Strong Jobs, Pricey Oil, and a Fed on the Move
Bottom line: the U.S. economy scores 49 out of 100 — “Softening,” one notch below what we would call normal. Jobs, consumer spending and corporate profits are holding up well, and the stock market is calm.
The biggest thing pulling the score down is oil. The war with Iran has Brent crude near $103 a barrel and inflation well above the Fed’s 2% goal, which is why the Fed raised interest rates on September 16 for the first time since 2023.
The one thing to watch: whether oil cools off before the Fed’s October 27–28 meeting, where markets put the odds of another rate hike at a little better than 50-50.
| Section | Weight | Score (0–100) | Weighted contribution |
|---|---|---|---|
| VIX & Volatility | 8% | 76 |
6.1 |
| Broad Market Health | 8% | 57 |
4.6 |
| GDP Growth | 15% | 46 |
6.9 |
| Current Inflation | 12% | 36 |
4.3 |
| Long-Term Inflation Expectations (Breakeven) | 8% | 63 |
5.0 |
| Fed Policy / Rates | 15% | 42 |
6.3 |
| Yield Curve | 10% | 58 |
5.8 |
| Labor Market | 15% | 56 |
8.4 |
| Currency & Commodities | 9% | 22 |
2.0 |
| Total | 100% | — | Economic Health Score: 49.4 / 100 |
Macro Verdict tag (for use in stock-by-stock analysis): Neutral — multiplier 1.00. The score sits just under the 50 line that separates “Softening” from “Stable.”
Why This Score
Three things are pulling the score toward “great”:
- Jobs and spending are strong. Employers added 162,000 jobs in August, about three times what economists expected, and unemployment is 4.1%. Consumer spending grew at a 3.4% pace in the spring, and the Atlanta Fed’s running estimate for this quarter’s growth is 5.1%.
- Markets are calm and profits are huge. The “fear gauge” (VIX) is under 15, the S&P 500 is only about 2% below its record, and corporate profits in the second quarter were the largest share of national income since at least 1950.
- The bond market isn’t sounding alarms. Long-term inflation expectations are steady at about 2.35% a year, and the yield curve is not inverted, so there’s no recession warning from bonds.
What’s Working Against Us
Three things are pulling the score toward “awful”:
- An oil shock. Brent crude is near $103, traffic through the Strait of Hormuz is still restricted, and a key Saudi pipeline was knocked out on September 11. Gasoline set a Labor Day price record of $4.15 a gallon, and analysts warned diesel could top $6 for the first time ever.
- Inflation above target while rates rise. Consumer prices are up 3.4% from a year ago and the Fed’s preferred gauge is at 3.7%, versus a 2% goal. The Fed has started hiking, and the 10-year Treasury yield touched its highest level since 2007 this week.
- Thin footing under the surface. Paychecks (up 3.1%) are lagging prices (up 3.4%), job growth has averaged only 31,000 a month over the past year, and only about a third of S&P 500 stocks were above their 50-day average in Schwab’s latest read.
The Nine Pieces, in Plain English
VIX & Volatility: 76/100
The VIX is Wall Street’s “fear gauge” — it measures how big a swing investors expect in stocks over the next month. It closed at about 14.8 on September 18, which counts as calm (under 15). Over the past year it has ranged from about 13.4 to 35.3, and it is sitting just above its 2026 low near 13.8. Investors are not panicking, even with the Fed hiking and oil above $100.
Broad Market Health: 57/100
The S&P 500 (the 500 biggest U.S. companies) closed Friday at 7,650.50, up about 11% this year and roughly 2% below its August 13 record; it’s more than 20% above its 52-week low. The Nasdaq 100 (a tech-heavy index) is near 29,640, up about 17% for the year and 3.6% below its high. The catch is “breadth,” meaning how many stocks are actually taking part: the Dow fell for a third straight week, and two companies, Nvidia and Micron, drive roughly a third of this year’s profit growth. Energy stocks lead the quarter while investors edge toward steadier areas like health care.
GDP Growth: 46/100
GDP is the total output of the economy. It grew at a 1.5% annual pace in the second quarter after 2.1% in the first, so the first half averaged about 1.8% — on the soft side. The details look better than the headline: spending by households and businesses on U.S. output rose 4.2%, and the Atlanta Fed’s running estimate for the current quarter is 5.1% (a model estimate, not an official number, and it can swing). Fed officials expect 2.3% growth this year and 2.4% next.
Current Inflation: 36/100
Consumer prices (CPI) rose 3.4% in August from a year earlier, and the Fed’s preferred gauge (PCE) ran 3.7% in July, or 3.3% once food and energy are stripped out. The target is 2%. The bright spot is core CPI, which eased to 2.4%. The worry is energy: gasoline alone jumped 3.9% in August, and Fed officials now forecast 3.7% inflation by year-end before it eases to 2.3% in 2027.
Long-Term Inflation Expectations (Breakeven): 63/100
This is the bond market’s own inflation forecast: the regular Treasury yield minus the yield on inflation-protected Treasuries (TIPS). For 10 years that’s 5.01% − 2.66% = 2.35% a year; for 5 years it’s 4.86% − 2.38% = 2.48%. That’s a bit above the Fed’s 2% goal but steady — it was about 2.40% in April and 2.28% in late July. The 5-year sitting slightly above the 10-year says investors expect a hot near term that fades, and yields have climbed mostly because investors want a higher “real” return, not because they fear runaway inflation.
Fed Policy & Interest Rates: 42/100
On September 16 the Fed voted 12–0 to lift its target rate a quarter point to 3.75%–4.00%, its first hike since July 2023. The middle forecast calls for one more hike this year, and 16 of the 18 officials who submitted forecasts expect at least one. This is an early-stage hiking cycle — orderly and widely expected rather than aggressive — but it makes borrowing more expensive.
Yield Curve: 58/100
The yield curve compares what Uncle Sam pays to borrow for 2 years versus 10 years. On September 18 the 10-year yielded 5.01% and the 2-year 4.76%, a gap of 0.25 points. Because the 10-year is still higher, the curve is not inverted (an inversion has often come before recessions). But the gap has narrowed from about 0.46 points a month ago as short-term yields jumped on the Fed hike.
Labor Market: 56/100
Employers added 162,000 jobs in August and unemployment held at 4.1%. Hiring has been thin, though: the prior 12-month average is just 31,000 a month, and June and July were revised to only +31,000 and +21,000. Wages are up 3.1% over the year, slightly behind 3.4% inflation, so real pay is slipping a little. Labor force participation (the share of adults working or looking for work) is 61.6%, still half a point below January.
Currency & Commodities: 22/100
The U.S. dollar index rose to about 100, a seven-week high, gaining more than 1% this week as the Fed hiked and the yen weakened even after Japan raised its own rates. The bigger story is oil. Brent is near $103 after peaking above $110 in the spring, sinking to about $70 in July, and whipsawing since. Gold is around $4,400 an ounce. Wild swings in energy prices are the main reason this section scores so low.
What to Watch Next
- Friday, October 2 — September jobs report. Another strong number would keep the Fed hiking; a sharp slowdown would raise recession worries.
- Tuesday, October 13 — September inflation report (CPI). The first full look at how the oil spike and the pipeline outage hit consumer prices.
- October 27–28 — Fed meeting. Markets put the odds of a second hike at a little better than 50-50, and the answer will hinge on oil and inflation.
Also on the calendar: September 30, when the government releases August’s PCE inflation reading and the third estimate of second-quarter GDP. Headlines from the Strait of Hormuz can move oil on any day.
Strong jobs and calm markets are holding up an economy that oil prices and rising rates are trying to pull down — 49 out of 100, one notch shy of normal.
Sources: Federal Reserve, Bureau of Labor Statistics, Bureau of Economic Analysis, U.S. Treasury yield and TIPS data, Cboe, Atlanta Fed, CNBC, Yahoo Finance, Charles Schwab. Not investment advice; reflects a point-in-time snapshot as of September 19, 2026 (market data through the September 18 close).
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