In the past two weeks, inflation has eased while policymakers work to address Social Security changes and avoid a government shutdown, shaping the economic outlook. Meanwhile, household wealth hit a record high, and shifts in energy and technology are transforming key industries. Let’s dive in!
Household Wealth Hits Record: U.S. household net worth reached $169 trillion in Q4, driven by a stock market surge, though real estate values declined. However, recent market losses have erased $5 trillion in gains, raising concerns about consumer spending. Household deposits also hit a record $19.4 trillion, while business debt growth slowed.
Housing Inflation Cools: Shelter costs rose 4.2% year-over-year in February, the slowest pace since December 2021, while monthly rent and owners’ equivalent rent increased 0.3%. Lodging prices also eased, contributing to a moderation in overall CPI. Economists expect rental price growth to slow further, influenced by stricter immigration policies and trade-related construction costs.
Inflation Slows Slightly: The Consumer Price Index rose 0.2% in February, with annual inflation at 2.8%, both slightly below expectations. Core inflation eased to 3.1%, the lowest since April 2021. Housing costs remained a key driver, but price increases slowed. Markets remain cautious as tariffs and economic growth concerns continue to shape inflation expectations.
Social Security Changes: The Trump Administration is reinstating full benefit withholding for overpayment recovery and tightening security for direct deposit changes. Supporters argue these measures combat fraud and protect taxpayer funds, while critics warn they may cause hardship for vulnerable beneficiaries, particularly those without digital access or financial flexibility.
Government Shutdown Averted: Congress passed a stopgap funding bill just before the deadline, with bipartisan support in the Senate despite deep divisions among Democrats. The measure keeps the government running through September but has sparked criticism from Democrats who see it as a concession to Republican priorities.
Record Solar Growth: The U.S. added 50 GW of solar in 2024, the largest annual increase for any energy source in two decades. Solar and storage made up 84% of new electricity generation, with domestic manufacturing tripling to meet demand. Future growth depends on stable federal policies, as changes could slow investment by $250 billion over the next decade.
Potential Russian Ceasefire: President Vladimir Putin conditionally supported a U.S.-led 30-day ceasefire backed by Ukraine but called for further negotiations to ensure lasting peace. A U.S. delegation arrived in Moscow as the U.S. resumed military aid following Kyiv’s approval.
AI Accelerates Oil & Gas Drilling: Energy companies are using AI to improve drilling efficiency, optimize well placement, and reduce downtime, with BP steering drill bits, Chevron deploying drones, and Devon Energy reporting a 15% efficiency gain. AI is also expediting offshore exploration, analyzing seismic data in weeks instead of months, giving early adopters a competitive edge.
Southwest Ends Free Checked Bags: Southwest Airlines will eliminate its decades-old free checked bag policy for most passengers on tickets purchased after May 28, as part of a broader revenue-boosting strategy. The airline also announced a new basic economy fare, changes to its frequent flyer program, and expiring flight credits, following pressure from activist investors.
Over the next two weeks, markets will focus on key economic data, including the latest GDP revision and consumer spending reports, which will provide insights into economic momentum and inflation trends. Meanwhile, geopolitical tensions and U.S. political developments, from ongoing trade negotiations to budget discussions, will shape investor sentiment as lawmakers work to solidify long-term funding agreements.
Footnotes:
SFM Market Commentary: 3/21/25
In the past two weeks, inflation has eased while policymakers work to address Social Security changes and avoid a government shutdown, shaping the economic outlook. Meanwhile, household wealth hit a record high, and shifts in energy and technology are transforming key industries. Let’s dive in!
Household Wealth Hits Record: U.S. household net worth reached $169 trillion in Q4, driven by a stock market surge, though real estate values declined. However, recent market losses have erased $5 trillion in gains, raising concerns about consumer spending. Household deposits also hit a record $19.4 trillion, while business debt growth slowed.
Housing Inflation Cools: Shelter costs rose 4.2% year-over-year in February, the slowest pace since December 2021, while monthly rent and owners’ equivalent rent increased 0.3%. Lodging prices also eased, contributing to a moderation in overall CPI. Economists expect rental price growth to slow further, influenced by stricter immigration policies and trade-related construction costs.
Inflation Slows Slightly: The Consumer Price Index rose 0.2% in February, with annual inflation at 2.8%, both slightly below expectations. Core inflation eased to 3.1%, the lowest since April 2021. Housing costs remained a key driver, but price increases slowed. Markets remain cautious as tariffs and economic growth concerns continue to shape inflation expectations.
Social Security Changes: The Trump Administration is reinstating full benefit withholding for overpayment recovery and tightening security for direct deposit changes. Supporters argue these measures combat fraud and protect taxpayer funds, while critics warn they may cause hardship for vulnerable beneficiaries, particularly those without digital access or financial flexibility.
Government Shutdown Averted: Congress passed a stopgap funding bill just before the deadline, with bipartisan support in the Senate despite deep divisions among Democrats. The measure keeps the government running through September but has sparked criticism from Democrats who see it as a concession to Republican priorities.
Record Solar Growth: The U.S. added 50 GW of solar in 2024, the largest annual increase for any energy source in two decades. Solar and storage made up 84% of new electricity generation, with domestic manufacturing tripling to meet demand. Future growth depends on stable federal policies, as changes could slow investment by $250 billion over the next decade.
Potential Russian Ceasefire: President Vladimir Putin conditionally supported a U.S.-led 30-day ceasefire backed by Ukraine but called for further negotiations to ensure lasting peace. A U.S. delegation arrived in Moscow as the U.S. resumed military aid following Kyiv’s approval.
AI Accelerates Oil & Gas Drilling: Energy companies are using AI to improve drilling efficiency, optimize well placement, and reduce downtime, with BP steering drill bits, Chevron deploying drones, and Devon Energy reporting a 15% efficiency gain. AI is also expediting offshore exploration, analyzing seismic data in weeks instead of months, giving early adopters a competitive edge.
Southwest Ends Free Checked Bags: Southwest Airlines will eliminate its decades-old free checked bag policy for most passengers on tickets purchased after May 28, as part of a broader revenue-boosting strategy. The airline also announced a new basic economy fare, changes to its frequent flyer program, and expiring flight credits, following pressure from activist investors.
Over the next two weeks, markets will focus on key economic data, including the latest GDP revision and consumer spending reports, which will provide insights into economic momentum and inflation trends. Meanwhile, geopolitical tensions and U.S. political developments, from ongoing trade negotiations to budget discussions, will shape investor sentiment as lawmakers work to solidify long-term funding agreements.
Footnotes: