Macro signals are mixed

The United States economy is sending two messages at once: growth gauges have cooled, but inflation and stocks both moved higher in early April. (bls.gov) The clearest inflation signal came on April 10, when the Consumer Price Index rose 0.9 percent in March and 3.3 percent from a year earlier. Energy prices jumped 10.9 percent in the month, and gasoline alone rose 21.2 percent, accounting for nearly three quarters of the monthly increase. (bls.gov) Growth data pointed the other way. The Bureau of Economic Analysis said on April 9 that real gross domestic product grew at a 0.5 percent annual rate in the fourth quarter of 2025, down from 4.4 percent in the third quarter, while the Atlanta Federal Reserve’s GDPNow model estimated first-quarter 2026 growth at 1.3 percent on April 7. (bea.gov) (atlantafed.org) The labor market sat in the middle. Nonfarm payrolls rose by 178,000 in March, the unemployment rate held at 4.3 percent, and the number of people unemployed for 27 weeks or more was 1.8 million, up 322,000 from a year earlier. (bls.gov) That mix helps explain why traders and economists are reading the same week differently. A surprise index rises when data beats forecasts, not when the economy is strong in absolute terms, so it can climb even while gross domestic product growth slows and inflation stays above the Federal Reserve’s 2 percent target. (atlantafed.org) (bls.gov) (macromicro.me) Markets have leaned toward the better-than-feared reading. The Standard and Poor’s 500 closed at 6,823.94 on April 9 after a seven-session winning streak, and Federal Reserve Bank of St. Louis data show the index remained near record levels in April. (barrons.com) (fred.stlouisfed.org) The federal payroll has moved in the opposite direction from stock prices. The Bureau of Labor Statistics said federal government employment continued to decline in March, and Federal Reserve Bank of St. Louis data show federal employment excluding the Postal Service fell to 2.85 million in March 2026. (bls.gov) (fred.stlouisfed.org) The “smallest since 1966” claim comes from a White House statement and from longer-run Office of Personnel Management tables that track executive branch civilian employment over time, but the series are not identical to the monthly payroll data economists use for jobs reports. One counts executive branch headcount at fiscal year-end, excluding the Postal Service; the other tracks monthly payroll employment. (whitehouse.gov) (opm.gov) (fred.stlouisfed.org) The immediate policy problem is that the Federal Reserve is watching both sides of the split at once. March core inflation, which strips out food and energy, rose 0.2 percent and 2.6 percent from a year earlier, while payroll growth and participation showed a labor market that is still expanding but not accelerating. (bls.gov 1) (bls.gov 2) For now, the data do not point to a single clean story. They show an economy with slower output growth, firmer price pressure, steady hiring, rising equity prices, and a shrinking federal workforce all at the same time. (bea.gov) (bls.gov 1) (bls.gov 2) (fred.stlouisfed.org)