Growth is slowing, prices are picking up again, and steady interest rates could stay high longer if inflation does not ease.
The economy is losing speed, prices are heating up again, jobs still look steady, and the Federal Reserve, the US central bank, is holding rates near 3.6%. Growth softened this week, and that matters because weak growth with faster inflation can keep borrowing costs high longer; war-driven oil risk could also lift gas bills. Things are not shifting harder because the job market is still holding up, with unemployment at 4.3% and few new layoffs. The next big thing to watch is the next inflation report, especially CPI, 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, 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.
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.
CPI, Consumer Price Index, the main measure of how much prices are going up, rose 3.29% compared to the same time last year, cooler than 3.56% expected but up from 2.43% in February. Oil shock headlines matter because higher crude prices can raise gasoline and heating bills for families. Watch the next CPI report; if core prices stay near a 4.79% three-month pace, inflation would look like it is heating up again.
The job market still looks balanced, with initial claims, the number of people filing for unemployment benefits for the first time, at 209,750 after 209,250 the week before. That steady level suggests layoffs are not rising much right now. Watch the next unemployment rate report; a clear rise above 4.3% would signal the job market is weakening.
Market stress looks elevated even though the yield curve, the line showing interest rates for US government bonds of different lengths, is at a normal 53.0 basis points, one hundredth of a percentage point. Oil shock and war headlines matter because they can raise gas prices and push investors toward safer places like bonds. Watch energy prices and global shipping news; a further jump would signal more pressure on markets and household budgets.
The Federal Reserve, the US central bank, is still on hold, with its policy rate midpoint at 3.625%. That means borrowing costs for credit cards, car loans, and mortgages are still relatively high. Watch the next Fed meeting; signs of lower rates would ease pressure on household borrowing costs.
Risk stayed elevated but shifted toward de-escalation hopes after a spike driven by Iran war oil shocks, Hormuz blockade headlines, and OPEC supply disruption.
Jobless Claims: 209,750.00 (no pre-release consensus available).
CPI below estimate: actual 3.29 vs 3.56.
GDP: 0.50 (no pre-release consensus available).
PCE below estimate: actual 2.97 vs 3.13.
The week's events, lined up with how they likely affected the economy.
A possible oil shortage tied to the Iran war could raise gas and heating costs and hurt stocks if it slows the world economy.
A severe oil supply shock tied to the Iran war could push up gasoline and heating bills fast and make markets more shaky.
A blockade near the Strait of Hormuz raises the risk of higher oil and gas prices, which could hit stocks and household budgets fast.
Oil output fell hard after war disrupted exports, which could raise gas prices fast and pressure stocks for a while.
Oil supply fell because war is blocking exports, which could raise gas prices and make markets more nervous right away.
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.
Realized GDP: 0.50% QoQ SAAR
Real GDP growth is 0.50% QoQ SAAR and 1.99% 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: 209,750
Unemployment rate is 4.3% (YoY change +0.10 ppts); initial claims 4wma 209,750.
Policy mid: 3.625%; gap: 0.135 ppts
Policy midpoint is 3.625% with a 30-day change of +0.000 ppts; market rate gap (2Y minus policy) is 0.135 ppts.
2s10s: 53.0 bps
The 2s10s yield spread is 53.0 bps and the curve is normal.
Things that could change our view of the economy before next week's update.
The big picture could change fast if inflation cools back down or if growth weakens more than the labor market shows now. The closest turning points are next week's Fed Policy Decision and GDP report, because inflation is running hot while growth has already slowed to 0.50% QoQ, compared to last quarter, at an annual rate.
If the Fed Policy Decision signals rates could go up again, borrowing costs could stay high for longer. That would matter because Core CPI, CPI without food and energy, is 2.60% compared to the same time last year and the 3-month pace is much faster at 4.79%.
If GDP comes in below the already soft 0.50% QoQ, compared to last quarter, at an annual rate, slowdown fears would rise quickly. That would raise worries about jobs, pay growth, and company sales.
If the next inflation readings move closer to the 2.60% yearly pace instead of the hot 4.79% 3-month pace, pressure on the Fed would ease. That could lower the chance of another rate hike and help mortgage and loan outlooks.
If the Strait of Hormuz blockade grows or oil output falls more, gas and heating bills could jump again. That would push inflation higher and squeeze household budgets at the same time.
If Initial claims, the number of people who filed for unemployment benefits for the first time that week, rise clearly above the current 4-week average of 209,750, the labor picture would stop looking balanced. That would be an early sign that slower growth is starting to hit jobs.
Jobs still look balanced, so this is the fastest check on whether slower growth is starting to hurt hiring.
If claims jump well above the 209,750 4-week average, slowdown fears rise. If they stay low, the labor market still looks steady.
The Fed is on hold, but hotter inflation raises the chance that rates stay high longer or even move up again.
If the Fed sounds more worried about inflation, markets may price in tighter policy. If it downplays the recent price jump, rate pressure could ease.
Growth already slowed to 0.50% QoQ, compared to last quarter, at an annual rate, so this report can confirm a soft patch or show a rebound.
If GDP is much weaker than expected, recession worries rise. If it beats by a lot, the economy may be handling high rates better than feared.
This is the closest scenario because inflation is already re-accelerating. Core CPI is 2.60% compared to the same time last year, but the 3-month pace is 4.79%, and oil risk could keep prices high.
Confidence is medium because the growth slowdown is clear, but we do not yet have fresh GDP follow-through or a direct inflation update in next week's catalyst list.
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, 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.
Growth remains in expansion territory but has flattened, with the GDP nowcast at 1.68% SAAR, pointing to continued but modest activity. Escalating Middle East tensions threaten growth through an energy-tax channel, where higher fuel costs and disrupted trade flows could squeeze real incomes, margins, and demand. Watch whether the GDP nowcast holds near 1.5%-2.0% or slips materially lower; a sustained move toward 1% would signal the expansion is becoming more vulnerable to external shocks.
GDP was revised down from 1.4% to 0.7% in the Second estimate for Q4 2025, even as the broader growth signal remains expansionary with a 2.80% SAAR nowcast. Higher oil prices and energy infrastructure disruptions act as a tax on real incomes and margins, creating a near-term drag on consumption, production, and broader risk appetite. Watch whether the nowcast holds near 2.8%; a sustained step-down alongside weaker hard data would shift the narrative from resilient expansion toward a more material slowdown.
GDP was revised down from 1.4% to 0.7% in the Second estimate for Q4 2025, pointing to softer underlying momentum even as the current GDP nowcast still sits at 2.80% SAAR. Higher oil prices act as a tax on consumers and margins, while supply disruption risk through energy channels could weigh on activity if sustained. Watch the next GDP revision and incoming activity data; a weaker nowcast or another downward revision would challenge the view that growth is merely moderating rather than rolling over.
