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Outlook: Recession risk increased in March, as the US-Israeli war in Iran triggered a massive shock to global oil and natural gas supplies. Most economists still expect to avoid a recession in the U.S. economy in 2026, as long as the hostilities end soon, but it depends on how long benchmark oil prices remain above $100 per barrel. U.S. real GDP growth was revised down by half to 0.7% for Q4 2025 (SAAR), showing that even before the war, the economy was slowing more than previously thought.
Fed Chair Powell said the labor market appeared to be in balance but with essentially zero monthly job growth—uncharted territory for the U.S. economy that has recently seen growth in the pool of available workers shrink alongside a significant slowdown in hiring by companies. The Fed kept its key interest rate unchanged at 3.5-3.75% in March. Annual inflation according to the PCE Price Index was 2.8% in January, significantly above the Fed’s 2% target even before the Iran war.
Connecticut home buying activity was slow in February, and a spike in mortgage rates is coming at the worst time—right as peak season gets underway. A rising rental vacancy rate is welcome news to renters and points to slower Connecticut rent growth in the year ahead.
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