The US economy is flashing major stagflation warning signs after a historic oil shock collided with a surprise collapse in the jobs market last week.
1. Oil shock: WTI Crude surged 35.6% last week—the biggest gain in futures history—closing at $90.90 after the Strait of Hormuz was effectively shut. JPMorgan warns output cuts could hit 6 million bpd if the blockade continues.
2. Jobs crash: The US lost 92,000 jobs in February, smashing expectations of a +59,000 gain. It’s the second negative print in three months, with healthcare down 28,000 and federal payrolls dropping 10,000.
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3. Inflation heat: Wages rose 0.4% month-on-month, adding pressure. Wolfe Research estimates a $20 oil spike adds 0.4% to inflation while shaving 0.1% off GDP.
4. Market mayhem: The Dow tumbled 3% last week. South Korea’s KOSPI plunged 12% in one session, triggering a circuit breaker. Gold hit $5,158, and the dollar jumped, signaling major stress.
What to watch this week:
- Wednesday: US CPI (Feb) – consensus 0.3% m/m
- Thursday: Jobless Claims – 225k would confirm weakness
- Friday: Core PCE – Fed’s key inflation gauge
The bottom line: If Wednesday’s CPI runs hot, the oil shock will act as a “vicious multiplier,” cementing stagflation risks. All eyes are on the Strait of Hormuz.
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