Holiday gatherings often double as informal economic roundtables, and this year is likely to be no exception. In a recent note, Bank of America analyst Aditya Bhave cautioned that the dinner table may feature plenty of “cold weather [and] heated debates,” as relatives probe into inflation, housing, jobs, and the Federal Reserve.
To help defuse the tension, the bank assembled “10 questions you might get asked,” along with suggested ways to respond.
When it comes to prices, Bank of America doesn’t sugarcoat the situation: “Inflation is running at nearly 3%,” and “tariffs are one reason why your holiday budget won’t go as far this year.” Even though some items — like clothing and computers — cost less than they did a year ago, the bank adds a reality check: “I’m not sure you’ll be too happy when you go to pay your credit card bills.”
Housing isn’t expected to ease the pressure either. According to BofA, “housing affordability remains a major problem because both mortgage rates and home prices are very elevated,” noting 30-year mortgage rates sit near 6.4% while home prices remain “around 16% above their pre-pandemic trend.” The median first-time buyer is now 40 — an “all-time high.”
Family members wondering why the Fed isn’t cutting rates faster may be reminded that “if the Fed cuts rates too much, the economy could over-heat.” The bank also emphasizes that mortgage rates are more closely tied to the 10-year Treasury yield than to the Fed funds rate, and overly aggressive cuts could actually push long-term yields higher.
Even with a softening labor market, BofA describes today’s landscape as a “K-shaped” economy: AI enthusiasm continues to lift tech stocks, and higher-income households are still spending steadily. When the topic turns to artificial intelligence, Bhave suggests explaining that data centers are “the poster child of the AI boom,” with investment in hardware, software, and infrastructure providing meaningful support to economic activity.
Looking toward 2026, Bank of America keeps a cautiously positive tone: “We are optimistic on US growth for next year,” citing supportive fiscal policy, looser financial conditions, and ongoing AI-driven investment.