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Investing Specialists

Happy Days Are Here Again--at Least This Week

Recent strong economic data may weaken some in spring, but don't panic.

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This week brought in some upbeat tidings. The economic indicators were uniformly positive. On the jobs front, initial unemployment claims set another recovery low. Small-business optimism was up for the fifth month in a row, and that's great news because that sector does most of the hiring at this stage of the recovery. Manufacturing, less the utility sector, turned in some more great numbers on several reports. Even the producer and consumer price indexes came in better than expected (lower inflation). The housing market, on a volume basis, continues its slow but volatile trudge off the bottom. Housing stocks have been reacting to that phenomena and are now up over 70% from the autumn lows.

The only one potentially worrisome number was a weaker-than-expected monthly government retail sales report that threw the market into a tizzy on Tuesday. More thoughtful analysis of the retail sales report showed that it was just an anomaly in the auto data that suppressed the headline number. The weekly retail data that I track continues to show steady consumer spending. Keep in mind, though, consumers continued to shun anything with a price increase.

Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.