Starting last Friday and extending over the weekend, we saw two very large bank failures: Silicon Valley Bank (SVB) and Signature Bank. Those followed the collapse last week of Silvergate, the “crypto bank.” These are some of the largest bank failures in U.S. history, and they all happened in the past several days. What is going on here—and could we be headed for the next Great Financial Crisis?

Each week, we break down the latest U.S. economic reports, including what the results mean for the overall health of the economy. Here, you will find how economists’ forecasts compare with actual results, key takeaways to consider, as well as a list of what’s on tap for the week ahead. 

I tried this format a week ago—looking “beyond the numbers” to what the data really means—and the feedback was good. So, here we go again.

Two moments mattered this week—one pretty good, all things considered, and the other bad, potentially very bad. Let’s start with the good one.

There is a lot riding on the monthly jobs report, which comes out tomorrow. For the economy, more jobs are good: more workers, more wage income, more spending ability, and so forth. There’s no real downside. But for financial markets, a strong report would be problematic. Those workers—earning and spending their wages—add to demand, which adds to inflation. So, a strong report would be bad news for the Fed, for interest rates, and for markets. This is the problem we face tomorrow. 

After a strong January, markets continued to rally in early February, only to roll over and end the month down. Fears about inflation rebounded, and worries that the Fed would hike rates farther and faster dominated markets. While the economic data remained solid, this good news was bad news for markets, as it was seen as a sign of higher inflation and interest rates.

Each week, we break down the latest U.S. economic reports, including what the results mean for the overall health of the economy. Here, you will find how economists’ forecasts compare with actual results, key takeaways to consider, as well as a list of what’s on tap for the week ahead. 

I’m going to try something new today. Rather than pick a specific topic to talk about, I’d like to look at the past week and discuss what everything means going forward. When I give talks, the usual title is “Beyond the Numbers,” where I present not only the data but what it means. Indeed, there are a lot of numbers out there every week, and not all of them mean anything. Of those that do, quite a few mean something different than what most people think. So, let’s take a look at what happened in the past week and what it means in the medium to longer term.

After a strong January, markets softened in February. U.S. markets were down by low single digits, international markets dropped, and emerging markets performed worst of all. The primary drivers were the disappointing inflation data and rising longer-term interest rates. Still, job growth exceeded expectations, and service sector business confidence bounced back.

Over the past two weeks, markets have been down between 4 percent and 5 percent, and worries about the economy and inflation have been growing. As a result, I’ve been getting questions as to whether it is time to start worrying about the resumption of last year’s bear market. While the recent volatility may well continue, and there are indeed things to keep an eye on, I don’t think so. Here’s why.

Each week, we break down the latest U.S. economic reports, including what the results mean for the overall health of the economy. Here, you will find how economists’ forecasts compare with actual results, key takeaways to consider, as well as a list of what’s on tap for the week ahead.