very easy to use, but of the gross revenue generated here, about 10% goes to Substack.

These are not figures that I am embarrassed or ashamed about by any means. In fact, I am quite proud of them. The Sunday Morning Post has largely been a labor of love, so to have that many people want to receive it in their inboxes when there is so much other incoming content bombarding them at all times, and for 42 people to say they will pay for something that they could otherwise get for free is actually quite affirming. Many Substack writers would probably laugh at these numbers as especially low, but I share them with you with pride and gratitude. At the end of the day, people pay to receive and support my writing, which is humbling and rewarding in more ways than one.

I will use this moment to say that while earning income from these articles is not my primary motivation, the supplemental income is nice. My pitch today is the same that it was in May 2024:

• You will never see any paid ads on this page. The articles are written by me (and not a bot; although the bots do now proofread each week before I post!). The page is clean and clutter-free without any pop-ups, ad banners, and interruptions.

• The revenue from paid subscriptions does help to make The Sunday Morning Post sustainable. I do give up some time and bandwidth to get these done each week, and the supplemental income is a nice way to justify the continuation of this ongoing project.

• I estimate that I am leaving between $2,000-$7,000 per year of revenue on the table each year by not adding a paywall. Where do I get this figure from? Various sources point to Substack writers who convert from an entirely free publication to a paywalled publication getting about 5-10% of their free subscriber base to pay for a subscription. My 42 paid subscribers in a total subscriber pool of 1,236 readers represents about 3.3% of my readers. If I were to have a paid subscriber base of 5-10% of my free reader list, it would generate an increase in paid subscriber revenue of about $2,000-$7,000 per year. That would have me around $10,000/year in revenue, which would actually be pretty good.

All that being said, I do not want the relationship between me, the writer, and you, the reader, and all of us in community together to be bound by payment. There is a reason I posted exactly one article like this (in May 2024), and then the follow-up is over 18 months later. I don’t want to get bogged down in the money. If not one new person pays to subscribe to The Sunday Morning Post and, in fact, if I were to lose subscribers, I am still going to keep writing. If I have to give this up at some point, it won’t be because I’m not making enough money from it; it will be because I just don’t have the bandwidth between my job, my side work, coaching my kids’ teams, and, most importantly, trying to be a good husband and dad to keep making it work each week.

What Comes Next

I mentioned above that some of the ambitions of the May 2024 article have not come to pass. One of them was to set up a chat community of Sunday Morning Post readers. That has fallen by the wayside for lack of my own capacity to develop and support. If writing these articles was my full-time job and I had 40+ hours a week to dedicate to it, I would love to get something like that going. But it’s just one piece that has not come together, at least not yet.

A second ambition is to have guest writers. I probably could invest some time into bringing on some additional writers, but so far, the potential time saved from having someone else cover a week or two has not felt worth the work of setting up these relationships. I have a pin in this one to come back to it, though, especially if The Sunday Morning Post were to eventually split into two separate series. Writing partners or guest writers could help bolster both series.

For now, however, my most important point to make to you today is that The Sunday Morning Post will continue into 2026. The good thing about writing a Substack series that is not your primary form of income is that I can be creative on the topics. I can go in some different directions. We can try some things and see if they work. For now, however, the beat goes on.

THANK YOU for reading The Sunday Morning Post. Whether you read it first thing Sunday morning or come back to it later in the week or whether you only catch it here and there, I am glad to have you as part of The Sunday Morning Post community. I’ll see you next week with some data on the housing market over the past year and some thoughts on what to expect in 2026.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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Top Ten Post of 2025

Here were the most read Sunday Morning Post pieces in 2025. Thanks again for supporting this publication.

10. 1946 vs. 2026. An article that compared income tax rates in 1946 to today.

9. The Home Insurance Crisis. An article that addressed rapidly rising home insurance costs, particularly after the California wildfires.

8. It’s Hard to Tariff a Pencil. An article that discussed how tariffs are very complicated because so many products have many parts and those parts often travel across country lines multiple times before a product is finished.

7. The Looming Critical Thinking Crisis. An article about how AI is changing the ways we think and undermining critical thinking in schools.

6. In Defense of Gen Z. An article about how the generations coming of age today aren’t so bad.

5. Your Banker Doesn’t Work on Commission. An article of several things your banker probably wishes you knew. Note: several people did NOT like this article. It’s probably one of the most and least popular articles I’ve ever published.

4. Ben’s 2025 Book Recommendations. An article with my top book picks for 2025, and those from my family members. This one is quite high up the list despite only being out in the world for one week at the time of this writing. Score one for the books!

3. How I Would Futureproof Myself if I Were Starting Out Today. An article about ways to guard against being automated or AI’ed out of a job.

2. Thoughts on the Stock Market and The Trump Tariffs. An article about the Spring 2025 stock market drop and the impact of the tariffs.

1. The 2020 vs. 2025 Comparison. An article about the state of the economy, inflation, and the unease many people and businesses are feeling.

The year 2025 was a year of uncertainty, economic and otherwise. The #1 most read article of the year (the 2020 vs. 2025 piece), which was published on April 20th, contained the passage below, which probably best summarized the 2025 year as far as the economy is concerned:

An ongoing theme in conversations I am having with a lot of business owners, investors, and just in everyday talks with people these days is that the world is frozen. Things are on pause. Business owners are not investing in themselves through expansions and new hires because of fears about tariff uncertainty. Real estate investors are having trouble making the math work on acquisitions due to high prices and elevated interest rates, so not as many deals are taking place. People at one end of the spectrum are feeling cash-strapped due to the lingering effects of inflation particularly at the grocery store, while others are feeling anxious after being pounded by stock market losses over the past three months.

What it all means is this: the world is at a standstill. Everyone is waiting to see what happens. This includes banks and others in the financial world, who are suddenly cautious about which deals to finance and which to avoid.

Since I wrote that article in April, an additional theme that emerged was the stock market rebound, which helped contribute to the emergence of the “K-shaped economy,” in which people on one end of the spectrum seem to be getting worse off while others about a certain level are improving. That is likely to be one of the major topics in the overall economy in 2026, and one of the key themes for The Sunday Morning Post in the months ahead.

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"A book is a gift you can open again and again.” - Garrison Keillor

Author’s note: Greetings, readers. As we wind down the year, I would like to thank the community of Sunday Morning Post readers for making these articles a part of your week. I hear from many of you that The Sunday Morning Post is a regular part of your actual Sunday morning routines, while others find it in their inboxes on Monday mornings when they get to work and others come back to it later in the week. For still other readers, you might get to it 50% of the time, or if the title, topic, or first few sentences happen to catch your eye. That is okay. I am the same way with the many Substack series I subscribe to. It is the way of the online written word. You get to what you can get to.

As we turn the page on 2025 — a challenging year in many ways economically, politically, and technologically — I wanted to try to ground this newsletter in something tangible to end the year: the printed page. In fact, a recommendation on a book, podcast, series, or movie is one of my favorite gifts to receive. Send me yours, and I’ll organize them into a Sunday Morning Post reader recommendation list to share next week or later in January. Please let me know the best thing you read this year. You can email me at bsprague1@gmail.com or leave it in the comments below. (We’ll do TV shows, movies, and podcasts a different time).

What follows today is a list of the books that brought me satisfaction this year (with bonus recommendations from the rest of my family members). I pass these suggestions on to you in the spirit of giving, sharing, and appreciation. Happy New Year, and best wishes for a healthy, happy, and peaceful 2026.

Ben’s 2025 Book Recommendations

Demon Copperhead, by Barbara Kingsolver. This 2022 novel won the Pulitzer Prize. It tells the coming-of-age story of a boy in the Appalachian South. I actually don’t read a lot of fiction, but this one was calling to me, and it has stuck with me long after finishing it. It’s a long book, but a brilliantly told story full of ups and downs. It was hard to put down, even at nearly 600 pages, and gave me a new perspective on poverty and the opioid crisis (don’t let these dark topics dissuade you from giving this book a try; the book is incredibly well-written).

The NVIDIA Way: Jensen Huang and the Making of a Tech Giant, by Tae Kim. I reviewed this book this past summer for a Sunday Morning Post column so I won’t dwell on it much here. This one is obviously nonfiction, but it’s also a very well-told story in its own regard about a company and a leader that is at the forefront of so many of the cutting-edge issues at play right now in technology and in the world in general.

1929: Inside the Greatest Crash in Wall Street History—and How It Shattered a Nation, by Andrew Ross Sorkin. It may sound like dwelling in the gallows, but I love to read accounts of some of the greatest financial tragedies in history. They are Shakespearean as much as they are economic or political. Greed, hubris, arrogance — it’s all there. This book, which comes from Andrew Ross Sorkin, who many people might recognize as a co-host of Squawk Box on CNBC (and also the author of a 2009 book, Too Big to Fail), tells in gripping detail the story of the lead-up to the 1929 stock market crash and the Great Depression, with eerie and foreboding parallels to the world of today.

Bonus Book Ideas (For Kids…From My Kids!)

My wife and I have managed to maintain our routine of, between the two of us, reading to all three of our kids before bed every night. I know they will probably outgrow it soon, but it is a nice way to wind down the day, even if it does often leave us feeling completely exhausted by the end of a long evening. I asked the kids for their top recommendations from this year, and here is what they offered:

Recommendations from our 12-year-old son:

• Ranger’s Apprentice, by John Flanagan. This is a fantasy series with young characters who are richly developed in fascinating adventures. It’s a worthy series for kids to get into either alongside Harry Potter or after finishing it. It helped that the protagonist, expert in stealth and archery, has the same name as my son. We are only on Book #2 of this twelve-book series.

• Lines of Courage, by Jennifer Nielsen. Not only did my son love this book, I did too. I consider it one of the best historical fiction books I’ve ever read, one in which the stories of five different young people in various parts of Europe at the outset of WWI are woven together. Our family has liked other Jennifer Nielsen books too, including Iceberg, about a young girl on the Titanic who wants to be a writer.

• The Perfect Mile, by Neal Bascomb. My son is a talented youth runner (so is my daughter, I am proud to say), and he and I just started this book about a month ago that tells the story of John Landy, Wes Santee, and Roger Bannister all trying to be the first to break the 4-minute mile at the same time in different parts of the world. Full disclosure, this book is not written specifically for a youth reader. It’s not that the content is at all inappropriate, it’s just fairly dense for a young person. Whereas Ranger’s Apprentice and Lines of Courage could be read by a 9-12 year old, The Perfect Mile has more of a grown-up style and vocabulary. Still, he has really enjoyed it. I have, too.

Recommendations from our 10-year-old daughter:

• The Bletchley Riddle, by Ruta Sepetys and Steve Sheinkin. I liked this one just about as well as I did Lines of Courage. It’s another historical fiction novel, this one set in Bletchley Park, England, in 1940. It tells the story of siblings Jakob and Lizzie Novus as they work to help break the German enigma codes during World War II, while simultaneously trying to solve the mystery of their mother’s disappearance. The chapters are short and rotate between the perspective of Jakob and Lizzie. You can get through quite a few of them in one sitting. It’s a captivating read, highly engaging, and entertaining throughout (also never hurts to hear the story of a brother and sister working together…).

• The Nancy Drew Diaries series, by Carolyn Keene. This is a 26-book series (plus a Christmas book) told from Nancy Drew’s first-person point of view. Many Sunday Morning Post readers likely grew up with the original Nancy Drew and Hardy Boys books. Let me tell you, as special as those originals were, they don’t always hold up over the course of time. The language, themes, and gender roles can feel antiquated to the modern ear. Honestly, I’m not trying to get political here, the originals just don’t flow as well; we have tried to read them as a family, and they just don’t land. But the modern Nancy Drew Diaries series (all written since 2013) are very entertaining and just complex enough for the middle reader (or listener), but won’t completely bore the mom or dad who is reading (for the most part). You don’t need to take them in order, although it’s probably best to start out with #1: Curse of the Arctic Star, to get a feel for the modern take on Nancy, Bess, and George and their shenanigans in River Heights.

• Redwall, by Brian Jacques. This is a classic fantasy tale of some intrepid forest creatures that I vaguely remember reading as a kid, but it felt both nostalgic and fresh to get back into it with my daughter this year. Redwall represented some good nature-based escapism after getting pretty wrapped up in Nancy Drew mysteries. We also read Mossflower, which is a Redwall prequel, and quite good in its own regard. There are many other books in this ongoing series; TBD on how many of them we get to. Unlike with Nancy Drew, where my daughter wanted to start the next one in the series immediately after finishing the previous one, the Redwall books seem to require a break in between.

Recommendations from our seven-year-old son:

• The Circus Ship, by Chris Van Dusen. This one has been a beloved classic in our family by all three children. It tells the story of a shipwreck off the coast of Maine where the animals swim to shore and befriend the islanders, who then help the animals take cover when their greedy owner comes back for them. The artwork is brilliant (worth the price of admission, for sure), and the book has a great Maine feel to it. We also like many other Chris Van Dusen books.

• The Daddy Book and The Mommy Book, by Todd Parr. These short board books highlight the many different types of dads and moms and the things they do that are special. It’s more of a beginner book and could be read to an infant, but The Daddy Book has always been our littlest’s favorite — I read it to him almost every night. For his birthday this year, we added The Mommy Book, which is equally as special and important.

• The Magic Treehouse series, by Mary Pope Osborne. This is the quintessential classic series for young readers (and listeners). You can’t go wrong with any of the books, which now total over 60 in the original series. I would give a special nod to Christmas in Camelot, which is a more challenging storyline that is actually pretty entertaining, especially as a Christmastime read.

• My Wonderful Christmas Tree, by Dahlov Ipcar (actually, I am adding this one to the list myself because it’s one of my recent favorites). This is another one with a Maine connection — the book is a beautifully illustrated take on 12 days of Christmas in a New England forest. For those who resist the commercialization and materialism of the holidays, this one reads like a breath of fresh pine air.

Bonus BONUS section — recommendations from my wife:

• Great Big Beautiful Life, by Emily Henry. This is a hybrid romance/historical fiction novel set on an island off of Georgia where two writers are competing over the same opportunity to write a biography of a former socialite turned recluse. It’s a good beach book if you find yourself on one at all this winter (or next summer), otherwise it’s an entertaining read regardless of season that will hold your attention right until the last sentence of the book. I’m not ashamed to admit I read this one too, and enjoyed the storylines and characters even if it was not my usual fare.

• The Whisperwicks Trilogy, by Jordan Lees. This is a middle reader fantasy series that my wife has been reading with our daughter. It features an eleven-year-old named Benjamiah Creek and his friends in a magical, sometimes dangerous world. The three books in the series also get the daughter stamp of approval.

There you have it: the Sprague Family Book Recommendation List for 2025. I wish we all had time to read more, actually. I have written a lot this year about the impact of technology, algorithms, and the growing influence of AI in our lives. It all makes me worried for our collective brain health (not just of my family…everyone’s). Sometimes I feel my own attention span declining, which I believe is a result of the constant bombardment of stimuli from all of these devices that surround us virtually 24/7. Slowing down and spending some time with the printed page is the antidote that many of us, me included, need.

There will be more on all of that to come in the digital pages of The Sunday Morning Post in 2026. Happy reading and Happy New Year to all! Don’t forget to email me or comment below with your own favorite reads of the past year.

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Ben Sprague lives and works in Bangor, Maine as a Senior V.P./Commercial Lending Officer for Damariscotta-based First National Bank. He previously worked as an investment advisor and graduated from Harvard University in 2006. Ben can be reached at ben.sprague@thefirst.com or bsprague1@gmail.com. Thoughts and opinions here do not represent First National Bank.

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The Sunday Morning Post is always free, never pay-walled, and contains no ads. To learn how you can support this work and keep these articles free from clutter, become a paid supporter here or click to read more here.

Addendum: if you enjoyed today’s book recommendations, you might enjoy following Read More Books, a Substack series by Jeremy Anderberg. Find it here.