US Market unaffected by Rising Inflation. Jinjja (really) !

There were only a handful of US economic reports out last week.

As we look backwards, they really did not impact US market at all. Is this even possible ?

Reports out last week:

• Tue, 28 Apr 2026 - US Consumer confidence report for April 2026.

• Wed, 29 Apr 2026 - US Trade balance in goods for March 2026.

• Thu, 30 Apr 2026 - US Jobless claims - weekly & continuing.

• Thu, 30 Apr 2026 - US Gross domestic product (GDP) for Q1 2026.

• Thu, 30 Apr 2026 - Personal consumption expenditure (PCE) for March 2026.

• Fri, 01 May 2026 - S&P final U.S. manufacturing PMI (final) for April 2026.

US Consumer confidence index (CCI) - April 2026.

The US Consumer Confidence report was a mild upside surprise, with Conference Board’s headline index rose to 92.8, by +0.6 points from upwardly revised March 2026’s 92.2. (see above)

The marginal improvement came despite a fairly hostile geopolitical backdrop for sentiment:

• Surveys conducted during 01 - 22 Apr; overlapped with (a) the 2-week ceasefire in the Middle East (since 08 Apr 2026), and (b) a rebound in US equities.

Although headline CCI increased to 92.8, its component index reports painted a different story:

• The Present Situation Index slipped by -0.3 points to 123.8. (see below)

• The Expectations Index climbed by +1.2 points to 72.2.

Present situation and Expectation index for April 2026

The split matters because:

• According to the Present situation index, consumers are a touch less upbeat about the present.

• As for the Expectation index, it shows that they are slightly less gloomy about the next 6 months. (see above)

In other words, April 2026 did not show a broad confidence boom.

• Instead, it showed a modest shift in mood, led by better expectations rather than better current conditions.

US Trade balance (in goods) for March 2026.

US Census Bureau’s Advance Economic Indicators report, revealed a widening trade gap that underscores a complicated moment for the US economy.

As the nation grapples with high energy prices and shifting global alliances, the data shows a consumer base and a corporate sector that are still hungry for foreign goods, even as domestic production faces hurdles. (see below)

International trade deficit (in goods):

• Climbed to $87.9 billion in March 2026, an increase of $4.4 billion from February 2026’s $83.5 billion.

• This increase of approx. +5.3% MoM highlights a persistent dynamic in US economy where import demand is aggressively outpacing export growth.

• It signals that domestic consumption remains a primary driver of economic activity.

The report also provided advance looks at wholesale & retail inventories, that are critical for understanding future supply chain stability.

Wholesale Inventories:

• Estimated at $932.8 billion, is up +1.4% MoM. (see above)

• This implies wholesalers are building a buffer, perhaps fearing further supply chain disruptions related to geopolitical tensions.

Retail Inventories:

• Rose by +0.7% to $823.5 billion.

• On a YoY basis, retail stocks are up about +2.3%. This shows that the "just-in-time" inventory model has largely been replaced by a "just-in-case" strategy.

In short, the 29 April 2026 report is more than just a ledger; it is a mirror reflecting the core truths about the US economy in 2026, that is (a) resilient internal demand and (b) a boom in AI infrastructure.

Jobless Claims.

Last week’s jobless claims data released,, provided a striking, unexpected signal of US labour market strength, with both weekly and continuing claims falling to levels rarely seen in recent decades.

Weekly.

For week ending 25 Apr 2026, weekly claims fell by by -26,000 to a seasonally adjusted 189,000.

This was an improvement from the upwardly revised 215,000 recorded the previous week. (see below)

The 4-Week Moving Average also dipped slightly, coming in at 207,500 - indicating reduced weekly volatility.

The plunging dip, that brought claims to their lowest level since 1969, suggests that despite various economic headwinds, American employers are keeping their payrolls largely intact and are not rushing to initiate broad-based layoffs.

Continuing.

For week ending 18 Apr 2026, continuing claims also fell by -23,000 to 1,785,000.

This decline, moving down from previous week's upwards revised level of 1,808,000, brought the figure to its lowest point in 2 years.

At face value, the downward trend in continuing claims implies unemployed workers are securing new employment, or at the very least, fewer people are remaining on the unemployment rolls for an extended duration.

Q1 2026 Gross Domestic Product.

The Bureau of Economic Analysis (BEA) report for Q1 2026 showed real Gross domestic product (GDP) growth of 2.0% at an annualized rate.

This represents a clear rebound from the sluggish 0.5% growth seen in Q4 2025, its still slightly below the consensus expectations of approx. of 2.2%.

At first glance, the headline number indicates a rebound but the underlying data reveals a complex tug-of-war between (a) a massive surge in AI investment and (b) a consumer who is increasingly feeling the pinch.

(1) AI Investment.

Specifically, US economy saw massive annualized growth in AI-related spending, including:

• 43.4% increase in IT equipment investment.

• 22.6% in software spending.

• 22.1% in data center construction.

While investment soared, household consumption that constitutes nearly ⅔ of US economic activity, actually cooled from 1.9% (Q4 2025) to 1.6% (Q1 2026), with quality of consumer spending under scrutiny. (see below)

Savings Crisis:

• Personal saving rate plummeted to 3.6% in March 2026, the lowest level since 2022.

• Consumers are dipping into their rainy-day funds to absorb higher gasoline prices (which accounted for 41% of the increase in personal consumption in March.

Sector Divergence:

• Spending was heavily concentrated in services, specifically Health care, that while durable goods remained flat and spending at hotels and restaurants actually fell by -2.8%.

(2) Government Expenditure.

The 2nd key contributor to growth is US government rebound.

Following the longest government shutdown (in US history) during Q4 2025, federal spending surged +9.3% in Q1 2026.

The "payback" effect added 0.73% points to growth, though it is viewed as a one-time mechanical bounce rather than a sustainable trend.

So far, what is “contributing” to US’s Q1 2026 GDP is know, as above.

However, it is the unknown that the US analysts and investors need to be concerned about.

• Economists have yet to fully measure how (a) heightened energy prices and (b) wider economic uncertainty stemming from the ongoing conflict in US-Iran will impact consumer behavior and business investment in the coming quarters.

• The question of AI-sustainability remains to be seen. Whether the AI-driven investment boom can continue to act as a primary engine for growth ?

• This is especially a concern if broad consumer confidence falters under the weight of higher, more persistent inflation.

Personal Consumption Expenditure (PCE).

The US Bureau of Economic Analysis (BEA) March 2026 inflation report confirmed inflation gauge has accelerated, highlighting growing price pressures across the economy.

While the Personal consumption expenditure (PCE) report suggests that US economy is not overheating, it remains uncomfortably "warm" and is drifting further away from the Fed’s target of 2% inflation rate. (see above)

Tabulating March 2026 readings into a table for an at-a-glance comparison:

Headline inflation.

The headline PCE (YoY) rose by 3.5%, a significant jump from February 2026’s 2.8%, marginally lower than economist consensus of 3.6%.

On a MoM basis, the index climbed 0.66%, the sharpest monthly increase since early 2024.

No prize for guessing that the key culprit for this spike was Energy.

Following the geopolitical volatility in the Middle East from 28 Feb 2026, gasoline and energy goods prices have surged by +19.23% in just one month, accounting for a massive portion of the headline increase.

Core inflation.

While headline inflation was fueled by volatile gas prices, US’s Core PCE Price Index (that exclude food & energy) provided a more nuanced view:

• Annual core inflation: rose to 3.2% YoY, up marginally from February 2026’s 3.0%.

• Monthly core inflation: increased by 0.29%, slightly higher than the 0.26% forecast, but a deceleration from February 2026’s 0.37%.

• 3-Month annualized rate: The short-term trend-tracker hit 4.43%, a number that will likely keep US Federal on high alert, as it remains way above their 2.0% long-term target.

The latest inflation report signals that US economy is facing a "sticky" inflation environment, heavily exacerbated by external shocks.

What is worse is that US central bank (the Fed) is “boxed in”.

With Core PCE YoY trending upward, hopes of a mid-2026 interest rate cut have likely been extinguished.

The Fed faces a scenario where growth is steady (as seen in the recent GDP report) but inflation refuses to settle at the 2% finish line.

S&P final US manufacturing PMI (final)

The “final” report for April 2026, revealed a dramatic surge in factory activity to 54.5, higher than flash estimate of 54.0 and well above March 2026’s 52.3.

This marked the strongest factory expansion since May 2022 and the 9th consecutive month of expansion for the sector.

For April, manufacturing did not just stay in growth territory; it accelerated (in a month) when markets were worried about tariffs, war-related supply disruptions, and rising input costs.

Although the headline numbers suggested a manufacturing "golden age", drill-down details showed that the growth was driven by defensive maneuvers rather than pure economic demand.

According to economists,

• If growth is driven mainly by stock-building, precautionary buying, and front-loading around tariffs, it may not be as durable as the headline number suggests.

• The April report therefore says 2 things at once: (1) manufacturing momentum is real, but (2) so are the cost and trade headwinds that could limit how long it lasts.

In short, the report points to a US economy that is still expanding, but one that is increasingly divided between (1) strong domestic demand and (2) a more fragile global backdrop.

My viewpoints: (mine only)

Safe to say, collectively the above reports reveal a US economy where the high-octane engine of AI investment is masking the deepening fatigue of the American consumer.

While technical data shows resilience, the persistent tug-of-war between defensive stockpiling and dwindling personal savings suggests US citizens, are navigating a fragile bridge of growth built on the back of anxiety.

One must wonder if the "known" stability of today is merely the quiet eye of a storm before the "unknown" costs of global volatility truly arrive. This is important for solo investors like us, no!

Still, I wonder aloud if this week’s jobs / US labour market reports will even dent the US market sentiments as Trump once again rammed up his rhetoric of attacking Iran again. Oh dear !

Remember to check out my other posts. (See below). Help to Repost ok, Thanks.

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• Do you think US market will affected by US economic reports out this week ?

• Do you think the probability of another attack on Iran will happen at the peril of a falling stock market, falling rating for the president and a further rise in petrol price ?

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