Inflation Heats Up, But Growth Lags

Rising oil prices tied to the Iran war pushed inflation higher in March, with core prices climbing to a 3.2% annual rate and overall inflation hitting 3.5%. Economic growth came in softer than expected at a 2% pace, even as AI-related investment surged and government spending increased. Consumers showed signs of strain, with higher energy costs weighing on spending despite a late-month bump. Meanwhile, the labor market remained historically strong, with jobless claims falling to their lowest level since 1969, highlighting a mixed economic picture for the Fed.

Fed Holds Rates

The Federal Reserve kept interest rates unchanged at 3.5%–3.75%, as rising inflation tied to the Iran war limits its ability to act. Jerome Powell may be presiding over his final meeting before Kevin Warsh potentially takes over leadership. Higher energy costs are worsening inflation and straining consumers, while borrowing costs for credit cards, mortgages, and auto loans remain elevated. At the same time, savings rates are still relatively strong, offering some benefit to savers despite broader affordability challenges.

Airfares Rise As Fuel Costs Surge

Jet fuel prices have spiked due to the Iran conflict and Strait of Hormuz disruption, adding billions in costs for airlines. Despite higher ticket prices, travel demand remains strong, with bookings and revenues rising as consumers continue to prioritize trips. Major carriers like JetBlue Airways, American Airlines, Delta Air Lines, and United Airlines expect to pass increased fuel costs on to travelers, especially through premium seating. However, budget airlines such as Frontier Airlines are under more pressure and are seeking government relief to offset rising expenses.

As always, Base Wealth Management remains focused on aligning investment strategies with your long-term goals amid evolving market conditions.