GDP Gets Cut in Half While Oil Jumps Around Like a Bug on a Hot Plate
- David Halseth
- 4 hours ago
- 2 min read
For the week ended 3/14/26.
Okay, things are starting to get more interesting. And by that I’m (unfortunately) not referring to March Madness brackets, but rather to a couple of economic data points released last week that may give our friends at the Federal Open Market Committee a bit of heartburn.
First up – and something that largely escaped the attention of the mainstream press – was the second revision of fourth-quarter GDP, which showed the economy was significantly weaker than previously thought. The initial release came in at 1.4%, with the official explanation being that much of the slowdown compared to the third quarter was due to the government shutdown.
Fast forward to last Friday, and the revised number is now 0.7% - yes, they literally cut the growth rate in half. According to the Bureau of Economic Analysis, this downward revision reflected weaker estimates for exports, consumer spending, government spending, and investment, while imports declined less than previously estimated. In other words… weakness pretty much everywhere.
That’s quite the revision.
The second data point Jerome Powell and company must now wrestle with is the latest Consumer Price Index. Consumer prices rose 2.4% in February from a year earlier, matching January’s reading and landing exactly where economists surveyed by the Wall Street Journal expected it to come in (a rare moment of forecasting success). Core CPI – which strips out food and energy – rose 2.5% year-over-year, also in line with expectations.
Of course, the Fed tends to focus more heavily on the PCE Price Index, and January’s reading there remains higher at 3.1%, meaning inflation pressures are still not entirely out of the woods.
And I haven’t even mentioned the U.S.–Israeli conflict with Iran, which has caused the price of oil to jump around like a bug on a hot plate (bad analogy, I know). Much of the mainstream coverage has focused on the Strait of Hormuz and what a potential disruption to this key shipping lane could mean for the global economy. But here’s the reality: China and India have far more to worry about than we do in the United States, given our position today as a net energy exporter.
Put all of that together – weaker growth, lingering inflation pressures, and geopolitical tensions – and markets responded with what can only be described as a mild collective vomit last week.
• Domestic bonds: -0.9%
• U.S. stocks: -1.6%
• Foreign equities: -2.1%
The one bright spot for those competing for returns with North Korea, Russia, and various non-state criminal actors was cryptocurrency, which rose 4.8% on the week, bringing its year-to-date loss to a more modest -20.7%.
Looking ahead, the previously mentioned FOMC meeting arrives Wednesday, while the real March Madness tips off Thursday and Friday. May your brackets be profitable, and your investment decisions even more so.
Good morning.
Interesting data point of the week.
