3 Things You Need to Know This Week | Inflation, Housing Market, Consumer Confidence

Transcript

Rachel Green:

Hello, and welcome to 3 Things You Need to Know This Week, our regular series designed to help you sift through the noise across financial media and understand what really matters for markets. To stay up to date with our latest market insights, subscribe to our YouTube channel or visit FisherInvestments.com. And with that, here are three things you need to know this week.

First, February US inflation data.

On Wednesday, we'll get a fresh look at February's inflation data. The Consumer Price Index, or CPI, came in at 2.4% year-over-year for January, its lowest level since May. After spiking in 2022, CPI has hovered around 3% year-over-year since early 2024. That's right in line with its long-term average going all the way back to 1926. Some investors are worried that new trade levies could reignite inflation. These concerns follow President Trump's announcement of a new blanket tariff introduced in response to the Supreme Court overturning his prior tariffs. But let's keep this in perspective. Inflation is fundamentally a monetary phenomenon. It happens when too much money chases too few goods and services. While tariffs can raise prices on specific imported goods, they don't increase the overall money supply. That's primarily influenced by central bank actions. And right now, global money supply growth looks tame. Ultimately, whether inflation rises or falls, investors shouldn't overstate the importance of February's headline inflation number. The prudent action is to stay focused on your long-term investment objectives.

Next, the US housing market.

On Tuesday, we'll see the latest from the US housing market, with February's existing home sales data. In January, existing home sales fell 8.4% from the previous month, firmly below market expectations. Taking a step back, 2025 was a tough year for the housing market. Annual existing home sales totaled just over 4 million, basically flat compared to 2024, which was the lowest level since 1995. Some investors may look at February's data for warning signs that the economy isn't on solid footing, but we think that misses the big picture. Housing market data often grabs headlines because it affects so many of us. While the health of the housing market can influence consumer confidence, spending, and borrowing trends, it's important to see the real estate economy in the context of the broader economy. Here's the key: the housing market is a smaller portion of the US economy than many people realize. The largest driver of economic growth is actually the Services sector, which makes up about three quarters of GDP. It has a much bigger influence on economic growth and the stock market. So, while housing market headlines can be attention grabbing, we believe the sector's influence on the overall economy is often overstated.

Finally, new consumer confidence data.

This Friday, the University of Michigan will release its preliminary consumer confidence data for March. February's preliminary reading came in at 57.3, but was later revised down to 56.6. While this was the strongest reading since August, consumer sentiment remains historically low. In fact, six of the consumer sentiment index's lowest historical readings occurred in 2025, with November 2025 ranking as the second lowest ever. Yet, despite this, US stocks rose 17.9% in 2025. As we often say, it's the gap between expectations and reality that matters most for stocks. Reality doesn't need to be perfect, it just needs to be better than expected. While many focus on low consumer confidence levels, economic reality continues to exceed outlooks. To us, this ongoing disconnect between downbeat consumer expectations and economic reality should continue to support this bull market.

And that's it for this episode of 3 Things You Need to Know This Week.

For more of our thoughts on markets, check out This Week in Review, released every Friday. You can also visit FisherInvestments.com. Thanks for tuning in, and don't forget to hit "Like" and "Subscribe!"