Weekly Economic Update
Last Week and the Economy
- Gas prices continued to climb amid conflict in Iran.
- Inflation measures showed little change.
- Q4 GDP was revised downward significantly.
- Existing home sales rose.
The bad luck that is usually expected from Friday the 13th was apparent in the weekly performance of U.S. stocks. The Dow Jones Industrial Average dropped by 1.99% while the Russell 2k Small Cap Index fell by 1.79%. The S&P 500 and Nasdaq Composite also lost 1.60% and 1.26%, respectively. These weekly losses pushed all the major U.S. stock indices into negative territory for the year thus far. The losses continued to mount in international markets where the MSCI-EAFE index declined by 2.13% and narrowly maintained a positive performance for the year to date.
Gas Prices Continued to Climb Amid Iran Conflict
The Strait of Hormuz is effectively closed due to the ongoing conflict pitting the U.S. and Israel against Iran. This narrow strip of sea facilitates about one fifth of the world’s oil shipments and is currently controlled by Iran.
Last week, White House officials stated that the U.S. would offer “escorts” to ships attempting to navigate the strait and asked other countries to do the same. However, Energy Secretary Chris Wright told CNBC on Thursday that the U.S. Navy is not ready to begin the escorts.
As the war in Iran continues, gas prices keep climbing. According to AAA, the national average price for regular gasoline has risen to $3.699 from $3.450 one week ago and $2.927 one month ago.
PCE Inflation Rate Slowed Marginally and CPI Held Steady
Two reports measuring inflation were released last week – the Personal Income and Outlays Report for January from the Bureau of Economic Analysis [BEA] and the Consumer Price Index for February from the Bureau of Labor Statistics [BLS]. Neither showed a large change in overall consumer prices by historical standards.
The BEA report showed that prices rose by 0.3% in January, bringing the year-over-year change to 2.8%. This marked a 0.1 percentage point reduction from the annual inflation rate in December.
The BLS report showed that prices rose by 0.3% in February, and the year-over-year change in prices was 2.4%. This was the same rate of inflation as the previous report in January.
The Shelter component of the CPI continued to be the most significant factor in the inflation calculation, and it rose by 0.2% in February. Food and Energy prices also rose by 0.4% and 0.6%, respectively.
Fourth Quarter GDP Revised Downward
The BEA also released an updated estimate of Gross Domestic Product [GDP] in the fourth quarter. The rate of increase for real GDP fell from 1.4% in the initial estimate to 0.7% in the updated estimate.
The change from the first to the second estimate reflected the release of new information including BEA data showing that exports were lower than originally believed, driven by lower charges for the use of intellectual property. New Census Bureau data also showed that consumer spending was lower than originally reported, driven by a reduction in spending on health care. Census Bureau data also necessitated downward revisions to investment, including government and private sector structures.
A final note in the latest GDP report states that the impact of the government shutdown in the fourth quarter is difficult to quantify because the effects of the shutdown are “embedded in the regular source data that underlie the estimates and cannot be separately identified.” However, the BEA estimates that the shutdown caused GDP to be about 1.0 percentage points lower than it would have been without the pause.
Existing Home Sales Rose
The National Association of Realtors [NAR] reported that sales of existing homes rose by 1.7% from January to February. However, sales fell by 1.4% from one year ago.
The NAR report also showed that the Housing Affordability Index rose to the highest level since March 2022. This calculation uses home costs, mortgage rates, and average income in a particular region to measure whether a typical family earns enough to purchase a typical home in their area. NAR Chief Economist Dr. Lawrence Yun noted that “housing affordability is improving, and consumers are responding. Still, there is a long way to go to return to pre-pandemic levels of transaction activity.”
Data Sources for stock and index quotes: Yahoo Finance, WSJ
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Key Economic Data Points
| Data Point | Date | Current | Change from Prior Period | Next Report |
| Unemployment Rate | 02-2026 | 4.4% | 0.1 | April 3rd |
| FOMC Target Rate | 1-2026 | 3.50% – 3.75% | 0 | March 18th |
| GDP | Q4 2025 | 0.7% | -3.7 | April 9th |
| PCE Inflation | 1-2026 | 2.8% | -0.1 | April 9th |
Data Sources: U.S. Bureau of Labor Statistics, FRED – St. Louis Fed, U.S. Bureau of Economic Analysis
Weekly Quote:
In the long run, it’s not just how much money you make that will determine your future prosperity. It’s how much of that money you put to work by saving it and investing it.
-Peter Lynch, Legendary Investor and Fund Manager
The Week Ahead – Economic Data & Events
Monday: Advance Retail Sales, Empire State Manufacturing Survey, Labor Market Tightness Index, Industrial Production and Capacity Utilization, Business Inventories, Multivariate Core Trend Inflation, SCE Credit Access Survey
Tuesday: Business Leaders Survey, Imports and Exports, New Residential Construction, NAR Pending Home Sales Index
Wednesday: Outlook-at-Risk
Thursday: Philadelphia Fed Manufacturing Survey
Friday: The New York Fed DSGE Model, Reserve Demand Elasticity, R-Star (HLW Estimates), R-Star (LW Estimates)
Weekly Reports: Mortgage Applications (Wednesday), EIA Petroleum Status Report (Wednesday), Jobless Claims (Thursday), EIA Natural Gas (Thursday), Fed Balance Sheet (Thursday), Baker Hughes Rig Count (Friday)
Source: New York Fed
The Week Ahead – S&P 500 Companies Reporting Earnings
Wednesday: General Mills (GIS)
Thursday: Accenture (ACN), FedEx (FDX), Darden Restaurants (DRI)
Source: Select Sector SPDRs Earnings Calendar
Weekly Tip:
Include healthcare premiums in your retirement budget. Medigap and most Medicare Advantage plans have premiums, so be sure to account for them in your monthly budget.
Data Sources for stock and index quotes: Yahoo Finance, WSJ
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Last Week's Riddle and Answer
Last Week's Riddle:
You have 12 red socks, 12 white socks, and 12 black socks in your drawer. Without looking, how many socks do you need to remove to ensure that you have at least one matching pair?
Last Week's Answer:
Since there are 3 colors of socks, you need to remove 4 socks to guarantee a match.
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