Did Somebody Hit the Economic Pause Button? Does Anybody Care?
Many U.S. metrics took a rest this week, even while the S&P hit a new high and bullish sentiment picks up about the economy.
While many market participants this week focused on holiday plans and spring break vacations, a lot of U.S. economic metrics took a rest, too. Markets seemed oblivious to negative U.S. economic data as the S&P managed a new recovery high. New-home sales were down sequentially as were pending home sales. Orders for non-defense capital goods ex-aircraft were down month to month as was the Purchasing Managers' report for the very important Chicago region.
Even worse, my weekly shopping center metric dropped to a pathetic 1% growth rate, its lowest level since 2010. The shopping center data goes all the way through March 23. The broader government report on consumption, released on Friday, looked considerably better than the shopping center data but only went as far as the end of February. The government report had inflation-adjusted consumption up by more than 2% on a year-over-year averaged basis. Some of that spending came out of savings, as consumer income growth on an averaged year-over-year basis dropped to a 1.6% growth rate. This rate will likely continue to fall for another month or so before the effects of the payroll tax increase begin to burn off.
Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.