Last week saw the release of a number of important economic updates. March’s inflation reports drew much of the attention, along with news on retail sales and consumer sentiment. The reports showed consumer and producer inflation picking up in March, in part due to rising energy costs. Nonetheless, retail sales growth remained solid during the month, and consumer sentiment improved to start April. This week will be busy once again, with a focus on the housing market update.

Today’s post will be short, as tomorrow is a holiday leading into a long weekend—and next week is vacation! I have to admit, I am ready to get out of the office for a week. As much as I love Commonwealth and Massachusetts, a warm week at the beach isn’t bad either. Add in a chance to see my parents for Easter, and I’m very glad to be heading out.

Following up on yesterday’s piece on inflation, I wanted to dig deeper into another topic I’ve been hearing about recently: stagflation. When people look at inflation and the fears of slower growth, the idea of stagflation comes back to life from the 1970s and 1980s. But that was a long time ago when few of us were paying attention to economics. So it’s worth going back to basics and thinking about what stagflation is before we start to worry too much.

The most recent inflation data came in this morning, with the Consumer Price Index (CPI) up sharply again. The headline index was up by 1.2 percent for the month and by 8.5 percent for the year (a 40-year high). On the face of it, inflation is approaching a crisis. What if it keeps on rising?

Several important economic updates were released last week, with the ISM Service sector confidence report serving as a highlight. The report showed that service sector confidence rebounded in March following Omicron-related declines to start the year. This will be a busy week of updates, with a focus on March’s inflation reports as well as a look at retail sales, consumer confidence, and industrial production.

My colleague Sam Millette, manager, fixed income on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Market Risk Update. Thanks for the assist, Sam!

Markets rebounded in March, but it was not enough to offset earlier losses in January and February. The S&P 500 gained 3.71 percent in March, while the Dow Jones Industrial Average (DJIA) rose by 2.49 percent and the Nasdaq Composite increased by 3.48 percent. But the selloffs in January and February caused all three indices to end the quarter in negative territory. Despite the March gains, the S&P 500 lost 4.60 percent for the quarter, while the DJIA dropped 4.10 percent and the technology-heavy Nasdaq dropped 8.95 percent. The market decline to start the year is a reminder that risks remain that should be monitored going forward.

The most recent news bomb taking markets down was the release of the minutes from last month’s meeting of the Fed. The Fed raised rates, as was amply reported. In the following press conference, Fed Chair Jerome Powell was widely reported to be more hawkish, which is to say, likely to raise rates further. But what we did not know until yesterday was just how emphatic the decision was for the entire committee.

My colleague Sam Millette, manager, fixed income on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Economic Risk Factor Update. Thanks for the assist, Sam!

We saw a bit of a bounce in stock markets in March, but not enough to recover from a terrible first quarter. U.S. markets were up between 2 percent and 4 percent for the month, and developed markets managed to squeak out a small gain, but everything else was down from 1 percent to 3 percent. For the quarter, markets were down between 3 percent and 8 percent, with blue-chip companies doing best and tech stocks getting hit the hardest.

There were several important economic updates last week, with the March employment report serving as a highlight. The report showed that hiring continued at a strong pace during the month, driving the unemployment rate to a new pandemic-era low. This will be another busy week of updates, with three major reports scheduled.