Clarksville, TN – There were a lot of economic data reports this week. Most of them were consistent with weather-related restraint in 1Q14 and a rebound in activity into early 2Q14. Real GDP rose at a 0.1% annual rate in the advance estimate for 1Q14 – while weather was a factor, the GDP growth figure was also trimmed by a wider trade deficit and slower inventory growth.
Personal income and spending figures improved in March, with upward revisions to figures for February. Unit auto sales slowed a little in April, still well above the first quarter average.The ISM Manufacturing Index was disappointing. Nonfarm payrolls rose by 288,000 in the initial estimate for April, while figures for February and March were revised a net 36,000 higher.
The unemployment rate dropped to 6.3% (from 6.7%), but that was due to a sharp decrease in labor force participation.
The employment/population ratio was unchanged, up only slightly from a year ago (suggesting that little of the excess slack has been taken up in the job market). Average hourly earnings were unchanged (another sign of slack), up 1.9% from a year ago.
As expected, the Federal Open Market Committee reduced the monthly pace of asset purchases by another $10 billion (to $45 billion). The policy statement was a near photocopy of the March statement. However, the FOMC noted that consumer spending “appears to be rising more quickly,” while “business fixed investment edged down.”
On Wednesday, Fed Chair Janet Yellen will testify before the Joint Economic Committee of Congress on “the economic outlook.” Yellen is expected to provide her assessment of the job market situation, as well as the overall outlook for the economy and monetary policy. We don’t expect any real changes in the policy outlook at this point, but you never know.
Consumer Money Rates
Treasury Yield Curve – 5/2/2014
S&P Sector Performance (YTD) – 5/2/2014
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Tax Equiv Muni yields (TEY) assume a 35% tax rate on triple-A rated, tax-exempt insured revenue bonds.
The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Data source: Bloomberg, as of close of business May 1st, 2014.
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