Inflation Might Be Easing But Tech Outlook Still Choppy, Analysts Warn

According to data released Thursday by the Bureau of Labor Statistics, the annual inflation rate fell to 2.4% in March, the lowest level in six months, down from 2.8% in February and below economist expectations of 2.6%.

On a monthly basis, the Consumer Price Index contracted by 0.1%, slowing from the 0.2% increase seen the previous month and below expectations of a 0.1% increase.

It marks the lowest monthly inflation reading since May 2020.

Wedbush analyst writes that the tariff disaster Trump triggered last week has been weighing heavily on the stock market, creating uncertainty and dragging down prices.

Also Read: Novartis Commits $23 Billion To Expand US Manufacturing Over Five Years, Despite Tariffs Uncertainties

Until now, it’s mostly been a Wall Street issue—but that’s about to shift. With the new 145% tariff on Chinese goods now in effect, U.S. consumers and businesses will feel the impact in the coming days and weeks.

DA Davidson says that inflation dropping below 3% is generally a good sign, but what’s more important is why it’s happening. In other words, did inflation cool down in March because the economy is starting to slow?

“Although falling inflation should give the Fed more room on interest rate policy following stagflation worries, but may be at the whims of uncertain tariff policy,” DA Davidson analyst Michael Baker wrote.

Wedbush highlights Apple Inc. AAPL is at the center of this tariff storm since 90% of iPhones are made in China. Although Apple has expanded its supply chain to places like Vietnam, India, and the U.S., most of its production still happens in Asia.

Wedbush estimates that most iPhones, over half of Mac products, and 75%–80% of iPads are made in China. If the tariffs last a few weeks, the company might raise iPhone prices to over $2,000.

Wedbush analyst on Tuesday said that building a factory in the U.S. takes four to five years. The analyst explains that high labor costs and other expenses in the U.S. don’t align with how modern supply chains are designed to operate, making it hard to compete with Chinese tech giants.

Wedbush analyst Daniel Ives writes, “We are heading into a very bumpy period as we expect a tech earning season that will be full of uncertainty, lack of guidance from many tech/China exposed tech players, and investors will need to buckle the seat belt and look past the next few quarters of choppiness and hold the tech winners through the storm.”

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