C.E.O.s Look Beyond a Rosy Inflation Report

DealBook|C.E.O.s Look Beyond a Rosy Inflation Report

The cloud behind the inflation silver lining

Even upbeat economic news can offer little comfort to markets and the C-suite.

Stocks look set to open lower as relief over Wednesday’s better-than-expected inflation report fades, and concerns grow that a trade war could sap consumer spending and corporate profits. That’s led more corporate chiefs to speak out about the confusion over President Trump’s trade moves.

A recap: The Consumer Price Index showed that inflation cooled off slightly last month. Trump hailed the data as “very good news,” and stocks rallied at the outset.

But others saw red flags, and the S&P 500 pared its gains as the president reiterated his intention to enforce more, and potentially higher, tariffs on trading partners.

The report didn’t fully reflect the effect of the Trump tariffs, let alone the tit-for-tat trade war measures that Canada, China and the European Union are now imposing on the United States. The report was “not as encouraging as it looks,” Thomas Ryan, an economist at Capital Economics, told The Wall Street Journal.

For example, the data showed an uptick in apparel and home furnishings prices, Stephen Juneau, an economist at Bank of America, wrote in a research note on Wednesday. As for tech goods, especially those made in China, Juneau wrote that he expected to see price increases over the coming months. A big concern: Consumer spending, which has helped the United States avert recession, is showing signs of faltering across income brackets.

Egg prices, an emerging symbol of America’s affordability crisis, jumped 10.4 percent last month after a big rise in January, prompting strong words from Senator Elizabeth Warren, Democrat of Massachusetts, about households’ shrinking budgets: “President Trump should focus on lowering costs for families like he promised, instead of causing chaos,” she said in a statement.