by Louis Navellier
March 24, 2026
The biggest financial news last week was the Federal Open Market Committee (FOMC) meeting and their subsequent statement and press conference. In essence, the FOMC voted 11 to 1 to leave interest rates unchanged, with Stephen Miran being the only voting member wanting the Fed to cut key rates by 0.25%.
During his press conference, Fed Chairman Jerome Powell said the private sector is basically not creating jobs. Despite job gains remaining “low and slow,” the Fed kept interest rates fixed at today’s high levels.
The “dot-plot” forecasted just one more key interest rate-cut this year, but a minority of FOMC members forecasted more cuts. Rather than say war-related inflation would be transitory, the FOMC chose to say, “The implications of developments in the Middle East for the U.S. economy are uncertain.” The FOMC also said economic activity “has been expanding at a solid pace” and inflation “remains somewhat elevated.” Overall, the acknowledgement of labor market problems was the big news in the statement.
Fed Chair Powell also stirred some controversy by saying he would continue to serve as Fed Chair if Kevin Warsh is not approved by the end of Powell’s term in May. Furthermore, he said he would stay on the Fed board for as long as a Department of Justice lawsuit against their cost over-runs remains in force.
The Fed has a dual mandate – to keep inflation and unemployment low – so it seems inflation is once again their main concern. Last Wednesday, before the FOMC announcement, the Labor Department announced February prices surged 0.7% (month-over-month) in the Producer Price Index (PPI), plus a 3.4% rise in the past 12-months. Wholesale food prices rose 2.4%, and wholesale energy prices rose 2.3%.
Prices for final demand goods rose 1.1% and accounted for half of the increase. Wholesale service costs rose 0.5% in February. Overall, this was a somewhat scary PPI report, since the food and energy inflation in March is expected to be much worse due to the Iran war and the closure of the Strait of Hormuz.
Interestingly, Fed Governor Christopher Waller told CNBC last Friday, “Two-weeks ago, when the jobs report came out and it was negative 92,000, I thought, this is it. I’m dissenting,” but Waller added, “Since then, the Strait of Hormuz was closed. This is looking like it’s going to be a much more protracted conflict, and oil-prices are going to stay high for a long-time.” Essentially, Waller’s comments show how anxiety about the inflationary effects of the Iran war caused the Fed and other central banks to hit the “pause” button until they figure out the inflationary impact of the war, despite the fact economic growth will naturally slow due to higher food and energy prices caused by the closure of the Strait of Hormuz.
Crude-oil prices initially meandered lower last week, since the U.S. bombed Kharg Island, Iran’s deep-water access for supertankers, so the U.S. is now effectively in control of Iran’s crude-oil revenue. Furthermore, Israel announced it killed Iran’s security chief, Ali Larijani, as well as the commander of the Basij forces, Gholamreza Soleimani, who helped punish domestic protesters. It is inevitable Iran and the U.S. will have to negotiate soon. If so, this is expected to provide some temporary crude-oil price relief.
In the meantime, crude-oil and natural-gas prices re-surged on Wednesday after Israel hit Iran’s South Pars Gas Field. This strike may be in retaliation for Iran hitting Qatar’s LNG facility, but it also helps boost the U.S. LNG industry. Then on Thursday, Iran hit Qatar’s LNG facility, in an apparent retaliation. This latest strike will curtail Qatar’s LNG production by an estimated 17% and reportedly may take years to repair, so LNG prices have risen dramatically and are expected to remain high for the foreseeable future.
President Trump said if Iran persists in targeting Gulf energy facilities, the U.S. “will massively blow up the entirety of the South Pars Gas Field at an amount of strength and power Iran has never seen or witnessed before.” This escalation is unfortunate, as the “fog of war” seldom allows such quick, clean victories. Until the fighting stops and shipping traffic resumes, energy inflation is expected to persist.
The War in Iran May Delay My 5% U.S. GDP Growth Forecast Until Mid-Year
These war distractions may stall U.S. GDP growth rates early this year. The fourth-quarter’s GDP growth has been slashed to a 0.7% annual pace, and the Atlanta Federal Reserve has cut its first-quarter GDP estimate to a 2.3% annual pace. This means my prediction of 5% annual GDP growth this year may be postponed until the Strait of Hormuz is reopened and Congress stops impeding U.S. commerce – not only in the crude oil trade, but in delaying many domestic travel plans by not paying the airport TSA agents.
This partial government shutdown has cut-off funding for TSA workers, which is crippling many U.S. airports and commerce. ICE agents have been diverted to aid the TSA workers not being paid, due to the fact Congress is blocking payments to TSA workers until the ICE raids stop. This spending spat is proof the U.S. is divided, as a substantial number of our elected leaders favor open borders and illegal labor.
Longer term, as the Fed cut-rates and war uncertainty dissipates, my 5% annual GDP growth could materialize as soon as the second-quarter. Improving weather should help boost consumer confidence, especially after severe winter weather impeded first-quarter GDP growth. U.S. GDP growth is also being boosted by massive productivity gains, strong export growth from gold, LNG, refined products and crude-oil, plus steady consumer spending. Housing remains a weak link in GDP growth, as the Commerce Department reported new home sales declining 17.6% in January to an annual pace of 587,000, the slowest sales-rate since 2022. This was partly due to severe winter weather, as sales were worst up north, down nearly 45% in the Northeast and about 34% in the Midwest – putting a drag on GDP growth-rates.
In other markets, gold prices continue to decline after breaking through a 50-day moving average. The prices of other commodities are also soft, since there is a fear of slower worldwide economic growth. Normally, gold is an oasis during times of uncertainty, such as war or inflation. I am planning on maintaining my big gold bet, since my gold stocks have very strong forecasted sales and earnings.
All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Fed Chairman Powell’s Tough Talk Shakes the Markets
Income Mail by Bryan Perry
Short-Term Inflation is Taking a Toll
Growth Mail by Gary Alexander
With Wars and High Oil Prices, Why is Gold Lower?
Global Mail by Ivan Martchev
A “Force Majeure” in LNG Has Been Triggered
Sector Spotlight by Jason Bodner
Follow the Flows, Then Follow Through
View Full Archive
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Louis Navellier
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