Comments based on information available as of 5:00 am CT on 5/1/2026

Growth: Blitz vs. slog.

In the first quarter, the economy was largely propelled forward by a capital expenditure blitz. Spending on computers and related equipment alone added more than half a percentage point to GDP growth. While personal consumption expenditures contributed over a full percentage point, the composition was uneven: goods spending contracted, leaving services (specifically, healthcare) to do the heavy lifting. This is growth driven by the boardroom, not the checkout line. If there’s a little relief at the pump eventually, the economy could fire on all cylinders.

Inflation: Budget buster.

Inflation is flaring where it hurts most: the gas pump. With gasoline back above $4 per gallon, lower‑income households are forced to devote a bigger share of paychecks to commuting and basics. In March, spending on gasoline was 21% greater than March of last year. That spending comes from somewhere. The squeeze doesn’t just sting. It can be deflationary elsewhere, as discretionary spending gets cut to make room for fuel bills. Energy shocks hit sentiment fast and spending plans soon after.

Policy: Mind games.

Central bankers are playing mind games with the public. They’re hoping aggressive rhetoric can serve as a substitute for actual policy shifts. Both the Federal Reserve and the European Central Bank opted to keep interest rates unchanged this week even as headline inflation climbed due to surging fuel costs. Energy price spikes are historically more damaging to economic growth than to long-term inflation. Central bankers know that. Their tough talk is a strategic move to anchor inflation expectations without actually pulling the trigger on further hikes. This “jawboning” allows policymakers to appear vigilant while they effectively look through the temporary noise of high oil prices. Their bark will likely be worse than their bite.

Looking ahead: Don’t put all your chips on chips.

While mega-cap tech companies continue to report impressive headline figures, the underlying market narrative is shifting toward the sectors that power the physical economy. There has been a widening breadth of returns beyond just technology. Energy has emerged as a clear leader, gaining more than 25% year-to-date as oil prices have surged. A diverse mix of cyclical and defensive sectors, including industrials, materials, and even utilities, have been outperforming technology. The market seems to be voting for the entire real-economy and not just artificial intelligence.