Connor Lokar Sees Steadier Economic Conditions Ahead in 2026
Denver, CO, January 14, 2026-Economist Connor Lokar, with ITR Economics, delivered a 2026 economic outlook during Day 3 of CCA Global Partners’ ConneXtion winter meeting in Denver, focusing on what the U.S. economy, housing market, consumer spending, inflation, interest rates and tariffs may mean for businesses tied to residential remodeling and construction.
Lokar acknowledged that business owners are operating in a news cycle dominated by volatility, but he argued that underlying conditions have been more stable than the tone of national coverage suggests.
“Despite all of that, despite all of those crazy things, what we actually saw is the economy more or less did what we thought it would do over the last year, with a couple of exceptions,” he said.
Why GDP can mislead business planning
Lokar cautioned against using GDP growth as the primary gauge for demand in housing- and home-improvement-linked categories. While GDP can signal whether the economy is expanding, he said it’s often too broad to reflect the lived reality of big-ticket consumer behavior and housing-driven categories.
“The reality is that GDP as a data set is too big,” he said, describing it as “a really broad brush” that can be influenced by drivers that don’t necessarily move residential demand in tandem.
Uncertainty, not just tariffs, pressures housing and big-ticket purchases
A key theme of Lokar’s talk was that policy uncertainty can suppress major consumer decisions-even when the broader economy is not in crisis. In his view, uncertainty has been especially relevant for categories connected to home buying, remodeling and renovation projects, where consumers are more likely to pause when headlines turn alarming.
“It wasn’t necessarily tariff rates that hurt your businesses. … It was the broader ecosystem of uncertainty, in my opinion, that hurt your business,” Lokar said. He added that 2026 may feel more navigable if uncertainty cools from last year’s levels, supporting steadier residential activity.
Tariffs: not preferred policy, but not an economic collapse
Lokar said ITR Economics takes a generally free-market view and is not supportive of tariffs as a tool to address competitiveness, describing tariffs as treating symptoms rather than underlying causes. Still, he pushed back on worst-case narratives that tariffs alone would cause an economic breakdown.
“It’s not going to kill the economy,” he said, emphasizing that the more immediate business challenge is often the uncertainty surrounding policy shifts rather than the tariff line-item itself.
Inflation and interest rates: don’t expect a return to 3% mortgages
Lokar said the low-inflation, low-rate era that many businesses remember is unlikely to return quickly. With inflation expected to remain elevated relative to pre-pandemic norms, he suggested that a dramatic decline in interest rates-and therefore mortgage rates-is not a base-case assumption.
“One of these years, I’m going to come up on stage and I’m going to say 3% mortgages are coming back. … Today is not that day,” he said.
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