US consumers did what they do best — they spent, hard. Real consumer spending surged 0.7% in March, the strongest pace since early 2023. The driver? A mix of rising disposable income and a rush to front-load purchases ahead of looming tariffs. Durable goods, especially cars, led the way. At the same time, the Fed's preferred inflation gauge — the core PCE — didn't budge from the prior month, marking the softest reading in nearly five years. It's the kind of report that raises eyebrows: strong demand, subdued inflation… for now.

But the calm could be the eye of the storm. Core PCE inflation for Q1 accelerated to 3.5% on an annualized basis — the fastest in a year. GDP shrank. Savings fell to 3.9%. Procter & Gamble (PG, Financial) are raising prices, while General Motors (GM, Financial) is pulling guidance altogether, preparing for cost pressures tied to Trump's new wave of tariffs. Some retailers may absorb the blow, but not all. After years of fighting off inflation fatigue, the US consumer might finally blink.

Markets aren't ignoring the signals. The S&P 500 slipped (SPY, Financial). Yields eased. The dollar ticked higher. Investors now face a tricky setup: a consumer still spending, but policy shifts and pricing shocks around the corner. The Fed remains cautious. And with fresh tariffs set to bite, the window for this “Goldilocks” moment may be closing faster than anyone expected.