GOOD MORNING. |
|
|
THE LEAD |
Two important pieces of economic data landed on Thursday morning, and together they paint a clear picture of where your money stands right now. |
First, the government reported that the economy grew at a 2.0% annual rate in the first quarter of 2026. That is a genuine improvement over the sluggish 0.5% rate at the end of last year. Government spending, investment, and exports all helped push growth higher. But the number came in below what economists were expecting, which was closer to 2.2% or 2.3%. Consumer spending also slowed compared to last quarter, as higher gasoline prices have taken a bite out of household budgets. |
The second piece of data matters more for your wallet. The Personal Consumption Expenditures price index, known as PCE, is the Federal Reserve's preferred measure of inflation. In March, it rose 3.5% compared to a year ago. That is up sharply from 2.8% in February. Core PCE, which removes food and energy to show underlying price pressure, came in at 3.2%, up from 3.0% in February. Both readings are well above the Fed's 2% target. |
America's New AI "Mega Computer" to Span an Area Bigger than the State of Texas |
|
|
The AI boom has been stalled for months. But according to legendary tech investor Louis Navellier, that's about to change. The world's first AI "Mega Computer" — Golden Dawn — will come online in 2026. It will cover a territory larger than the state of Texas… and be more than 1 trillion times more powerful than Elon Musk's Colossus. This company's building it right now. |
Click here for the full story |
The main driver of the surge is energy. Since the U.S. and Israel launched military strikes against Iran in late February, the resulting conflict has effectively shut down the Strait of Hormuz, a narrow waterway through which roughly 20% of the world's oil normally flows. That has sent crude oil prices significantly higher and pushed gasoline above $4 per gallon nationally. California drivers are now paying $6.01 per gallon on average. |
Those higher energy costs travel through almost everything you buy. Trucking, manufacturing, food distribution, utilities - all of them get more expensive when fuel costs rise. That is why a conflict in the Persian Gulf shows up in your grocery receipt in Texas. |
The Federal Reserve responded Wednesday by holding its benchmark interest rate steady at 3.5% to 3.75%. Markets have now priced in zero rate cuts for the remainder of 2026. Some analysts have even begun discussing the possibility of a rate increase next year if energy-driven inflation continues to spread into broader prices. |
|
|
For retirees, this creates a familiar squeeze. Fixed income sources like pensions, annuities, and Social Security do not automatically adjust for every uptick in prices. And while Social Security's annual cost-of-living adjustment will eventually catch up, it lags by months. Your purchasing power is eroding in real time. |
The silver lining is real, though. With rates staying high, cash is still earning something worth keeping. High-yield savings accounts are paying 4% to 5% at many institutions. Short-term CDs and Treasury bills continue to offer returns that keep pace with or slightly outrun inflation. If your cash is sitting in a traditional bank account earning next to nothing, this environment gives you a genuine reason to move it somewhere better. |
| |
THE NUMBER THAT MATTERS |
3.50% |
Annual Inflation Rate |
That is how much the PCE price index rose in March compared to a year ago. The Federal Reserve's target is 2%, which means inflation is still running 75% above where policymakers want it. This number carries real weight because PCE is the exact measure the Fed uses to evaluate whether it is winning or losing its battle against inflation. A reading of 3.5%, combined with core PCE at 3.2%, leaves the central bank essentially no room to lower rates. Markets are now pricing in no cuts at all through the end of 2026. For savers, the good news is that the current high-rate environment on CDs and savings accounts persists. For retirees drawing down a portfolio, it means your spending power continues to face a quiet headwind every month that prices stay elevated. And for anyone on a fixed pension or annuity, that 3.5% gap between what you receive and what things cost is the number to keep in mind when reviewing your annual budget. |
|
| |
|
|
|
|
WHAT WE’RE WATCHING THIS WEEK |
INFLATION DATA |
EARNINGS: Apple Topped Expectations After the Bell Thursday |
Apple reported its fiscal second-quarter earnings after markets closed Thursday. Revenue and profit came in above what analysts had forecast. The result adds a positive note to what was a mixed week for technology earnings: Alphabet advanced 10% on strong cloud results, and Qualcomm rose 16% on a solid quarter, while Meta declined 9% and Microsoft fell nearly 4% after both companies raised their AI spending plans sharply. Apple's beat matters for retirees because it is one of the most widely held stocks in the country, showing up in most broad index funds and many dividend-focused portfolios. |
|
|
SMART MONEY SIGNAL |
ENERGY: Gas Prices Keep Rising with No Clear End in Sight |
The national average for regular gasoline has crossed $4 per gallon, with California hitting $6.01 according to AAA, a 30% increase since late February. West Texas Intermediate crude briefly touched above $110 per barrel this week before pulling back slightly. President Trump stated this week that the U.S. naval blockade on Iran will continue until a nuclear deal is reached. Iran has warned of retaliation. There is no clear timeline for resolution. That means energy costs are likely to remain elevated through at least the early summer, and will continue to feed through to inflation readings in the months ahead. |
|
|
WORTH KNOWING |
LEADERSHIP: Powell's Last Meeting, Warsh Cleared Key Vote |
Wednesday's rate decision was likely Fed Chair Jerome Powell's final press conference as head of the central bank. His term as chairman expires May 15. The Senate Banking Committee voted 13 to 11 on Wednesday to advance Kevin Warsh's nomination to the full Senate, where a vote is expected the week of May 11. Warsh, a former Fed governor, is considered more hawkish on inflation than Powell. He has been critical of the Fed's practice of signaling future rate decisions through its dot-plot forecasts and has called for shrinking the Fed's balance sheet more aggressively. His arrival could shift how the Fed communicates and how much flexibility it retains meeting to meeting. |
| |
| |
Inflation rose back to 3.5% in March, and the data leaves the Fed no room to cut rates this year. If you are living on fixed income, your purchasing power is continuing to erode at a pace well above what anyone planned for. On the positive side, the elevated rate environment means savings accounts, CDs, and Treasuries are still working for you, and now is a reasonable time to make sure your cash is placed where it can earn a real return. |
|
|
|
| |
|
|
