Japan's 4% Inflation Shock

Are We Heading for a Global Financial Meltdown?

Last week serves as a reminder of how the macro forces that have been building over the past several quarters, including inflation, interest rates and geopolitics, may finally be suggesting that an economic deceleration is upon us. In January, the U.S. composite PMI reading dropped sharply to its lowest level in 9 months. This past week, the February reading dropped sharply again, this time to a 17-month low. Perhaps even more concerning is the fact that the services component of this number came in at 49.7, indicating a contraction in activity for the first time in two years. It’s a stunning reversal that’s taken just two months to go from strong to stagnant.

Other data points that hit just this week: The University of Michigan consumer sentiment reading was revised lower to its lowest level since November 2023. Existing home sales in the United States had their biggest single month decline since June. And that doesn’t even include a Walmart earnings report that included a disappointing consumer outlook.