From the Desk - Economic Commentary
Scott Hofer, Member Strategies Manager - 3/5/2026
U.S. major indexes edged slightly lower this morning as investors react to yesterday’s stronger than expected economic data and persistent geopolitical tensions. Caution prevails due to ongoing U.S.–Iran conflict risks and shifting global trade dynamics, including new tariff policies and elevated oil prices, which added to inflation concerns and kept investors on edge as they await additional economic data and policy developments throughout the week.
Regarding economic releases this morning, the jobless claims report showed that new filings for unemployment benefits held steady at 213,000 for the week ended February 28, unchanged from the prior week and slightly below economists’ expectations of 215,000, signaling continued stability in the labor market. Continuing claims rose to 1.87 million, the highest level this year, though still consistent with a labor market that remains relatively firm as seasonal distortions fade. Overall, the report points to a labor market that is stabilizing after recent volatility, with unemployment applications remaining near historically low levels and broader indicators suggesting steady employment conditions.
Next, the Challenger job cuts report showed that U.S. employers announced 48,307 layoffs in February, a steep 55% drop from January’s 108,435 cuts and 72% lower than the same month last year, offering a temporary reprieve after an unusually heavy start to the year. However, despite the monthly decline, overall layoffs for the first two months of 2026 have already reached 156,742—one of the highest January February totals since the 2009 financial crisis—and hiring plans have fallen sharply, with year to date hiring intentions down 56% compared with last year, signaling growing employer caution amid economic uncertainty, rising costs, and geopolitical tensions, particularly the ongoing U.S.–Iran conflict.
Moving to productivity, the nonfarm productivity report showed that productivity in the nonfarm business sector rose 2.8% in the fourth quarter of 2025, reflecting increased output alongside a decline in hours worked, which helped boost efficiency. At the same time, unit labor costs also climbed 2.8%, indicating that despite productivity gains, labor expenses continued to rise, tempering some of the positive effects on business cost structures. Overall, the report suggests solid productivity momentum heading into 2026, though higher labor costs remain a counterbalancing factor.
Rounding out this morning’s releases, the Import and Export Price Index report showed that U.S. import prices rose 0.2% in January, matching December’s increase, while export prices climbed 0.6%, reflecting stronger pricing for U.S. goods sold overseas. Over the past year, import prices edged down 0.1%, indicating mild downward pressure on traded goods costs, whereas export prices increased 2.6%, pointing to firmer external demand and higher prices for U.S. exports.
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