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🌎 The Big Picture

 The main thing driving everything is still the war, which had a lot of good news this week.

Gas prices may finally start coming down after weeks of sharp increases driven by the US-Iran conflict.

President Trump agreed to a two-week ceasefire with Iran. In exchange, Iran agreed to allow ships to pass safely through the Strait of Hormuz, a narrow waterway in the Persian Gulf that carries roughly 20% of the world’s oil supply. Attacks on commercial ships in the Strait had caused the largest disruption to global crude supplies in history, pushing the price of oil, gasoline, diesel, and jet fuel sharply higher. With promises of the route reopening, US crude oil prices fell more than 16% on Wednesday, one of the steepest single-day drops in years.

Energy analysts say drivers could see prices start coming down at the pump within days. GasBuddy analyst Patrick De Haan expects national average gas prices to fall below $4 a gallon within one to two weeks if the ceasefire holds. However, prices remain well above pre-conflict levels. For now, the truce remains relatively fragile. For now, travelers and businesses are on track for a little relief.

The stock market kept climbing this week as investors grew more confident that a two-week ceasefire between the US and Iran could hold.

But the relief comes with real limits. Oil prices are still climbing, the Strait of Hormuz is still largely closed to tankers, and the economic damage from five weeks of conflict is already showing up in the data.

The latest economic data revealed that the US economy had an even weaker fourth quarter than initially estimated. For everyday Americans, prices are still rising while the broader economy is slowing, and a lasting resolution in the Middle East remains uncertain.

Americans are spending more but earning less, and it is getting harder to save.

The Bureau of Economic Analysis reported that personal income fell 0.1% in February, driven by a drop in dividend payments and a decrease in Affordable Care Act enrollment subsidies. Accounting for inflation, people actually lost 0.5% purchasing power in the month. Consumer spending rose 0.5%, but once higher prices are factored in, people barely bought anything extra, with real spending up just 0.1%. People are essentially paying more for the same stuff.

Higher prices and lower incomes are making it hard to get ahead. The personal saving rate, what people set aside after taxes and spending, dropped from 4.5% in January to 4.0% in February, well below the pre-pandemic average of more than 7%. Families have significantly less financial cushion for unexpected expenses or a sudden spike in costs.

The US economy depends on consumers spending more every month to keep growing, so the steady purchases are a positive sign for businesses. But with incomes slipping and savings shrinking, households have less room to absorb potential higher costs ahead.

Hiring bounced back in March.

The Bureau of Labor Statistics reported that employers added 178,000 net new staff last month, far more than economists expected and making up for the 133,000 net job losses in February. Much of that February decline came from temporary setbacks, including a healthcare worker strike and severe winter storms, and those workers returning to their jobs helped inflate March’s count. Healthcare led the way, as usual, adding back 76,000 jobs, as nurses who had been on strike. Construction and transportation also hired a lot, while the federal government cut another 18,000 positions.

Without much hiring demand from employers, workers haven’t been able to negotiate the same pay raises. Wages grew by only 3.5%, the weakest annual pace in nearly five years, but still gaining ground on the higher cost of living.

While the data swings a lot month-to-month, the trend of low hiring and low firing has been steady. Over the past six months, the unemployment rate has actually declined slightly, while employers only grew their staff by a very low average of 16,000 per month. So, it’s a very challenging time to find a job, but those who have one are pretty secure in keeping it.

Sports betting is taking a toll on household finances.

Researchers at the New York Federal Reserve analyzed consumer spending data and credit report data to compare financial outcomes in states that legalized mobile sports betting against those that did not. Even though only about 3% of people actively started placing bets after legalization, the financial fallout was large enough to create noticeable debt problems for entire counties. Among people who took up betting, the percentage of people seriously delinquent on their debt payments jumped by 10 percentage points, roughly doubling the broader percentage of people seriously behind on their payments. Adults under 40 were hit hardest, falling behind on both credit card and auto loan payments at notably higher rates.

The damage did not stop at state borders either. People who lived near legal states crossed over to place wagers, and delinquency rates climbed in those areas, too, even though those states collected none of the tax revenue. For anyone struggling to pay down their debts, the data is growing clear that sports gambling is more likely to make the problem worse.

🏭 The Companies Everyone’s Talking About

❔ The Big Question of the Week

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