Weekly Economic Update 03-06-26: ISM Manufacturing & Services; 4th Quarter Productivity; Retail Sales; and February Employment

Manufacturing continues to recover...and that was before we needed to replace millions of dollars' worth of bombs.

The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

Well, this was a slow news week. Not much has been going on in the world since last Friday.

I mean, except for the invasion of Iran and the complete elimination of their entire leadership structure - twice. As the world’s 5th largest producer of oil at more than 5.1 million barrels per day, and the gatekeeper for the Straight of Hormuz through which about 17 million barrels of oil travel each day (20% to 30% of world consumption), this could very well have an impact on our economy.

As of this writing, oil prices were up 25% from last Friday’s close and are sitting at about $85 per barrel. To be honest, given what has happened, that really isn’t too bad. However, if this drags on for weeks, and the Straight of Hormuz is closed for an extended period of time, oil prices could rise significantly, which would add considerable short-term price pressure in an environment where inflation in the United States is already accelerating.

And this during a time when people are really struggling to make ends meet. Redfin recently released the results of a survey that showed just about HALF (49%) of all U.S. residents struggle to afford their rent or mortgage payments. HALF! How long will it be before we start to see a sharp increase in foreclosures and bankruptcies?

The financial stress isn’t limited to those with low incomes. The average income of people seeking help from credit counseling organizations is rising.

And just this week, the Wall Street Journal reported that last year, a record number of people had to take a hardship withdrawal from their 401(k). That was the sixth straight year of increases in the number of hardship withdrawals, and it is now 3x higher than the pre-COVID level.

Iranians may be shouting “death to America,” but Americans are shouting, “I’m broke and can’t afford my mortgage payment!” If only the administration would give the domestic economy as much attention as it does to Venezuela, Iran, or Greenland. Maybe if they did, people could afford a home.