Week ending 13 November 2026 · Published 14 November
US consumer inflation slowed in October, but producer costs and core prices still point to pressure. At the same time, layoffs have not accelerated on the four-week measure. The investment conclusion is specific: the better case is for projects that lower operating costs or deliver power customers can actually use. The weaker case is for capacity that only pays at high utilisation and cheap refinancing.
AI-generated. Not investment advice.
The headline improved faster than the cost base
October consumer prices rose 0.4% month on month, down from 0.6% in September. Core CPI still rose 0.3%, matching August and September. Food was up 0.5%, and household electricity rose 0.9%. Real hourly and weekly earnings were flat on average. Nominal wages moved higher without giving households more purchasing power that month. The missing October 2025 comparison means there is no official October annual headline or core CPI reading. BLS consumer prices · BLS real earnings
Producer prices rose 0.3% in October after a revised 1.4% in September, but final demand excluding food, energy and trade services rose 0.5% for the month and 4.9% over the year. Truck freight prices rose 3.9%. When those costs rise faster than a business can pass them on, investment that reduces freight, energy or labour per unit can earn a return without requiring stronger consumer demand. Growth that depends on more volume at the same margin is a harder proposition. BLS producer prices
Underinvestment: power delivery and industrial efficiency
EIA now forecasts nearly 4,390 billion kWh of US electric-power-sector generation in 2026, up 2.7%, with utility-scale solar accounting for most of the growth. More generation creates opportunities for connections, storage and transmission where customers are constrained by peak delivery. PJM's 5 November winter outlook identifies delivery constraints in parts of Maryland, Virginia and Washington, DC. I would start with those local constraints, then test where a substation upgrade or flexible load could unlock more usable capacity per dollar than adding generation elsewhere. EIA November outlook · PJM winter outlook
The same EIA outlook cut its winter Henry Hub gas forecast 16% to US$2.87 per MMBtu as expected weather and storage changed. That split matters: electricity demand can make a particular grid connection valuable while gas-producer economics deteriorate. For a generation project, check the contracted power price and delivery date. For an industrial efficiency project, look for a measured reduction in operating cost rather than relying on a permanently high fuel price.
Where capital risks getting ahead of demand
Rate-sensitive projects with long construction periods now deserve a tougher financing test. On 10 November, Governor Christopher Waller said he supported at least a quarter-point December increase and would consider half a point if core CPI came in around 0.3% or higher. Core CPI subsequently printed at 0.3%. That is one policymaker's view, but it makes lower financing costs a particularly weak assumption for a project that must refinance soon. Federal Reserve speech
For a speculative data centre, the two gates are a firm energisation date and contracted cash payments from tenants. In its 5 November survey, ERCOT collected responses covering roughly 177 GW of connection requests; later-stage target dates often went with more unresolved equipment decisions. Use signed power and customer contracts to size construction, not the total queue. Returns can disappoint even if the market for computing as a whole keeps growing. ERCOT large-load survey
What would change the allocation
- Consumer demand: Look for stronger real spending alongside real earnings. The next retail release is due 17 November. Census schedule
- Financing: Consecutive softer core price readings would make longer-payback projects easier to justify. Until then, favour projects whose returns hold at current funding costs.
- Power: A shorter connection timeline or a signed load commitment changes a project's value more than another announcement about future demand.