Jobless Claims Increased More Than Expected

• Initial jobless claims jumped to 219K, 9,000 above consensus, while continuing claims dropped to 1.794 million, the lowest level in nearly two years
• February PCE inflation remained at 2.8% year-over-year as expected, with core PCE at 3.0%, reflecting muted inflation activity before recent economic disruptions
• Q4 GDP was revised down 20 basis points to 0.5%, bringing full-year 2024 GDP growth to 2.2%, the weakest annual growth since 2022

Summary: Weekly Jobless Claims and Economic Indicators Show Mixed Signals

Key Economic Data:

Initial jobless claims surged to 219,000 last week, significantly exceeding consensus estimates by 9,000 and marking a sharp increase from the prior week's upwardly revised 203,000—the lowest level since the holiday shopping season. However, continuing claims fell to 1.794 million, dropping below 1.8 million for the first time in nearly two years, down from 1.832 million the previous week.

Inflation and Spending Metrics:

February's Personal Consumption Expenditures (PCE) largely met expectations. Personal income rose 0.4% (matching forecasts), while personal spending increased 0.5% (10 basis points below projections). Year-over-year PCE remained flat at 2.8%, while core PCE dipped to 3.0%, both in line with expectations. These figures suggest relatively muted inflation, though analysts note the data is outdated given current market volatility.

GDP Revision:

Q4 GDP was revised downward by 20 basis points to 0.5%, marking the weakest quarterly growth since Q1 2025. Full-year 2025 GDP growth came in at 2.2%, the lowest since 2022. Consumption fell to 1.9% while pricing held at 3.8%.

Market Implications:

Pre-market futures declined sharply following geopolitical concerns over an unraveling ceasefire with Iran. The Dow fell 170 points, S&P 500 down 17 points, and Nasdaq dropped 47 points. Investors are awaiting Friday's March Consumer Price Index report, expected to show headline inflation rising due to increased oil prices.