February inflation data shows more of the same

This Marketplace episode examines the latest economic data, focusing on February's inflation report and its implications for the U.S. economy. The Bureau of Economic Analysis revealed a 0.4% monthly increase in the Personal Consumption Expenditures (PCE) index—Fed's preferred inflation gauge—marking a concerning trend, especially as it doesn't reflect the recent escalation in the Middle East conflict or rising oil prices. GDP growth for Q4 2025 was a weak 0.5% annualized, largely due to the longest government shutdown in U.S. history. Despite low unemployment, the share of long-term unemployed is rising, signaling underlying labor market fragility. Experts like Catherine Ann Edwards warn of stagflation risks, though they note the Federal Reserve is better equipped than in the 1970s to respond. Meanwhile, the war in Iran has disrupted global oil and petrochemical supply chains, driving up plastic prices by 15–20%, which is squeezing manufacturers and threatening broader economic slowdowns. In real estate, higher mortgage rates are cooling demand, though cash buyers and strategic buyers remain active. The episode also highlights a promising shift in energy: the rise of factory-built micro-reactors by companies like Radiant, which aim to provide reliable, clean power for data centers, hospitals, and military bases—offering a stable alternative to volatile fossil fuels. These developments underscore a complex economy balancing inflation, supply chain shocks, and a quiet but growing pivot toward nuclear energy. Key takeaways include: 1) Inflation remains sticky despite weak growth, raising stagflation concerns; 2) Supply chain disruptions from geopolitical tensions are driving up input costs, especially for plastics; 3) The Federal Reserve is more credible than in past inflation crises; 4) Consumers are resilient but under financial strain, with savings declining; 5) Real estate markets are cooling due to high mortgage rates, though cash buyers are still active; 6) Micro-nuclear reactors represent a potential solution for energy reliability in critical infrastructure; 7) The U.S. is becoming a global oil exporter as Asian nations seek alternatives to Gulf supplies; 8) Long-term economic resilience depends on both monetary policy and innovation in clean energy.