March Market Recap
Market attention during March was firmly focused on the Middle East, where escalating regional tensions reverberated across global markets. The conflict’s spillover effects, particularly on key commodities such as energy, added a new layer of volatility and uncertainty worldwide.
Despite these headwinds, the prevailing investor playbook remained intact. “Buying the dip” continued to be the dominant strategy, and for now, it has largely paid off as markets demonstrated notable resilience in the face of negative headlines.
That resilience was tested following February’s Jobs Report, which surprised to the downside as employers shed jobs unexpectedly. The weaker-than-anticipated labor data raised fresh questions about the durability of the employment market, which until recently had been a pillar of economic stability.
Looking ahead, the market’s best case scenario hinges on three key developments:
- a rapid de escalation of geopolitical tensions (seems to be happening),
- a pullback in oil prices from current elevated levels, and
- resilience in the labor market over the coming quarters.
Together, these factors would help support risk sentiment and reinforce the economy’s ability to weather near term shocks.
Oil Prices and the Economy: What to Know
Oil plays a central role in powering the world’s transportation networks, manufacturing systems, and supply chains. Because of this, oil prices often act as an economic barometer – when prices rise meaningfully, both consumers and businesses feel the shift. Yet, even though oil shocks can introduce short term turbulence, history shows that economies adapt, innovation accelerates, and long term investors continue to be rewarded.
How Higher Oil Prices Feed into Inflation
Studies show that U.S. households spend less than 2% of their disposable income directly at the pump,1 but its influence ripples through every corner of the economy.
When oil becomes more expensive, transportation, manufacturing, and agricultural costs all rise. Businesses often pass these costs to consumers, contributing to broad inflation. In earlier decades, wage price spirals and institutional dynamics amplified these effects, particularly in the 1970s when inflation became more persistent due to automatic wage indexation and fiscal pressures.2
When Consumers Begin to Feel the Pinch
In the U.S., a commonly observed threshold is around $4 per gallon. Above this level, households often reduce discretionary spending because higher fuel costs act like a tax on daily life. While this can soften near term economic momentum, it also encourages efficiency, innovation, and diversification.
Why Long‑Term Investors Can Stay Positive
Oil shocks may produce unsettling headlines, but they rarely derail long term financial plans. Periods of high oil prices often reward energy related companies, and sectors with strong pricing power – technology, healthcare, consumer staples – prove resilient. Diversified portfolios naturally balance these dynamics.
Most importantly, markets tend to anticipate and adjust to energy shocks before consumers fully feel them. That means volatility is often temporary and historically is followed by recovery.
For long term investors, the right approach is steady, diversified, and strategic. And as always, we are here to help you stay grounded, confident, and focused on the opportunities that emerge through every economic cycle.
Introducing Washington State's First Income Tax
Key Provisions of the tax:
- Tax Rate: A flat 9.9% applies only to Washington taxable income above $1 million.
- Exemption: The first $1 million of income is exempt.
- Marriage Penalty: This $1 million deduction is applied per household and is not doubled for married couples.
- Inflation Adjustment: The threshold will be adjusted for inflation every two years.
- Effective Date: The tax applies to tax years beginning January 1, 2028.
- Exemptions: Specific types of income are exempt, including:
- Sales of residential and other real property.
- Gains from the sale of qualified family-owned small businesses.
- Qualified pension income and retirement account withdrawals.
There is time for Washington residents to plan for the millionaires’ tax since it does not kick in until 2028.3 What specific strategies may benefit you will depend on your unique situation and require a thoughtful collaboration with your trusted advisor team!
Footnotes:
1 https://www.eia.gov/pressroom/releases/press574.php
3 A helpful summary is available from the Association of Washington Business.
