Why are Costco Customers Demanding IEEPA Tariff Refunds?

IEEPA Tariff Refunds

If you’ve noticed your Costco hauls getting a little pricier over the last year due to tariff passthrough, you aren’t alone. But a new legal battle is brewing that asks a multi-billion-dollar question: If a retailer gets a refund for the “illegal” tariff they passed on to you, who actually keeps the cash?

On Wednesday, March 11, 2026, a Costco member in Illinois filed a nationwide class-action lawsuit against the retail giant. The goal? To ensure that any tariff refunds Costco receives from the federal government end up back in the pockets of the shoppers who actually paid for them.


The Backdrop: A Supreme Court Shake-up

The drama started on February 20, 2026, when the U.S. Supreme Court ruled that the sweeping worldwide tariffs imposed last year under the International Emergency Economic Powers Act (IEEPA) were unlawful. The Court found that the executive branch had overstepped its authority, effectively turning roughly $130 billion to $175 billion in collected duties into a massive pot of refundable money.

Immediately, over 2,000 companies—including Costco—filed their own lawsuits against the government to claw that money back.

The Conflict: “Double Recovery” vs. “Better Value”

The new consumer lawsuit, led by plaintiff Matthew Stockov, argues that Costco acted as a “pass-through vehicle.” The logic is simple:

  1. The Hike: Costco raised prices on electronics, household goods, and food to cover the cost of the tariffs.
  2. The Refund: Now that the tariffs are struck down, Costco is suing the government to get that money back.
  3. The “Double Dip”: If Costco keeps the refund and the extra money they already collected from shoppers via higher prices, the lawsuit alleges they are “unjustly enriched” at the expense of their members.

Costco CEO Ron Vachris recently addressed the situation, stating the company’s commitment is to return value to members through “lower prices and better values” in the future.

However, the lawsuit isn’t buying it. The legal team argues that a promise of future discounts for future shoppers doesn’t compensate the specific people who paid the “tariff tax” last year. They want direct restitution.


Is a Refund Actually Coming?

While the Supreme Court ruling is a win for importers, getting cash into the hands of individual shoppers is a legal uphill battle. Here is why:

  • Standing: Under federal trade law, only the “importer of record” (Costco) has the legal right to claim a refund from the government.
  • The Math: Proving exactly how much of a $0.50 price hike on a rotisserie chicken was due to a specific tariff vs. inflation or supply chain issues is a forensic accounting nightmare.
  • The Contract: Legal experts note that when you buy an item, the “contract” is the price on the tag. Retailers generally aren’t legally obligated to refund you if their internal costs go down later.

What’s Next?

Costco isn’t the only one in the crosshairs. Similar suits have been filed against FedEx and EssilorLuxottica (the makers of Ray-Ban).

If the court certifies this as a class action, it could set a massive precedent for how “corporate windfalls” are handled after major policy reversals. For now, Costco members should keep their receipts—and their eyes on the Court of International Trade.

If Costco decides to fight this in court rather than settle, their legal team will likely lean on a defense built around retail economics and contract law.

Here are the four “pillars” of defense they are expected to use:

1. The “Commingled Costs” Argument

Retail pricing isn’t a simple $1+1=2$ equation. When Costco raises the price of a television, that hike accounts for shipping fuel, labor, warehouse rent, insurance, and tariffs. Costco will likely argue that it is mathematically impossible to isolate exactly how many cents of a price increase were “just” for the tariff. Since the costs were commingled, they may argue that specific “tariff surcharges” were never actually charged to the customer.

2. Lack of “Privity” (Direct Relationship)

In trade law, the “Importer of Record” is the only entity with a legal relationship to U.S. Customs.

  • Costco’s stance: We paid the government; the government owes us.
  • The logic: There is no contract between Costco and a member that promises to pass through government refunds. When you buy a jar of almond butter, you agree to the price on the tag at that moment, regardless of Costco’s internal cost fluctuations.

3. The “Future Value” Offset

CEO Ron Vachris has already hinted at this strategy. Costco may argue that they are already fulfilling their duty to members by using anticipated refunds to lower prices across the board today. By proving they are reinvesting the money into “better values,” they can claim they are not being “unjustly enriched”—the core requirement for the plaintiff to win.

4. Administrative Impossibility

Costco has over 130 million members. Tracking every single purchase of tariff-affected goods (from socks to patio furniture) over a multi-year period and issuing individual checks would be an administrative nightmare that could cost more than the refunds themselves. They may argue that a “cy-près” award (like a general price drop or a donation to a relevant cause) is a more legal and practical remedy than individual refunds.


Comparison of Arguments

ArgumentPlaintiff’s View (Shoppers)Defense View (Costco)
EnrichmentCostco gets a “double recovery” (shoppers’ money + gov refund).Costco is a low-margin business that “returns value” via lower future prices.
PricingPrices went up specifically because of tariffs.Prices are set by market competition and total operating costs.
EquityThe specific people who paid the “tax” should get the cash.It is impossible to track individual “tariff cents” per member.

While Costco is currently the primary target of this specific class-action pressure, other major retailers like Walmart and Target are taking noticeably different approaches to the $175 billion tariff refund opportunity.

Here is how the other giants are positioning themselves:

1. Walmart: The “Conservative Pivot”

Walmart has been more cautious in its public statements regarding specific consumer refunds. Instead of promising direct returns, they are focusing on their role as a “price stabilizer.”

  • The Strategy: During their recent February 2026 earnings call, Walmart leadership noted they are using their massive scale to absorb costs. Their official stance is that because they negotiate long-term contracts and used “inventory pull-forward” strategies to avoid the worst of the tariffs, they didn’t pass through costs as directly as others.
  • The Defense: They are positioning any potential refunds as “capital for reinvestment” into their operations and employees, which they argue ultimately benefits customers through lower prices over the long term.

2. Target: The “Supplier Squeeze”

Target’s response has been more aggressive toward its supply chain rather than the federal government.

  • The Strategy: Target made headlines earlier this year by reportedly asking its Chinese suppliers to absorb up to 50% of the tariff costs to keep shelf prices stable.
  • The Stance: Because Target forced suppliers to eat much of the cost, they may argue that they aren’t the ones owed the full refund—or that since they didn’t raise prices as much as competitors, there is no “excess profit” to return to consumers.

3. FedEx & UPS: The “Direct Pass-Through” Exception

Unlike retailers where tariff costs are buried in the price of a gallon of milk, shipping companies like FedEx and UPS often used explicit line-item surcharges labeled as “Tariff Fees.”

  • The Vulnerability: Because these fees were itemized, these companies are facing the most direct legal heat. FedEx has indicated in recent filings that if they receive refunds, they have a framework to pass them back to the original shippers, though the logistics of reaching the end consumer remain a “mess.”

Summary of Retailer Responses

RetailerPublic Stance on RefundsPrimary Defense
Costco“Future value” through lower prices and better deals.Administrative impossibility of tracking individual cents.
WalmartFocused on reinvesting refunds into business operations.Scaled absorption—claims they didn’t pass through 1:1 costs.
TargetSilent on customer refunds; focused on supplier negotiations.Argues suppliers bore the cost burden, not just the retailer.
FedExExploring pass-throughs for itemized surcharges.Contractual obligations to the “shipper of record.”

Why the National Retail Federation (NRF) is Worried

The NRF, which represents all three of these companies, has called for a “seamless and automatic” refund process from the government. However, they are lobbying hard against the idea that retailers must “prove” they passed the money back to consumers, calling such requirements an “accounting nightmare” that would stall the economic boost the refunds are intended to provide.

While the lawsuit filed by Matthew Stockov seeks a blanket refund for “all affected products,” the actual legal battle centers on specific goods that were hit by the International Emergency Economic Powers Act (IEEPA) tariffs.

Because Costco sells such a wide variety of items, the impact is spread across several high-volume categories. Here are the product types most likely to be at the heart of the refund calculations:

1. Electronics and Accessories

This is a massive category for Costco and one of the hardest hit by the reciprocal tariffs.

  • Small Tech: Laptop bags, charging cables, and power banks.
  • Peripherals: Computer mice, keyboards, and monitors.
  • Smart Home: Security cameras and small connected appliances.
  • Note: Some major electronics (like certain computers) were protected under different trade laws, but “intermediate” components and accessories were often taxed at the full IEEPA rate.

2. Home Furnishings and Hard Goods

Furniture retailers have been among the first to join the “refund clamor.”

  • Large Furniture: Sofas, dining sets, and patio furniture.
  • Home Decor: Rugs, textiles, and lighting fixtures.
  • Kitchenware: Cookware sets and small appliances (like air fryers or coffee makers) imported from affected regions.

3. Apparel and Footwear

These items saw some of the most significant price fluctuations over the last 12 months.

  • Clothing: “Fast fashion” items, activewear, and outerwear.
  • Shoes: Sneakers and boots, particularly those where the supply chain relies heavily on international sourcing.

4. Food and Intermediate Packaging

This is the most complex category for Costco to untangle.

  • Imported Specialties: Specific wines, spirits, and olive oils that were subject to geopolitical surcharges.
  • Packaging Costs: Even for “American-made” products, the tariffs often applied to the packaging (plastic containers, coffee filters, or baby wipe canisters) imported from abroad. Proving how a tariff on a plastic tub affected the price of the 5-pound tub of animal crackers is a key hurdle for the lawsuit.

What is NOT Included?

It’s important to note that many items at Costco were taxed under different laws (like Section 232 or Section 301), which the Supreme Court did not strike down. You likely won’t see refunds for:

  • Steel and Aluminum products (including some appliances and car parts).
  • Specific Chinese-made goods covered under long-standing trade war sections.

Summary Table: Refund Potential by Category

Product CategoryRefund PotentialWhy?
Electronics Acc.HighMany were hit with the 2025 “reciprocal” 10-25% tariffs.
FurnitureHighHome goods were a primary target for IEEPA-based levies.
ApparelMediumHigh volume, but often split between different tariff authorities.
GroceriesLowMost food price hikes were tied to inflation/labor, not just tariffs.

Learn how you could obtain some of your IEEPA Tariff Refund early

Contact Factoring Specialist, Chris Lehnes

The Impact of Pump Shock on Small Business

While the macro economy is feeling the “pump shock,” the impact on small business lending and accounts receivable (AR) factoring is more nuanced. For many industries, rising oil prices act as a catalyst for alternative financing, as traditional bank credit tends to tighten just when operational costs spike.

1. Impact on Small Business Lending

Traditional bank lending to small businesses is becoming more restrictive as energy-driven inflation persists.

  • The “Double Squeeze”: Small businesses are facing higher input costs (fuel/transport) alongside high interest rates. Banks, wary of compressed profit margins, are increasing their underwriting scrutiny.
  • The Approval Gap: As of early 2026, large banks are approving only about 68% of small business loans, compared to 82% at smaller, community-focused institutions.
  • Pivot to High-Cost Credit: With traditional loans taking weeks to approve, many businesses are turning to credit cards (averaging 18%–36% interest) to cover immediate fuel and supply chain gaps, significantly increasing their long-term debt burden.

2. The Surge in AR Factoring Demand

In a high-oil-price environment, factoring often shifts from a “last resort” to a strategic cash-flow tool, particularly for energy-intensive sectors.

  • Fuel as a Fixed, Immediate Expense: In industries like trucking and oilfield services, fuel must be paid for daily or weekly, while customers (shippers or large operators) often demand 30- to 90-day payment terms. Factoring bridges this “cash gap” without adding traditional debt to the balance sheet.
  • Sector-Specific Trends:
    • Transportation/Trucking: Factoring companies are seeing record demand. These businesses often enjoy the highest advance rates (90%–97%+) because their invoices are backed by tangible freight delivery.
    • Oilfield Services: As drilling activity ramps up in response to higher prices (especially in the Permian Basin), service providers are using factoring to scale quickly—buying new equipment or meeting surge payroll without waiting for 60-day payouts from major oil producers.
    • Manufacturing: With raw material costs rising alongside energy, manufacturers are factoring invoices to maintain liquidity reserves to buy inventory before prices hike further.

Factoring vs. Traditional Lending in 2026

FeatureTraditional Bank LoanAR Factoring
Approval BasisBusiness credit & historyCustomer (Debtor) credit
Speed of Funding2 – 7 weeks24 – 48 hours
Debt LoadIncreases liability on balance sheetNo new debt (selling an asset)
ScalabilityFixed limitGrows with your sales volume
CostLower interest (6%–12%)Higher fees (1%–5% per 30 days)

Strategic Outlook

For the remainder of 2026, businesses that rely on “floating” cash flow are likely to prioritize speed over cost. While factoring fees are higher than bank interest, the ability to access cash within 24 hours to pay for $4.00/gallon diesel is often the difference between staying operational and grounding a fleet.

In a volatile economy where oil prices are surging and traditional banks are pulling back, choosing the right financing tool is a high-stakes decision. For B2B businesses—especially those in staffing, digital marketing, and manufacturing—the choice often comes down to the speed of Factoring versus the lower cost of a Bank Loan.

Below is a strategic comparison designed to help you evaluate which path aligns with your current cash flow needs.


Factoring vs. Bank Loans: 2026 Strategic Comparison

FeatureAccounts Receivable FactoringTraditional Bank Loan
Speed to CashUltra-Fast: Funds usually arrive within 24–48 hours after invoice setup.Slow: Approval typically takes 30–90 days of underwriting.
Credit FocusThe Debtor: Decisions are based on your customer’s credit and payment history.The Business: Based on your FICO score, tax returns, and years in business.
Balance SheetDebt-Free: It is the sale of an asset (invoices), not a liability.Debt-Heavy: Adds a liability that can impact your debt-to-income ratio.
ScalabilityUnlimited: As your sales grow, your available cash grows automatically.Fixed: You are capped at a set amount and must re-apply to increase it.
Total CostHigher Fees: Usually 1%–5% per 30 days (effective APR is higher).Lower Rates: Typically 6%–12% APR for qualified businesses.
RiskLow: No collateral like your house or equipment is typically required.High: Often requires a blanket lien on assets or personal guarantees.

Export to Sheets


The “Why Now?” Factor: Navigating 2026 Volatility

Pros of Factoring in This Market

  • Immediate Fuel/Supply Buffer: With diesel prices fluctuating, factoring gives you the cash today to buy inventory or fuel before the next price hike.
  • Protects Your Growth: In sectors like digital marketing or staffing, you can’t wait 60 days for a client to pay to meet your weekly payroll. Factoring ensures your team stays paid regardless of when the client cuts the check.
  • No “Covenant” Stress: Bank loans often come with strict “covenants” (rules about your profit margins). If high oil prices temporarily squeeze your margins, a bank might call your loan; a factor simply keeps funding your sales.

Cons to Consider

  • Margin Impact: If your profit margins are already thin (common in food production or distribution), the 1%–3% factoring fee could eat up a significant portion of your net income.
  • Customer Perception: While widely accepted today, some ultra-conservative clients might still prefer to pay you directly rather than a third-party factor.

The Bottom Line

If you have long-term stability and time to wait, a Bank Loan is cheaper. However, if you are growing rapidly or facing unpredictable costs, Factoring acts as a flexible insurance policy for your cash flow.


Contact Factoring Specialist, Chris Lehnes

Unexpected Downturn: US Economy Sheds 92,000 Jobs in February 2026

Economy Sheds 92,000 Jobs

Economy Sheds 92,000 Jobs. The American labor market hit a significant speed bump last month, as the Bureau of Labor Statistics (BLS) reported a loss of 92,000 jobs for February 2026. This unexpected contraction caught economists off guard, as many had projected a modest gain of roughly 60,000 positions.

Coupled with the job losses, the national unemployment rate ticked up to 4.4%, rising from 4.3% in January. While the figure remains low by historical standards, the sudden reversal in momentum has reignited concerns about the underlying health of the economy amidst ongoing geopolitical tensions and domestic labor disputes.


The Numbers at a Glance

The February report was a stark contrast to the start of the year, which initially saw a healthy gain in January. However, even those numbers were revised downward, painting a picture of a job market that is struggling to maintain its footing.

MetricFebruary 2026 DataComparison
Nonfarm Payrolls-92,000Down from +126,000 (revised) in Jan
Unemployment Rate4.4%Up from 4.3%
December Revision-17,000Revised down from +48,000
Labor Force Participation62.0%Lowest level since December 2021

Key Drivers of the Decline

Several factors converged to create the “perfect storm” that led to February’s disappointing figures:

  • Labor Disputes: The healthcare sector, usually a reliable engine of growth, shed 28,000 jobs. Much of this was attributed to a major strike involving over 30,000 workers at Kaiser Permanente in California and Hawaii.
  • Harsh Winter Weather: Severe storms across the country likely hampered hiring in the construction sector, which saw a decline of 11,000 jobs.
  • Sector-Specific Weakness: The Information and Transportation/Warehousing sectors both lost 11,000 jobs, while the Federal Government continued its downward trend, losing 10,000 positions.
  • Geopolitical Uncertainty: The escalation of the conflict in the Middle East has driven up crude oil prices, injecting a new layer of caution into business spending and hiring plans.

“Just when it looked like the labor market was stabilizing, this report delivers a knock-down blow to that view. It’s bad news whichever way you look at it.”

Olu Sonola, Head of U.S. Economics at Fitch Ratings.


Silver Linings and the Path Forward

Despite the gloomy headline, there were a few areas of resilience. Average hourly earnings rose by 0.4% for the month, representing a 3.8% increase year-over-year. This suggests that while hiring has slowed, those currently employed are still seeing wage growth that is largely keeping pace with inflation.

The Federal Reserve now faces a delicate balancing act. While the job losses might typically signal a need for interest rate cuts to stimulate the economy, the surge in energy prices due to the war in Iran keeps the threat of inflation high.

Economists will be looking toward the March report (scheduled for release on April 3rd) to determine if February was a temporary blip caused by weather and strikes, or the start of a more concerning long-term trend.

Contact Factoring Specialist, Chris Lehnes

Mortgage Rates Fall Below 6% for the First Time Since 2022

What It Means for You

Mortgage Rates – The housing market has seen a welcome shift! Mortgage rates have fallen below 6% for the first time since 2022, offering a significant improvement for potential homebuyers. This news comes as a breath of fresh air after a period of steadily climbing rates that have put a strain on many budgets.

What Does This Mean for Potential Homebuyers?

The drop in mortgage rates translates directly into increased affordability for those looking to purchase a home. This can be beneficial in several ways:

  • Lower Monthly Payments: A lower interest rate means a smaller portion of your monthly payment goes towards interest, reducing your overall housing cost.
  • Increased Buying Power: With lower monthly payments, you may be able to qualify for a larger loan amount, potentially allowing you to purchase a more expensive home.
  • Refinancing Opportunities: Existing homeowners who currently have a higher mortgage rate may be able to refinance their loan and save money on their monthly payments.

Why Are Mortgage Rates Falling?

While the exact reasons behind the rate drop are complex, several factors may be contributing to the trend:

  • Lower Inflation: Inflation has shown signs of cooling down, which can influence interest rates.
  • Economic Growth: While economic growth has been moderate, some signs suggest it may be slowing, which can also affect mortgage rates.
  • Changes in the Bond Market: Bond yields, which are closely tied to mortgage rates, have also seen a decline.

What Should You Do Now?

If you’ve been on the fence about buying a home, this could be an excellent time to re-evaluate your options. Here are some steps to consider:

  • Get Pre-Approved for a Mortgage: This will give you a clear idea of how much you can borrow and help you understand your monthly payment.
  • Shop Around for Rates: Different lenders offer varying rates, so it’s essential to compare offers from multiple institutions.
  • Consider Your Long-Term Goals: While the lower rates are attractive, it’s crucial to ensure that buying a home is the right decision for your long-term financial goals.

Important Note: It’s important to remember that mortgage rates are subject to change based on economic conditions and other factors. While the current trend is encouraging, it’s essential to stay informed about any potential shifts in the market.

Conclusion:

The drop in mortgage rates below 6% is a significant development for the housing market, offering some much-needed relief to potential homebuyers and homeowners alike. If you’ve been considering buying a home, this could be the right time to take action. With lower monthly payments and increased buying power, you may be closer to achieving your homeownership goals than you thought. However, it’s crucial to act carefully and seek professional advice to make the best decision for your individual situation.

Primary Data Sources

  • Freddie Mac (Primary Mortgage Market Survey): The ultimate source for the 5.98% figure. Freddie Mac released its weekly report on February 26, 2026, confirming that the 30-year fixed-rate mortgage dipped below 6% for the first time in approximately 3.5 years.
  • The Federal Reserve (FRED): Used to verify historical trends, specifically confirming that the last time rates were at this level was September 8, 2022 (when they were 5.89%).

News and Analysis Sources


Mortgage rates in 2026 forecast This video provides expert analysis on how these sub-6% rates impact monthly affordability and what to expect for the rest of the 2026 housing market

The Hold-Out is Over: Companies Are Raising Prices Again

Prices are going up…

Remember that brief sigh of relief? The one where it felt like maybe, just maybe, the relentless march of price increases was slowing down? Well, if you’ve been to the grocery store, filled up your gas tank, or even just browsed online recently, you’ve probably noticed it: the break is over. Companies are jacking up prices again, and consumers are once again feeling the pinch.

For a while, many economists and analysts pointed to easing supply chain issues, stabilizing energy costs, and even a slight dip in consumer demand as potential signals that inflation was cooling. Some businesses even held the line on prices, perhaps hoping to retain market share or out of a genuine desire to give their customers a break.

But those days seem to be largely behind us. We’re seeing a resurgence in price hikes across a wide array of sectors. From everyday necessities to discretionary items, the numbers on the tags are climbing.

What’s Driving This Latest Surge?

Several factors are likely contributing to this renewed upward trend:

  • Persistent Input Costs: While some raw material costs have stabilized, others continue to be elevated. Labor costs are also a significant factor, with many businesses facing pressure to offer higher wages to attract and retain employees. These increased operational expenses often get passed on to the consumer.
  • Strong Consumer Demand (Still): Despite earlier predictions of a significant slowdown, consumer demand has proven remarkably resilient in many areas. When demand remains high, businesses have less incentive to lower prices and more leeway to raise them.
  • “Catch-Up” Pricing: Some companies might feel they absorbed increased costs for a period and are now playing catch-up, adjusting prices to reflect their sustained operational expenses.
  • Geopolitical Factors: Global events continue to create volatility in commodity markets, particularly for energy and certain raw materials, which inevitably impacts production and transportation costs.
  • Profit Margins: Let’s be honest, businesses are in the business of making a profit. If they perceive an opportunity to increase their margins without significantly impacting sales volume, many will take it.

What Does This Mean for You?

For the average household, this renewed wave of price increases means a continued squeeze on budgets. Discretionary spending may need to be curtailed further, and even essential purchases will require more careful planning. Savings might deplete faster, and the goal of financial stability could feel increasingly distant.

How Can Consumers Cope?

While we can’t control the broader economic forces at play, there are strategies consumers can employ to mitigate the impact:

  • Become a Savvy Shopper: Compare prices diligently, look for sales and discounts, and consider generic or store-brand alternatives.
  • Budgeting is Key: Revisit your budget and identify areas where you can cut back. Track your spending to understand exactly where your money is going.
  • Prioritize Needs vs. Wants: Distinguish between essential purchases and items that can be deferred or eliminated.
  • Support Local (Where Affordable): Sometimes local businesses, with lower overheads, can offer competitive pricing, or at least you’re supporting your community.
  • Advocate for Yourself: When possible, negotiate prices for services, or look for loyalty programs that offer discounts.

The “break” from rising prices was indeed short-lived. As companies continue to adjust their pricing strategies, it’s more important than ever for consumers to be vigilant, adapt their spending habits, and advocate for their financial well-being.

Contact Factoring Specialist, Chris Lehnes

German Factory Orders Unexpectedly Soar

Frankfurt, Germany:

In a surprising turn of events, German factory orders in have shown an unexpected and robust surge, signaling a potentially stronger-than-anticipated rebound in the nation’s industrial sector. This latest data has instilled a renewed sense of optimism among economists and policymakers, suggesting that Europe’s largest economy might be on a more solid recovery path than previously estimated.

The Federal Statistical Office announced this morning that new factory orders jumped by a significant margin in the past month, far exceeding analyst expectations. This remarkable uptick follows a period of cautious growth and even some contractions, making the current surge all the more impactful. The increase was broad-based, with both domestic and international orders contributing substantially to the overall rise.

A Deeper Dive into the Numbers

The reported increase in orders was particularly driven by strong demand for capital goods, indicating that businesses are investing more in machinery and equipment – a key indicator of future production capacity and confidence. Intermediate goods also saw a healthy boost, suggesting renewed activity across various supply chains.

Economists are pointing to several factors contributing to this positive development. A resilient global demand, particularly from key trading partners, appears to be playing a significant role. Furthermore, a gradual easing of supply chain bottlenecks, which have plagued manufacturers for months, is allowing companies to fulfill orders more efficiently and take on new business.

Impact on the Broader Economy

This unexpected surge in factory orders is a shot in the arm for the German economy, which has been grappling with persistent inflation and the lingering effects of global uncertainties. A strong industrial sector is crucial for Germany’s economic health, as it is a major employer and a significant contributor to GDP. The improved outlook could lead to increased hiring, higher wages, and ultimately, stronger consumer spending.

Contact Factoring Specialist, Chris Lehnes

U.S. Inflation Shows Promising Easing at the Start of the Year

2.4% rate is lower than expected

The latest economic data brings a sigh of relief for consumers and policymakers alike, as U.S. inflation has shown a more significant easing than anticipated at the beginning of the year. This positive development suggests that efforts to tame rising prices may be gaining traction, offering a glimmer of hope for greater economic stability in the months to come.

For much of the past year, inflation has been a persistent headwind, impacting everything from grocery bills to housing costs. The robust labor market, while a sign of economic strength, also contributed to upward price pressures. However, recent reports indicate a potential shift in this trend.

Several factors appear to be contributing to this welcome slowdown. Supply chain disruptions, which were a major catalyst for price increases, have largely improved. This has allowed for a more consistent flow of goods, reducing bottlenecks and associated costs. Additionally, the Federal Reserve’s aggressive monetary policy, including multiple interest rate hikes, seems to be having its intended effect of cooling demand and reining in inflationary expectations.

While the easing of inflation is certainly good news, it’s important to maintain a balanced perspective. The economy is a complex system, and various forces are constantly at play. Energy prices, geopolitical events, and shifts in consumer spending habits can all influence the trajectory of inflation. Therefore, continuous monitoring and adaptive policymaking will remain crucial.

What does this mean for the average American? For starters, it could translate into less pressure on household budgets over time. If the trend continues, we might see more stable prices for everyday goods and services, allowing purchasing power to stretch further. It also provides the Federal Reserve with more flexibility in its future policy decisions, potentially reducing the need for further aggressive rate hikes.

The journey to sustained price stability is an ongoing one, but the early signs from this year are undoubtedly encouraging. It’s a testament to the resilience of the U.S. economy and the effectiveness of concerted efforts to address inflationary pressures. As we move further into the year, economists and consumers alike will be watching closely to see if this promising trend continues, paving the way for a more predictable and stable economic environment.

Contact Factoring Specialist, Chris Lehnes

Home Sales Take a January Dip: What Does It Mean for the Market?

Home Sales Take a January Dip: What Does It Mean for the Market?

The housing market, often a dynamic and unpredictable beast, just delivered a notable headline: home sales in January experienced their most significant monthly decline in nearly four years. This news might spark a bit of anxiety for some, and perhaps a glimmer of hope for others. But what’s truly behind this downturn, and what could it signal for the months ahead?

According to recent reports, the seasonally adjusted annual rate of existing home sales saw a substantial drop last month. This marks a notable shift after a period where the market showed some signs of stabilizing, or even modest recovery, in late 2023.

What’s Driving the Decline?

Several factors are likely at play in this January slump:

  • Mortgage Rate Volatility: While rates have come down from their peaks, they’ve also experienced some upward swings, creating uncertainty for prospective buyers. Higher rates directly impact affordability, pushing some buyers to the sidelines.
  • Persistent Inventory Shortages: Despite the dip in sales, the fundamental issue of low housing inventory remains a significant challenge in many areas. Fewer homes on the market mean less choice for buyers, and can still keep prices elevated, even with softening demand.
  • Seasonal Slowdown (Exacerbated): January is typically a slower month for real estate activity due to holidays and winter weather. However, the magnitude of this decline suggests more than just a typical seasonal lull. It could indicate that underlying market pressures are intensifying.
  • Affordability Challenges: The combination of elevated home prices and higher interest rates continues to stretch buyer budgets thin. For many, especially first-time homebuyers, the dream of homeownership remains a distant one.
  • Economic Uncertainty: Broader economic concerns, even if subtle, can influence consumer confidence. Worries about inflation, job security, or a potential recession can lead people to postpone major financial decisions like buying a home.

Is This the Start of a Larger Trend?

It’s crucial not to jump to conclusions based on a single month’s data. Real estate markets are complex and influenced by numerous variables. However, a decline of this magnitude certainly warrants close attention.

  • Potential for Price Adjustments: A sustained drop in demand, particularly if inventory levels begin to rise, could eventually lead to more significant price corrections in some markets. Buyers who have been waiting for prices to come down might see this as a positive sign.
  • Opportunity for Buyers? For those who are financially secure and ready to buy, a less competitive market could present opportunities. Fewer bidding wars and potentially more negotiating power could be on the horizon if the trend continues.
  • Impact on Sellers: Sellers might need to adjust their expectations. Pricing strategically and ensuring homes are in top condition will become even more critical in a market where buyers have more leverage.

Looking Ahead

The coming months will be telling. We’ll need to watch several key indicators:

  • Mortgage Rate Movements: Any significant and sustained drop in interest rates would likely bring buyers back into the market.
  • Inventory Levels: A notable increase in homes for sale would help alleviate pressure and potentially lead to more balanced market conditions.
  • Economic Data: Broader economic health, including inflation and employment figures, will continue to play a role in consumer confidence and housing demand.

While January’s numbers present a cautious start to the year for the housing market, they also highlight the ongoing adjustments and recalibrations happening. Whether this dip is a temporary blip or a harbinger of more significant changes remains to be seen, but it’s a clear reminder that the real estate landscape is always evolving.

Contact Factoring Specialist, Chris Lehnes

Survey: 89% of Middle Market Execs Optimistic About 2026

The results of recent surveys, most notably the Capital One Middle Market Strategic Investments report, have sent a ripple of confidence through the business community: 89% of middle-market companies are optimistic about their growth in 2026.

For those who track the “engine room” of the U.S. economy, this isn’t just a number—it’s a signal of a major strategic pivot. After years of playing defense against inflation and supply chain “whack-a-mole,” the middle market is moving back to offense.

Here is my take on why the “Mighty Middle” is feeling so bullish and what this means for the year ahead.


1. The “Big Beautiful Bill” Effect

A significant driver of this 89% figure is the One Big Beautiful Bill Act (OBBBA) passed in late 2025. Middle-market leaders aren’t just aware of the policy; they are already building it into their spreadsheets.

  • Tax Certainty: By codifying full expensing of capital expenditures and maintaining the 21% corporate tax rate, the bill has removed the “wait and see” hurdle that often stalls big investments.
  • Cash Flow: 59% of companies expect improved cash flow through these incentives, giving them the “dry powder” needed to expand.

2. AI: From “Hype” to “Help”

In 2024 and 2025, AI was a buzzword. In 2026, it’s a budget line item.

  • Operational Efficiency: 66% of middle-market businesses are prioritizing AI investment, not to replace humans, but to solve the persistent labor crunch.
  • ROI Focus: Unlike the “growth at all costs” tech era, middle-market firms are looking for AI to deliver specific returns—29% expect AI to be their highest-yielding investment this year.

3. Resilience Through “Alternate” Means

What I find most fascinating is the evolution of middle-market financing. With traditional bank lending remaining tight, 50% of these companies are now pursuing alternate financing, specifically private credit.

The Takeaway: Middle-market companies are no longer at the mercy of traditional interest rate cycles. They have diversified their “oxygen supply” (capital), allowing them to stay optimistic even when the Fed is being cautious.

4. The M&A “Spring”

After a multi-year slumber, deal-making is waking up. Nearly 44% of middle-market firms intend to pursue acquisitions in 2026. This suggests that the optimism isn’t just about internal growth; it’s about consolidation and picking up smaller players who may not have the scale to handle 2026’s regulatory and technological demands.


The Bottom Line: Execution is the New Strategy

The 89% optimism rate doesn’t mean the road is easy. Leaders are still citing inflation (97%) and tariffs as major headaches. However, the difference in 2026 is preparedness.

Middle-market companies have spent the last two years “stress-testing” their models. They are leaner, more tech-forward, and more agile than they were pre-2020. If 89% of them believe they can win this year, the rest of the market should probably pay attention.

The “Mighty Middle” is playing offense in 2026. 🚀

The numbers are in, and they are striking: 89% of middle-market companies are officially optimistic about their growth this year.

After years of navigating the “whack-a-mole” challenges of inflation and supply chain disruptions, we are seeing a massive strategic pivot. Middle-market leaders aren’t just surviving; they are scaling.

Why the surge in confidence?

  • The OBBBA Effect: Tax certainty and full expensing are providing the “dry powder” needed for major capital investments.
  • AI Integration: We’ve moved past the hype. Companies are now budgeting for AI to solve real-world labor shortages and drive operational efficiency.
  • Alternative Financing: With traditional bank lending remaining tight, the shift toward private credit and alternative capital sources is keeping growth on track.
  • M&A Resurgence: Nearly 44% of these firms are looking to acquire, signaling a year of consolidation and expansion.

The bottom line? These companies have “stress-tested” their models for two years. They are leaner, tech-forward, and ready to win.

Is the Middle Market the new economic bellwether for 2026? 📈

The data is hard to ignore: 89% of middle-market firms are entering 2026 with high optimism. This isn’t just “wishful thinking”—it’s a calculated response to a shifting fiscal and technological landscape.

Here are the four pillars driving this confidence:

  1. Fiscal tailwinds: The One Big Beautiful Bill Act (OBBBA) has finally provided the tax certainty and full-expensing incentives required to move “wait-and-see” capital into active deployments.
  2. Maturity in AI adoption: We have moved beyond the “hype cycle.” 66% of mid-cap leaders are now prioritizing AI as a tool for operational leverage, specifically targeting persistent labor bottlenecks.
  3. The Rise of Alternative Credit: As traditional bank lending remains constrained, the pivot toward private credit and specialized liquidity solutions has decoupled middle-market growth from traditional interest rate volatility.
  4. Strategic Consolidation: With 44% of firms pursuing M&A, we are entering a period of significant market “up-tiering.”

The “Mighty Middle” has spent the last 24 months stress-testing their balance sheets. In 2026, they aren’t just defending their position—they are expanding it.

Contact Factoring Specialist, Chris Lehnes

Factoring: Funding the Energy Industry

Our Accounts Receivable Factoring program can quickly meet the working capital needs of businesses in the energy industry.

Versant’s underwriting focus is solely on the quality of a company’s accounts receivable, which enables us to rapidly fund businesses which do not qualify for traditional lending.

Factoring Program Overview

  • $100,000 to $30 Million
  • Non-recourse
  • Flexible Term
  • Ideal for B2B or B2G

We fund challenging deals:

  • Start-ups
  • Losses
  • Highly Leveraged
  • Customer Concentrations
  • Weak Personal Credit
  • Character Issues

In about a week, we can advance against accounts receivable to qualified manufacturers, distributors or service providers in the energy sector.

Contact me today to learn if your client could benefit.