Happy Friday! Often, hard and soft data point to the same conclusions about the economy. But that’s not at all the scenario the US finds itself in today. First time reading? Join 190,000 self-directed investors gaining an edge every morning and subscribe here.

Hard numbers still point to strength

The economy is holding up better than the trade war alarmists expected.

Despite the downbeat forecasts tied to President Trump’s tariff agenda, hard data does not reflect the feared stagflation or recession scenario. 

Headline inflation has cooled each month this year. And on Thursday, new data showed producer prices have also fallen more than expected, defying economist expectations for an increase.

Still, that hasn’t stopped the chorus of warnings from journalists, economists, and even Federal Reserve officials who continue to signal broad price pressures ahead.

“If you are in the stagflation camp, these data aren’t confirming your thesis,” Jamie Cox, managing partner for Harris Financial Group, said in regard to producer prices. “While growth is slowing, disinflation remains intact.”

Retail data also surprised. April sales rose 0.1%, and March was revised sharply higher to a 1.68% gain — the biggest monthly jump in two years. 

Some analysts argue the burst in spending is due to front-running tariffs, though either way, the resilience in demand is clear.

That strength shows up in the labor market, too.

The latest jobless claims data for the week ending May 10 showed no material uptick in either initial or continuing claims, suggesting layoffs remain low and employment is stable. 

Yet even with those robust numbers, businesses remain cautious. Walmart announced Thursday it will raise some prices for customers in the coming months as tariff-related costs work their way into inventory.

“The magnitude and speed at which these prices are coming to us is somewhat unprecedented in history,” Walmart CFO John David Rainey said in an interview, per the Wall Street Journal.

JPMorgan CEO Jamie Dimon echoed that caution. Speaking Thursday with Bloomberg, he warned that despite the recent US-China tariff pause, a recession is still possible.

“Hopefully we’ll avoid it, but I wouldn’t take it off the table at this point,” Dimon said.

His bank’s economists lowered their recession odds below 50% on Tuesday as stocks erased their post-Liberation Day losses for the year.

Indeed, the stock market appears to believe the country will sidestep a worst-case scenario. The S&P 500 has climbed for four days in a row, led by many of the names that stumbled through April. 

Yet that doesn’t change the fact businesses feel stuck between an economy that looks healthy on paper and a policy environment that’s anything but predictable.

At the same time, consumers continue to spend while prices cool off and layoffs remain low.

But good data does not always sway the mood.

Market snapshot

Elsewhere

📉 Coinbase stock tumbled after a cyberattack. Shares fell roughly 7% due to news that digital attackers stole customer data and threatened to publish it unless the company paid $20 million in ransom. A separate report emerged that the SEC still has an open investigation into Coinbase potentially misreporting user data. (Yahoo Finance)

🏦 Powell says inflation swings could be coming. The Fed Chair said Thursday that data could be more erratic in the coming years: “We may be entering a period of more frequent, and potentially more persistent, supply shocks — a difficult challenge for the economy and for central banks.” (Barron’s)

🍻 Want more financial news, but after the closing bell? Thousands of readers trust Brew Markets for their end-of-day analysis. I’ll handle your morning dispatch, and you can wrap up your afternoons with Brew Markets from Morning Brew — sign up free.

Rapid-fire

• Meta stock tumbled after announcing a delay to its flagship AI model

• Foot Locker stock jumped more than 85% Thursday after Dick’s Sporting Goods agreed to acquire it for $2.4 billion (Barron’s)

• Fed Governor Barr said the US economy remains on solid footing and inflation is cooling (Reuters)

• Business travelers to the US dropped 9% in April (AP)

• President Trump said he doesn’t want Apple building products in India (CNBC)

• The White House will partner with the UAE on a massive AI data campus (CNBC)

• Greed has rapidly replaced fear in the stock market (Opening Bell Daily)

Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].