Comments based on information available as of 7:00 am CT on 3/20/2026
Growth: More Than Just an AI Sugar High
The Fed’s latest upgrade to both near‑term and longer‑run growth forecasts raised some eyebrows, but the story isn’t just about artificial intelligence (AI) hype. Productivity numbers have been improving for the past four years. AI may be a tailwind, but it’s not doing all the lifting. That matters, because growth that’s diversified tends to be more durable and less vulnerable to a sudden narrative unwind.
Inflation: Pressure in the Pipeline
February’s producer price index (PPI) wasn’t just hot, it was uncomfortably broad. Producer prices for final demand rose 0.7% month over month, with gains spanning both goods (+1.1%) and services (+0.5%). Food prices were a major contributor, jumping 2.4%, but energy was already moving higher as well, up 2.3%, even before the latest conflict in the Middle East. With energy prices now poised to rise further due to geopolitical risk, the danger is second‑round effects: higher transportation, manufacturing, and service costs filtering through the pipeline.
Policy: The Fed’s Fog of War
Policy uncertainty is rising, and the Fed knows it. Officials are openly grappling with questions they can’t yet answer. Specifically, how long will the Iran conflict last? But also importantly, especially for setting policy, whether it shows up as higher inflation, slower growth, or some uncomfortable mix of both. The challenge is credibility: the Fed already misjudged how long to leave monetary policy easy coming out of COVID, then how long to leave it restrictive, and now there’s another big risk that they might misjudge. For now, caution—not conviction—seems to be the operating principle.
Looking Ahead: Survive the Short Term, Invest for the Long Term
The hardest part of markets right now is the short term. Headlines change daily, narratives can flip quickly, and conditions can turn on a dime. The goal probably shouldn’t be to predict the next move, but simply to get through the noise without making unforced errors. The good news is that clarity improves with time horizon. While short‑term forecasting is unusually fraught with danger, a longer-term focus on innovation and progress is far easier to anchor to.
