Topic: U.S. economy
Clarksville, TN – The economic data were mixed, but generally disappointing, consistent with first quarter GDP growth closer to 0% (growth is widely expected to pick up again in the 2Q15). Consumer confidence improved more than anticipated in March and motor vehicle sales picked up.
However, the ISM manufacturing data suggested a slowdown in the factory sector (likely related to the stronger dollar, although survey respondents continued to note West Coast port delays).
Clarksville, TN – The economic data were mixed, adding little to the overall picture. Durable goods orders disappointed (again), with orders for nondefense capital goods excluding aircraft (a rough proxy for business fixed investment) down for the sixth consecutive month. Unfilled orders are falling and inventories are outpacing shipments – both are bad signs, but neither is yet at a dangerous level.
Home sales figures were mixed. The third estimate of fourth quarter GDP growth came in at 2.2%, the same as in the previous estimate. This report included corporate profit data for 4Q14, which showed a moderate increase in domestic nonfinancial corporate profits, but a sharp drop in profits from abroad.
Clarksville, TN – As was widely anticipated, the Federal Open Market Committee removed the “patient” language from the policy statement, but indicated that “an increase in the target range for the federal funds rate remains unlikely at the April FOMC meeting.”
The FOMC noted that “economic growth has moderated somewhat” (vs. January’s “expanding at a solid pace”). In its Summary of Economic Projections, Fed officials lowered their forecasts for GDP growth and inflation. The dots in the dot plot (expectations of the appropriate year-end level of the federal funds rate) generally moved lower, implying a lower expected path of short-term interest rates in the months ahead.
Clarksville, TN – Retail sales results for February continued to disappoint and consumer sentiment slipped unexpectedly, but weather may have been a factor. The reports on import prices and producer prices both showed significant disinflationary pressure (which may be seen as delaying the Fed’s initial hike in short-term interest rates). Stock market volatility was elevated, with sharp moves day by day.
Market participants have grown increasingly worried about exchange rates. Around the world, exchange rates mostly fall under the jurisdiction of finance ministers (the Treasury in the U.S.), not the central banks.
Clarksville, TN – The economic data were mixed, but the February Employment Report was stronger than expected. Nonfarm payrolls rose by 295,000 (±105,000), with a revision to January of -18,000. The BLS indicated that the payroll survey missed most of the bad weather that hit last month.
The household survey showed that 328,000 could not make it to work due to bad weather, which is about average (it was 601,000 in February 2014). Average weekly hours held steady (no weather impact).
Clarksville, TN – Greece’s reform proposals were accepted by European finance ministers, effectively kicking the can down the road for another four months.
In her monetary policy testimony, Fed Chair Janet Yellen signaled that the Fed will begin to consider raising short-term interest rates on a meeting-by-meeting basis. Before then, the Fed will change its forward guidance (currently, the language suggests that the Fed can be “patient” in deciding when to raise rates).
Clarksville, TN – The minutes of the January 27th-28th Federal Open Market Committee meeting showed officials continuing to make preparations for policy normalization.
There was some debate about the risks of moving either too late or too soon. “Several” Fed officials feared that waiting too long to raise rates would risk higher inflation, but “many” (which in Fedspeak, is more than “several”) worried that a premature increase in rates could dampen the economic recovery and leave the Fed with limited options to correct course.
Clarksville, TN – The two weeks of trading this month took investors on a wild ride. The Dow Jones Industrial Average, for example, posted its biggest point gain and loss back to back for the first time since 1997, according to the Wall Street Journal
Last Tuesday’s 273-point “Dow Dive” was reversed by Wednesday’s 275-point “Dow Wow.” But then the Dow slumped again, dropping 335 points on Thursday.
Clarksville, TN – While the markets managed solid gains over the last three months, investors continue to measure their enthusiasm as the U.S. economy maintains a less-than-robust growth trend heading into the second half of the year.
After a hesitant start to 2014, the markets gained momentum as the winter doldrums gave way to slow spring growth. But ever-present concerns over the Fed’s imminent move to wind down its quantitative easing program and eventually raise rates again have kept stock market euphoria at bay.
Clarksville, TN – The housing market is stronger than it’s been in years. The U.S. economy grew an estimated 1.8% during the first quarter of 2013–not rip-roaring expansion, but an improvement over the previous quarter’s 0.4%.
Employment isn’t where it needs to be, but companies are no longer shedding jobs in record numbers and the Federal Reserve thinks the unemployment rate will fall roughly another half-percent by the end of the year. Weeks and even months have gone by without headlines about a new European debt crisis.
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