Treasury
Wholesale Price Increase Below Expectations, War Impact Initially Mild
The U.S. PPI rose 0.5% month-over-month in March, below market expectations and matching February's increase, showing that energy price hikes triggered by the war have not yet caused a severe impact on the overall economy. Core PPI, excluding food and energy, rose only 0.1%. A 15.7% surge in gasoline prices contributed nearly half of the increase in goods prices. The IMF downgraded its U.S. economic growth forecast for this year to 2.3% and warned that if oil prices remain high, global growth could fall below 2%. Most business economists believe high inflation is temporary but raised the probability of a U.S. recession in the next 12 months to 35%.
Survey: Most Corporate Economists Believe Iran Conflict Has Short-Term Impact on US Economy
According to the latest Wolters Kluwer survey, most corporate economists believe the impact of the Iran conflict on inflation and economic growth is temporary, expecting the US economy to grow 2.2% this year. However, geopolitical tensions have raised the recession probability to 35% and delayed expectations for Fed rate cuts.
Inflation posts biggest gain since 2022, consumer confidence falls to record low
U.S. CPI rose 0.9% month-over-month and 3.3% year-over-year in March, with gasoline prices surging 21.2% contributing nearly 75% of the increase. The consumer confidence index fell to 47.6 in April, the lowest since data began in 1952. The energy price shock from the Iran conflict was a major driver, but core inflation remained moderate.
US consumer spending edges up in February, inflation expectations cast a shadow
Data from the US Bureau of Economic Analysis shows that real personal consumption expenditures edged up 0.1% month-on-month in February, following zero growth in January. With inflation persistently above the Federal Reserve's 2% target, compounded by energy price spikes driven by the Iran war, consumer confidence remains low and the spending outlook is weak. Fed officials and economists warn that energy and tariff uncertainties could further weigh on consumption and growth in the first half of the year.
Iran War Pushes Up Oil Prices, US Consumer Inflation Expectations Rise Significantly
The latest New York Fed survey shows that US consumers' inflation expectations for the coming year rose to 3.4% in March, with gasoline prices expected to rise by 9.4%. Meanwhile, small business confidence has declined for the second consecutive quarter, with inflation becoming their primary concern. Analysts point out that the oil price shock triggered by the Iran war is bringing stagflation risks.
ISM Survey: Iran War Drives Up Inflation, US Services Expansion Slows
A survey released by the Institute for Supply Management (ISM) on Monday showed that US services sector expansion slowed in March, mainly due to the Iran war disrupting supply chains and intensifying inflationary pressures. The non-manufacturing composite index fell 2.1 percentage points to 54%, the employment index hit a more than two-year low, while the price index jumped sharply.
Job Market Rebounds: 178,000 Jobs Added in March, Unemployment Rate Falls to 4.3%
The U.S. job market rebounded in March, with nonfarm payrolls increasing by 178,000 and the unemployment rate falling to 4.3%. However, February's employment data was revised down sharply, indicating recent volatility in the labor market. Wage growth slowed, with the year-over-year rate dropping to 3.5%, the lowest since May 2021. Economists point out that job growth may remain weak in the coming months, with risks to the labor market tilted to the downside.
NABE Survey: Economists Expect Iran War to Push Up Inflation and Drag on GDP Growth
A survey released Thursday by the National Association for Business Economics (NABE) shows that the Iran war and other geopolitical conflicts are expected to slow economic growth this year and in 2027, and push up inflation. The survey was conducted in late March, as the war entered its fourth week, and surveyed economists lowered their expectations for the magnitude of rate cuts this year. The Federal Reserve's policy path faces uncertainty, with most respondents saying geopolitical risks have become the biggest threat to the U.S. economy.
ISM: Manufacturing expands for third straight month, input prices jump to highest since 2022
The ISM reported on Wednesday that U.S. manufacturing activity expanded for a third consecutive month in March, but the index of input prices paid by manufacturers surged to 78.3%, the highest since June 2022. Among respondents, 64% of comments were negative, about 40% mentioned the Iran war, and 20% mentioned tariffs. Economists warned of upside risks to inflation, with the OECD forecasting overall inflation of 4.2% this year, more than double the Federal Reserve's target.
Consumer confidence edges up despite Iran war and higher oil prices
Despite the Iran war pushing up oil prices and fueling inflation concerns, the U.S. consumer confidence index rose slightly to 91.8 in March. However, the University of Michigan survey shows sentiment falling to a yearly low, with labor market indicators diverging, and economists warn that second-quarter spending could be restrained.