As a follow-up to yesterday’s look at the yield curve, today we will review employment, another indicator that does a good job of signaling economic risk. The reason employment works as an indicator is simple: More than 70 percent of the economy is made up of consumer spending, and the vast majority of that spending comes from wage income—which is to say, from jobs. No jobs? No spending. No spending? No economy. It really is that simple.

One of the key indicators I look at when evaluating economic and market risks is the yield curve, which is a fancy name for how interest rates for different time periods vary. You would expect the rate an investor needs for a 10-year loan, for example, to be different from what she needs for a 3-month—or 30-year—loan. And, by and large, that is the case. Exactly how different the rates are, however, can change quite a bit, and those changes can tell us a lot about the economy.

One of the big themes so far this year has been the return of volatility to the stock market. After a very calm 2017, markets have gotten much more turbulent in 2018. One way to quantify this is to look at daily movements. In 2018 (through April 9), the S&P 500 had an intraday swing of 2 percent or more on 13 days. The day-to-day price movements, measured at the close, have been more than ±2 percent on eight days. Neither of those happened in 2017, at all. There clearly has been an increase in volatility, and in a big way.

Last week, the news was largely about inflation, with producer and consumer prices leading the way. The week ahead will be a busy one for economic news. Reports will give us a look at consumer spending, the housing market, and industrial production and manufacturing. In other words, we’ll get an update on the entire economy.

Earnings season is here again, and expectations are high. In fact, expected growth is at the highest level since 2011, with growth expected to continue through 2019. You would anticipate markets to respond positively. So, the fact that the stock market has instead just been bouncing around is a bit concerning. What is going on—and what does it mean for the future?

It seems to me that a couple of recent news items need to be put together in a way that, so far, I have not seen. Although the idea that inflation is rising and the discussion of the Fed’s rate increases are often connected, the link to the stock market has been neglected. Let’s see if we can make that connection.

Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for April? Let’s take a closer look at the numbers.

March’s data continued to be good overall, although there was some pullback from February’s very strong reports. Job growth slowed substantially, which was the most notable concern. This is most likely not an immediate problem, however, as long-term trends remain favorable. More worrying is that while confidence remains high, the trend appears to be peaking for both consumers and business. Again, this is more of a change in trend rather than an immediate concern. Fed policy continues to be stimulative, which is helpful, despite the recent rate increase. Overall, this month’s economic data indicates that growth continues, although it may have peaked.

On Friday, I appeared on CNBC's Nightly Business Report (my segment starts at 10:19) to discuss the latest jobs report, more rate increases from the Fed, and what effect the tariffs may have on the market. Listen in to learn more.

Last week was a busy one for economic news, starting with the major business surveys. Inflation will be the focus this week, with producer and consumer prices due in the first half.