03/14/2025

Ahead of Tariff Turbulence, U.S. Producer Inflation and Labor Market Appear Stable

The producer price index remained unchanged in February

U.S. producer prices were unchanged in February for the first time in seven months, while fewer Americans filed claims for unemployment benefits last week, pointing to a stable economy that should allow the Federal Reserve to keep interest rates steady next Wednesday.

But the calm painted by the reports from the Labor Department on Thursday could be upended by radical government spending cuts, which have pushed thousands of federal employees and contractors out of work, and an escalating trade war stemming from broad import tariffs.

The aggressive policies pursued by the current administration have sent business and consumer confidence plummeting, and raised the chances of a recession. U.S. airlines have cut their earnings estimates noting that corporations and consumers were scaling back spending because of mounting economic uncertainty.

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