Growth is still solid and jobs are steady, but prices are picking up again, so interest rates are staying high.
The economy is still growing at about 2.7%, unemployment is 4.3%, prices are heating up again, and the Fed is holding rates near 3.6%. The big picture barely changed this week because growth was flat, but faster price gains could keep borrowing costs higher for longer. What is holding things steady is the job market: layoffs are still low, and oil-shipping worries matter only if they push gas prices up for long. The next big thing to watch is the Consumer Price Index, the main measure of how much prices are going up. Not investment advice.
The biggest moves in the numbers we watch since our last update.
GDP, Gross Domestic Product, the total value of everything the US economy produces, grew at a 2.0% annual rate in the Advance estimate. Higher oil prices and possible new auto tariffs could raise costs and slow spending by families and businesses. Watch the next GDP revision; a meaningful cut would suggest growth was weaker than first reported.
GDP, Gross Domestic Product, the total value of everything the US economy produces, grew at a 2.0% annual rate in the Advance estimate. Higher oil prices and possible new auto tariffs could raise costs and slow spending by families and businesses. Watch the next GDP revision; a meaningful cut would suggest growth was weaker than first reported.
PCE, Personal Consumption Expenditures, rose 3.2% compared to the same time last year, cooler than 3.27% expected but up from 2.83% in February. Trouble around the Strait of Hormuz and possible new car tariffs could raise gas, shipping, and vehicle costs. Watch Core CPI, CPI without food and energy, next; another reading above 3% would mean price pressure is building again.
Initial claims, the number of people who filed for unemployment benefits for the first time that week, were 203,250 after 207,750 the week before. That suggests layoffs are still fairly low, even with unemployment at 4.3%. Watch the monthly jobs report; a clear rise in unemployment would mean the job market is softening.
Market risk looks elevated even though the basic signal is steady, with the gap between 2-year and 10-year Treasury rates at 49 basis points, one hundredth of a percentage point. Trouble around oil shipping routes, attacks on Russian oil sites, and tariff threats could raise prices and make markets more jumpy. Watch oil prices and Treasury moves next; a sharp jump would signal investors are getting more worried.
The Fed, the US central bank, held its target range, the range it wants the Fed funds rate to stay inside, at 3.63%, in line with expectations. News of a possible leadership shake-up could make rate plans less clear, which matters for mortgages, car loans, and savings rates. Watch the next Fed meeting; any signal that cuts are delayed would mean borrowing costs may stay high longer.
Risk cooled from prior escalation, but remained elevated on Hormuz disruption warnings, a 25% EU auto tariff threat, and Ukraine strikes on Russian oil targets.
Jobless Claims: 203,250.00 (no pre-release consensus available).
GDP: 2.00 (no pre-release consensus available).
PCE below estimate: actual 3.20 vs 3.27.
Jobless Claims: 207,750.00 (no pre-release consensus available).
The week's events, lined up with how they likely affected the economy.
Trouble around the Strait of Hormuz could push up oil and gas prices, which may raise costs for drivers, shoppers, and investors soon.
If prices stay high while growth slows, people may face higher living costs, weaker job growth, and bumpier markets.
A surprise change at the Federal Reserve, the US central bank, could make markets jumpy because interest rate plans may be less clear.
A possible 25% tariff on cars from Europe could make some vehicles and parts cost more, and it could unsettle markets for a while.
Attacks on Russian oil sites could push up oil and gasoline prices soon, which may raise costs for families and make markets more nervous.
The 11 main US stock market industries, plotted by whether the economy is helping or hurting them, and how the industry itself is doing. Click any industry for details.
Each force, where it stands today, which way it's headed, and the data behind it.
GDP nowcast: 2.66% SAAR
GDP nowcast for the current quarter is 2.66% QoQ SAAR; latest realized GDP is 2.00% QoQ SAAR and 2.66% YoY.
Core CPI: 2.60% YoY; 3m trend: 4.79%
Core inflation is 2.60% YoY with a 3m annualized trend of 4.79% (momentum gap 2.19 ppts).
Unemployment: 4.3%; claims 4wma: 203,250
Unemployment rate is 4.3% (YoY change +0.10 ppts); initial claims 4wma 203,250.
Policy mid: 3.625%; gap: 0.245 ppts
Policy midpoint is 3.625% with a 30-day change of +0.000 ppts; market rate gap (2Y minus policy) is 0.245 ppts.
2s10s: 49.0 bps
The 2s10s yield spread is 49.0 bps and the curve is normal.
Things that could change our view of the economy before next week's update.
The big picture changes fastest if the next inflation report breaks the recent hot trend. Inflation is the closest thing to a turning point because recent price momentum is running much faster than the yearly pace, while growth and jobs still look steady.
CPI, the Consumer Price Index, the main measure of how much prices are going up, is the clearest near-term swing point. If core CPI stays near the recent 3-month pace of 4.79% per year, rate cuts could get pushed back and borrowing costs could stay high longer.
If the next CPI report comes in clearly cooler, it would ease fears that price growth is heating up again. That would lower the chance of delayed rate cuts and help mortgage, car loan, and credit card outlooks.
Warnings around the Strait of Hormuz and attacks on Russian oil sites could push oil higher fast. If that happens, gas and shipping costs could rise, and that can feed into the next few inflation reports.
Initial claims, the number of people who filed for unemployment benefits for the first time that week, are still low at a 4-week average of 203,250. If claims stay near this level, it would signal firms are still holding onto workers, which can keep spending and price pressure firm.
If jobless claims move up for several weeks from the current low level, it would be an early sign that hiring and paychecks are losing strength. That would cool spending and lower pressure on the Federal Reserve, the US central bank, to keep rates high.
Talk of a surprise leadership change at the Fed could make investors less sure about future rate decisions. That could move bond yields and stock prices even before the Fed changes any policy.
Inflation is the main pressure point now because recent core price growth is running much hotter than the yearly reading.
A much hotter report would raise the odds of rates staying high longer, while a cooler report would ease that pressure fast.
Claims are still low, so this report tests whether the job market is staying firm despite high rates.
A sharp jump would hint that job losses are starting to build, while another low reading would support steady growth and firm spending.
A second weekly claims report matters because one jump can be noise, but two weeks can show a real shift.
Another high reading after a weak week would strengthen slowdown worries, while back-to-back low readings would support the view that jobs remain stable.
This scenario is closest because core CPI is 2.60% compared to the same time last year, but the 3-month pace is much hotter at 4.79% per year. One more firm CPI report would make the recent inflation rebound harder to dismiss.
Confidence is medium because growth and labor data look steady, but the outlook depends heavily on the next CPI report and oil news.
A look back at how our view of the economy has shifted week by week.
GDP, Gross Domestic Product, the total value of everything the US economy produces, grew at a 2.0% annual rate in the Advance estimate. Higher oil prices and possible new auto tariffs could raise costs and slow spending by families and businesses. Watch the next GDP revision; a meaningful cut would suggest growth was weaker than first reported.
GDP, Gross Domestic Product, the total value of everything the US economy produces, grew at a 2.0% annual rate in the Advance estimate. Oil above $120 a barrel could raise business costs and leave people with less money to spend elsewhere. Watch the next GDP estimate; a downward revision would suggest growth was weaker than first reported.
Growth looks weak, with Real GDP, GDP after adjusting for inflation, running at 0.50% QoQ SAAR, compared to last quarter at an annual rate. Higher oil prices from the Iran conflict could squeeze household budgets and leave people with less money to spend. Watch the next GDP update or consumer spending report: a further slowdown would show the economy is losing momentum.
GDP, Gross Domestic Product, the total value of everything the US economy produces, was revised down from 0.7% to 0.5% in the Third estimate. War-driven oil supply risks could raise fuel costs and leave people with less money to spend elsewhere. Watch the next GDP update or spending data; weaker numbers would confirm the economy is losing speed.
Real GDP, Gross Domestic Product after adjusting for inflation, was revised down to 0.5% in the third estimate from 0.7% in the second estimate. Higher oil prices can squeeze family budgets and business costs, which can slow spending. Next, watch the next GDP estimate or retail sales; weaker numbers would confirm the economy is losing speed.
Growth is slowing, with realized GDP running at 0.70% quarter-over-quarter SAAR, pointing to a materially softer expansion backdrop. The oil shock tied to Middle East escalation acts as a tax on consumers and businesses, threatening demand through weaker real incomes, lower confidence, and tighter financial conditions. Watch the next GDP estimate and incoming activity data; a further downgrade or continued sub-1% growth would strengthen the case that the economy is losing momentum.