By Marcelle Dibrell

Ahead of its regularly scheduled December committee meeting, the Federal Reserve is facing mounting pressure to cut interest rates, driven by political pressure, signs of a slowing labor market, market expectations, and mixed economic data. For the pool and spa industry, the Fed’s rate decision could have direct implications on the 2026 build season.

On December 10, the Federal Reserve is scheduled to announce its next interest rate decision, with many anticipating a rate cut, although the recent government shutdown has complicated its analysis of the latest jobs and inflation numbers.

The official September 2025 jobs report, released November 20 by the U.S. Bureau of Labor Statistics (BLS) showed that job growth was better than expected, with 119,000 new jobs added — the strongest gains since April. Meanwhile, the unemployment rate rose to 4.4 percent, its highest level in four years, as roughly half a million people reentered the labor force.

The latest official data also shows that construction employment increased by 19,000 jobs in September 2025, reaching approximately 8.3 million employees. This was a sharp turnaround from a decline of 7,000 jobs in August and suggests that employers are still hiring and demand for construction projects remains fairly strong. The overall construction unemployment rate was 3.8 percent in September — generally considered low and healthy — indicating that most people seeking construction work are finding it.

That said, for swimming pool builders, recent construction employment data presents a mixed outlook. Residential specialty trade contractors saw a modest decline of 800 jobs, a direct indicator of a slowdown in the housing market and related projects. The numbers signal that homeowners remain cautious about big-ticket, discretionary projects like new pools. Although the Fed recently cut interest rates (the October 29 quarter-point cut brought the federal funds target down to 3.75–4.00 percent), rates remain high enough to make financing new pools expensive. That has discouraged some homeowners from taking on large projects now, and some are holding off in hopes of better rates in the future.

The picture is murkier still for the pool and spa service and repair sector. The BLS does not provide a category specific to this niche industry, grouping it instead within “other services to buildings and dwellings,” a broad category that includes chimney, ventilation duct, gutter, and drain cleaning services in addition to other property maintenance trades. For this category, the BLS reports little or no change over the month, confirming the trend that repair and maintenance businesses remain steady and resilient even when pool construction slows.

Taken together with recent upticks in inflation, the September jobs report gives the Fed a mixed bag as it weighs whether to lower interest rates again.

For many consumers, lower interest rates would be good news, making credit cards, auto loans, and home improvements cheaper. And for the pool and spa industry — where interest rates, home values, and housing activity tend to move together — another rate cut would almost certainly help spark a new wave of pool and spa construction.

A recent PBS NewsHour interview with Austan Goolsbee, president of the Chicago Federal Reserve, sheds light on the Fed’s current thinking.

One of the biggest concerns he raised relates to fresh anxiety over whether the surge in AI investment is becoming a bubble — meaning investors are pouring money into the new technology so enthusiastically that company valuations far exceed what underlying profits can justify. Some economists worry that too much of the broader economy is leaning on AI-linked gains.

What’s a bubble? To understand what a bubble looks like, imagine a pool company that raises prices because everyone in town suddenly wants a pool — not because of real demand, but because of hype. Soon:

• More pool companies open.

• Investors pile into pool equipment companies.

• Prices rise simply because everyone expects big profits.

But then demand slows, projects get delayed, and funding dries up — and the price of all those companies collapses. That collapse is the bubble popping.

According to Goolsbee, it’s a valid concern because the current period feels reminiscent of the dot-com bubble of the late 1990s. If today’s AI boom is in fact a bubble, a future collapse could once again trigger recession, as similar episodes have done in the past.

Today,AI companies are raising vast sums of money, receiving enormous valuations despite inconsistent profits, and both major tech firms and startups are racing to stake out their position. The scale of investment may be unrealistic in the short term, which means that when the dust clears, the strongest companies will survive, weaker ones will disappear, investors will lose money, and the rest of the country will hear about “the AI crash.”

If AI is becoming a bubble, the Federal Reserve does not want to make it worse — and lowering interest rates too aggressively could do exactly that. “Very low interest rates in the face of a bubble threaten to fuel it, so it’s something I’m monitoring,” Goolsbee said.

He also emphasized that the Fed should not lower rates prematurely when inflation remains uncertain. The BLS jobs report shows stable employment, but the report arrived seven weeks late due to the shutdown, complicating the Fed’s ability to get an up-to-date read on the economy. Getting a read on inflation, Goolsbee said, is even harder.

The Fed targets a 2-percent longrun average inflation rate, using the Personal Consumption Expenditures (PCE) index as its preferred measure. The latest PCE data from August 2025 showed inflation running at 2.7 percent, still above target. Lowering interest rates generally pushes inflation upward, and the Fed does not want to reignite price increases.

“With stable employment, if we can get back on a path to 2-percent inflation and get past this uptick we’re seeing, I think rates can go down a fair amount from where they are now,” Goolsbee said.

If there is takeaway for the pool and spa industry, it’s that the Fed’s December announcement won’t determine 2026 on its own. A rate cut would loosen the gears of consumer spending and help revive new construction, but steady rates wouldn’t freeze the industry either. Service and repair work remains resilient, even in high-rate environments, and builders have weathered slowdowns before.

What matters most may be the direction consumers sense — whether the economy feels like it’s stabilizing or drifting into another uncertain year. For now, the Fed’s decision is just one signal in a landscape where confidence, not the rate itself, may end up steering the season ahead.