Dr. Chris Kuehl breaks down the latest Fed Forecast, explaining what changing rates and inventory trends mean for your integration business.
When it comes to the economy, everyone is looking for clarity. But the message is often far from clear. What’s driving growth? What’s happening with inflation? What will the Fed do next?
That’s why we rely on NSCA Chief Economic Dr. Chris Kuehl and his team: for straightforward analysis that cuts through the noise.
While we typically reserve most of their analysis for subscribers, the team made a few standout observations that we want to share with all our members.
Mixed Messages on Interest Rates
In September 2025, the quarter-point rate cut was expected, but reasoning behind the move raised some eyebrows. The Fed cited weakening labor conditions as justification, yet unemployment forecasts remain unchanged through 2027.
For integrators that are working to manage project pipelines and client expectations, these mixed messages can impact future planning.
Specifically,Dr. Kuehl outlines several notable shifts in the Fed’s outlook:
- GDP growth for 2025 was nudged up from 1.4% to 1.6%, well below the Atlanta Fed’s 3.3% projection
- Inflation is expected to remain at 3% in 2025, with tariffs driving extended pressure into 2026 before reaching the 2% target in 2027
- Rate cuts will be slow and limited, with two more likely in 2025, one in 2026, and one in 2027
- The long-term “terminal rate” is holding steady at 3%, dashing hopes for a return to a range of 2% to 2.5%
For integrators and their clients, this means borrowing costs will stay higher than expected. Hesitation around new investments is also likely to continue.
Inventory-to-Sales Ratio: A Metric to Watch
Dr. Kuehl’s insights also point to inventory-to-sales ratio (ISR) as a key indicator shaping what’s ahead. ISR reveals whether companies are overstocked or balanced. When inventories run high relative to sales, reorders stop. The slowdown ripples through transportation, distribution, and manufacturing.
Since 2023, this has fueled a quiet recession across much of the supply chain. The origins trace back to over-ordering in 2021 and 2022, plus the uncertainty added by the war in Ukraine. Even as retail and business consumption remained steady, bloated inventories stalled new activity.
Today, the ISR trend line looks more promising:
- Excess inventory is steadily working down
- Tariff concerns haven’t led to a return of panic-stocking
- Supply chain activity may finally begin to normalize as ratios even out
As rates soften slowly, creating modest shifts in financing conditions, ISR improvements suggest gradual reacceleration in industries that are connected to integrators’ work.
That translates to a few key realities:
- Financing conditions still matter. Lower rates help, but borrowing will continue to be more expensive than in past years.
- Client industries are stabilizing. Manufacturing, logistics, and distribution are moving past inventory troubles, which could mean steadier demand for integration projects.
- Uncertainty isn’t gone. Confusion at the Fed, coupled with uneven global signals, makes it important to stay flexible and prepare for multiple scenarios.
Stay Ahead with Member-Only Insights
Dr. Kuehl’s regulatory industry analysis connects economic shifts to the challenges and opportunities that integrators face. And, as an NSCA member, you can receive these insights in your inbox for only $15 per month to help you make smarter, faster business decisions with confidence.
With insights from Dr. Chris Kuehl delivered straight to you, you’ll be better positioned to find clarity in the noise and plan for what’s next.
His team monitors a series of trigger events, getting well in front of market shifts, and reports it to you, giving you time to react and position your business for success.
