The Federal Reserve is staring at a US economy that has been softening more than economists feared

Ahead of this afternoon’s Fed decision, where the central bank is poised to keep rates unchanged at a range of 4.25% to 4.5% despite the protestations of President Donald Trump, let’s look at how US economic data has been doing. In sum: poorly relative to the last year, and worse than expected.

Citigroup has a pair of indexes to track the performance of US activity: the Economic Data Change Index measures data relative to its one-year average, while the Economic Surprise Index assesses whether that data is better or worse than economists expected.

Both of these measures are deeply in negative territory. The Economic Data Change Index is at its lowest level in more than two years, while the Economic Surprise Index is at its lowest level of 2025.

Housing data released Wednesday morning was, in a word, atrocious: mortgage applications fell, and housing starts and building permits for May came in shy of estimates, with a particularly bad reading for new builds.

“Housing starts are running below the level of housing completions. This means that units under construction will continue to decline. That’s all you need to know,” Neil Dutta, head of US economics at Renaissance Macro Research, wrote. “Residential investment will be a drag on growth over the next few quarters. Importantly, builders probably have a bit too many employees given the level of housing activity.”

Now, these Citigroup metrics probably overstate the negatives in the US economy. Surprise indexes follow a typical seasonal pattern and are usually slumping now, and data being worse than a year ago is simply an affirmation that the economy is decelerating. But these are definitely not trends that inspire confidence.