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Energy Shock and Labor Weakness Complicate the Fed’s Path

Financial Commentary
March 9, 2026 By Krista Biernbaum, CFP®, CIMA®
Investment Management Officer

 

What a week! Escalating geopolitical tensions in the Middle East pushed oil prices higher and triggered volatility in global markets, prompting investors to reassess both inflation risks and the outlook for monetary policy. As the week progressed, attention shifted back to the U.S. economy, with Friday’s job report adding another layer to an already complex backdrop for markets and the Federal Reserve. Let’s dig into the eventful week.

Mideast Conflict Impacts Energy Prices

The conflict in Iran is a continually evolving situation. The biggest market impact thus far is on energy prices, particularly oil. Why? The Middle East is a large player in global oil production. In addition, the Strait of Hormuz, a key passageway for transporting through that region, is effectively closed. As a result, the global supply of energy is constrained, and that leads to higher oil prices.

How does this impact the consumer? Rising oil prices lead to higher prices at the pump. As of Friday, the national average gas price (according to AAA) is $3.32, 11% higher than the prior week. Keep in mind that, although oil and gas prices are volatile and subject to large near term movements, pump prices tend to be ‘stickier’ on the downside than when rising. Last week’s rapid and significant price increase raises concerns about the longer term prospects for inflation. Thus, the Fed faces a growing challenge. Price stability is one of the Federal Reserve’s dual mandates. Higher inflation will keep the Fed on hold longer than initially expected.

Labor Market Weakens

Adding to the drama, at the end of the week we received an update on the other side to the Fed’s dual mandate, the labor market. It showed the U.S. economy lost 92,000 jobs in February, well below expectations. In addition, downside revisions to the prior two months resulted in a three-month average of just 6,000 jobs added. The unemployment rate rose from 4.3% to 4.4% in the month. Overall, it was a weak report.

With higher near term inflation and downside risks to employment, the Fed is fighting a growing two-front battle, further complicating monetary policy going forward. This is why the market is not pricing in any meaningful odds of a rate cut at the next few policy meetings.

Looking forward, volatility will continue as the Iran conflict continues to evolve. Periods like this are reminders of the importance of having a broadly diversified portfolio and maintaining a longer-term perspective. As Michael List illustrated last week, market shocks are common and have historically recovered and moved higher over the long run. There’s an old saying that ‘the market climbs a wall of worry’. True, but of little comfort during challenging times. We are here to help you navigate through these periods. Please reach out to an advisor if you have any questions or concerns. Your financial success matters to us.

 

About the Author

Krista Biernbaum, CFP®, CIMA®

Krista Biernbaum is an Investment Management Officer within the Security National Wealth Management division. As an Investment Management Officer, she manages client portfolios, analyzes securities and performs daily trading activities. A Certified Financial Planner (CFP®) and Certified Investment Management Analyst (CIMA®), Krista holds a Bachelor of Science degree in mathematics from Wayne State College.

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