CPI Slows Despite Iran Crisis
US inflation slowed to 2.4% year-over-year in February — a 13-month high but still beating expectations despite the Middle East crisis. GDPNow cratered to 2.4% while unemployment hit 4.4-4.5% with jobs falling 92,000. Wage growth held at 3.8% as macro conditions shift amid regional volatility.
The recent crisis in the Middle East, sparked by US-Israeli military strikes on Iran beginning February 28, 2026, has sent shockwaves through global energy markets. This has jeopardized the 20% of global oil supplies that pass through the Strait of Hormuz, causing Brent crude prices to surge by 10-13% to around $82 per barrel. Analysts warn that a prolonged conflict could push oil prices past $100 a barrel. February's unexpected loss of 92,000 jobs was a stark reversal from January's gains and signaled a potential cooling of the labor market. The decline was widespread across most sectors, with even the consistently strong healthcare industry shedding 28,000 jobs, partly due to a strike involving over 30,000 workers. The downward revision of the Atlanta Fed's GDPNow forecast for the first quarter, to 2.1% as of March 6, reflects weakening economic activity. This adjustment was driven by lower projections for both real personal consumption expenditures and private investment growth. The jump in unemployment to 4.4% coincides with a dip in the labor force participation rate to 62%, its lowest point since late 2021, excluding the pandemic era. This, combined with downward revisions to job numbers from previous months, paints a picture of a labor market that is softening more than previously thought.
