The previous week had the Federal Reserve making their first rate decision since the Trump administration had taken office. With many uncertainties about the current direction of things, the Federal Reserve had decided there would not be any change necessary to the current rates. Stating that the current inflation and economic conditions have largely been a result of the Trump administration’s policies on tariffs. Chairman Powell has been strongly dovish at this point, stating they would need to “see how things actually work out.” There were a slew of other minor data releases but none were far reaching in their impact on the economy and current direction of things.

The inflation data report released last week showed a surprising result–it was cooler than expected across the board. This has led to a much more positive outlook, even in light of recent events regarding the Trump administration. While consumer sentiment reports from the University of Michigan still showed more dissatisfaction than expected, they were accompanied by largely positive data across various releases. There are strong expectations that there will be no interest rate increases, with some potential for rate cuts this year.

While the data releases were plentiful, many are made less significant in consideration of the current disruption with the administration and the oncoming inflation data reports with the CPI and PPI arriving next week. The largest and most noteworthy report this time is the Job Report numbers, which will help give a clearer idea on the state of the job market. With the mass federal layoffs, there is much uncertainty but the labor market is still holding up in light of things. The most pressing data to be released is the predictions for GDP, which has shown to have shown a deflationary value. As long as the inflation data remains consistent then there is little chance the Federal Reserve will consider increasing the interest rates once again. The silver lining in all the reports is the Manufacturing PMI data is noting that the manufacturing sector is still showing strong growth.

The PCE Index has aligned with expectations, and as the Federal Reserve’s preferred measure of inflation, it eases the sense of urgency for policy action. GDP data has also indicated continued economic growth, though this is tempered by future forecasts predicting a potential economic contraction. This outlook is further reflected in the Consumer Confidence report, which has shown a significant decline since the change in administration. Uncertainty is evident across lending and broader markets, affecting all aspects of the economy.