Powell’s Final Act… and the Fed Drama Just Got Renewed for Another Season

For the week ended 3/2/26.

Some interesting data points rolled in last week, so let’s skip the warm-up lap and get right to it.

First and foremost, the Federal Open Market Committee (FOMC) extended its interest-rate pause, but not without some unusually public disagreement. Several committee members are no longer casually hinting at future rate cuts – in fact, a growing minority now believes rate hikes may become more likely as we move deeper into 2026. That’s quite the backdrop for the closing chapter of Jerome Powell’s eight-year run as Fed Chair. 

And because apparently central banking wasn’t entertaining enough already, Powell also announced he intends to remain on the Federal Reserve Board as a governor after stepping down as chair, breaking a roughly 75-year precedent. Incoming Chair Kevin Warsh now inherits a Fed with internal divisions, persistent inflation concerns, and, naturally, a very vocal White House. President Donald Trump wasted approximately three seconds expressing displeasure. Should be fun to watch from a safe distance.

The other major release last week was the initial Q1 GDP estimate. The U.S. economy expanded at a 2.0% annualized rate, slightly below the 2.2% consensus forecast. Beneath the surface, though, the report contained a major theme that continues to dominate the economic landscape: AI spending is exploding. Business investment surged at a 10.4% annualized pace, the strongest increase in nearly three years, driven heavily by equipment purchases and intellectual property spending tied to artificial intelligence infrastructure and development.

Consumers, meanwhile, showed a bit more restraint. Spending rose at a 1.6% pace versus 1.9% in the prior quarter. Americans continued spending on services like healthcare, but purchases of goods softened slightly. Translation: the consumer is still carrying the economy, just with a slightly tighter grip on the wallet.

And finally, for those keeping score at home, U.S. publicly held debt has now officially surpassed 100% of GDP. As of March 31, debt stood at $31.265 trillion versus GDP of $31.216 trillion. That milestone was once considered almost unthinkable outside of wartime economics. Now it barely makes page two. What could possibly go wrong? 

As has been the case recently, commodities led the weekly performance table, climbing 3.1% thanks largely to higher energy prices. U.S. stocks finished a respectable second, up 0.9%. And bonds? Well… bonds once again fulfilled their 2021 - 2025 hobby of disappointing everyone. Some traditions remain alive and well.

Looking ahead, this week should be calmer on the scheduled economic-release front, though Friday’s payroll and unemployment reports will still matter. Markets remain obsessed with one question: is the economy slowing enough to cool inflation without tipping into something uglier? Easy question. Tiny detail: nobody actually knows.

And with that, may your outdoor adventures increase alongside the warmer weather, may your espresso be smooth and hot, and may your portfolio avoid unnecessary drama – unlike the Federal Reserve. Good morning. 

Interesting data point of the week.

Source: Visual Capitalist

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