This Weekly Market Update reviews the top market headlines: U.S. GDP Declines in Q1, Fed's Preferred Inflation Index Jumps in March, Home Prices Escalated in February
  • U.S GDP shrank by 1.4% in Q1
  • The PCE Deflator rose 0.9% in March and 6.6% year-over-year
  • The S&P CoreLogic Case-Shiller 20-City Composite Index rose at a 19.8% annual rate in February

Top Three Market Headlines

U.S. GDP Declines in Q1: The Bureau of Economic Analysis last week reported that U.S. gross domestic product ("GDP"), a measure of all goods and services produced, declined by a seasonally adjusted annual rate ("SAAR") of 1.4% in Q1 of 2022. The result was a material reversal from Q4 2021, when the economy expanded at a 6.9% SAAR. Key factors driving the Q1 decline included decreases in inventory investments, exports, and government spending, as well as an increase in imports (which subtracts from the GDP measurement). On the other hand, higher expenditures by consumers aided GDP in Q1, though this was centered on services, as spending on goods declined in the quarter.

Fed's Preferred Inflation Index Jumps in March: The price index embedded within the latest personal income and spending report from the BEA, referred to as the PCE Deflator, indicated that consumer prices rose 0.9% in March, or 6.6% over the prior year. The "core" PCE Deflator, which strips out volatile food and energy prices and is considered the Federal Reserve's preferred inflation gauge, rose 0.3% from the prior month, or 5.2% over the prior year. While this remained much higher than the Fed's target of 2.0%, it was down marginally from 5.3% in February, marking the first month-to-month decline in the annual rate in more than a year.

Home Prices Escalated in February: Home prices continued surging across the nation during February, as indicated by the 20.2% year-over-year increase for the S&P CoreLogic Case-Shiller 20-City Composite Index. This was an increase from 19.0% in January and the highest annual rate recorded in the 20-year history of the 20-City Composite. All 20 cities saw an acceleration in prices, with higher annual gains in February than January. The largest gains were recorded in Phoenix, Tampa, and Miami (+39.2%, +32.6%, and +29.7%, respectively). The continued price momentum has been keyed by high demand combined with a persistent shortage of homes for sale.

As of May 02, 2022 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -2.63% -8.00% -12.94% -6.27%
S&P 500 -3.26% -8.72% -12.92% -0.50%
Russell 2000 -3.94% -9.91% -16.69% -17.92%
MSCI EAFE -2.20% -6.47% -12.00% -9.07%
MSCI Emerging Markets 0.08% -5.56% -12.15% -19.34%
FTSE NAREIT -5.44% -4.39% -8.08% 12.36%
Bloomberg Commodity 0.37% 4.14% 30.75% 43.84%
Barclays U.S. Aggregate -0.01% -3.79% -9.50% -8.42%

WSJ 4/28/2022; BEA 4/28/2022, BEA 4/29/2022, Marketwatch 4/29/2022, S&P Dow Jones Indices 4/26/2022. Data from Morningstar Direct. Returns for periods greater than one year are annualized. Gallagher Fiduciary Advisors, LLC ("GFA") is an SEC Registered Investment Adviser that provides retirement, investment advisory, discretionary/named and independent fiduciary services. GFA is a limited liability company with Gallagher Benefit Services, Inc. as its single member. GFA may pay referral fees or other remuneration to employees of AJG or its affiliates or to independent contractors; such payments do not change our fee. Securities may be offered through Triad Advisors, LLC ("Triad"), member FINRA/SIPC. Triad is separately owned and other entities and/or marketing names, products or services referenced here are independent of Triad. Neither Triad, Arthur J. Gallagher & Co., GFA, their affiliates nor representatives provide accounting, legal or tax advice.