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The tenuous ceasefire in the Middle East held today, buoying stock markets and calming oil prices. But the Iran war is also cutting into spring home sales; mortgage applications are down. We’ve got those numbers below, along with revised GDP and the war’s ripple effects on plastic prices. Plus, did you spend $7 on a bag of Doritos? My colleague Daniel Ackerman does the numbers on new consumer spending and inflation data, on salty snacks and everything else. — Carrie Barber, newsletter editor

A desk with a laptop, calculator, receipts and a ledger book. A person's hands are visible, the right writing in the ledger and the left holding a mug.

ridvan_celik/Getty Images

February was not a great month for household budgets

Prices rose, but consumers managed to keep up. That’s been the status quo for a while now.

Prices ticked up 0.4% between January and February, the Bureau of Economic Analysis reported today, and prices rose 2.8% from a year ago, 3% when you strip out volatile food and energy.

February’s stubborn, elevated inflation hurts more when you consider disposable income ticked down by 0.1% compared to January. And yet, consumers were still spending.

Here’s one more number for you: Real personal consumption expenditures, which is how many goods and services consumers bought in February adjusted for inflation, ticked up by 0.1% from the month before. What do we make of that?

“The American consumer has been remarkably resilient, given a whole set of incredible shocks that have occurred over the last year,” said Randy Kroszner, an economics professor at the University of Chicago.

Thursday’s report suggests that resilience has basically continued, Kroszner said, at least through February.

“The consumer is sort of moving along — not strongly, not weakly — continuing to buy goods,” he said.

Vehicle sales, for one, rose in February. But the uptick in spending was largely a product of higher prices, not household financial strength, said RSM economist Tuan Nguyen.

“The short story is consumers are starting to feel the squeeze,” he said.

News you should know

Let’s do the numbers

Stocks rose today after Israel authorized direct negotiations with Lebanon, easing worries that the Iran war ceasefire would fall apart. The S&P 500 rose 0.6%, the Dow added 0.6%, and the Nasdaq climbed 0.8%.
A barrel of U.S. crude oil rose to $97.87 today; the national average for a gallon of regular gas was $4.16.

The economy grew at a slower pace in the fourth quarter than previously reported, the Bureau of Economic Analysis said today, down to 0.5% from 0.7%.
Mortgage applications have taken a hit since the Iran war began; they fell 0.8% from last week. Pending sales are also down. Some real estate agents told us they’re working twice as hard to maintain their typical volume.
Plastic prices are rising as war in the Middle East squeezes supply chains and petrochemical markets, hurting manufacturers. March contract prices for plastic used in packaging were up nearly 20%.

The Fed

The Federal Reserve is still considering an interest rate cut this year, notes from last month’s policy meeting show, but there’s also a scenario in which rates could go up. It depends on what happens in Iran.
When it comes to inflation measures, the Fed prefers PCE. It wasn’t always that way.

Tech

Who is Satoshi Nakamoto, the bitcoin creator who disappeared before his cryptocurrency went mainstream, and surged in value? The New York Times spent months digging through thousands of emails and documents and unearthed evidence pointing to British cryptographer Adam Back. Back says the clues are all a series of coincidences. You be the judge (gift link).
Anthropic said this week its new AI model, Claude Mythos Preview, is too dangerous to release to the public because of how quickly it can detect and exploit software vulnerabilities. The AI lab assembled big names in tech to make proactive fixes; cybersecurity experts said the warning is not just hype.

QUOTE OF THE DAY

“I asked family vloggers and mom influencers: What content does the best for you? And several of them went on the record and said that content where kids are sick, sad, or injured does better than content where they're not.”

— Fortesa Latifi, journalist and author

Would you share your children’s most intimate moments on social media — like potty training or the sex talk — if it meant making millions of dollars a year? For some American families, posting about daily life has become a full-time job and a financial necessity. That’s just one topic Latifi covers in “Like, Follow, Subscribe: Influencer Kids and the Cost of a Childhood Online.” She spoke to “This Is Uncomfortable” host Reema Khrais about how children are paid for their work, why some parents stopped posting, and how kids feel about having their lives broadcast online.

HEAR MORE

Kevin Carter/Getty Images

Final note

How do you lose billions after raising prices?

PepsiCo knew its Frito-Lay snacks were overpriced for years. Some of its brands, which include Doritos, Lay’s and Cheetos, reached $7 a bag. In February, PepsiCo said it was cutting some prices by 15%, but it might not be enough to win back customers and reverse billion-dollar losses. Consumers are tired of inflation, especially with the Iran war and tariffs raising gas, food and packaging prices. These three charts illustrate PepsiCo’s pickle.

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