A Primer for February Employment


We expect payroll employment to rise by 210,000 jobs in February, less than we initially expected as unusually harsh winter weather and work stoppages at West Coast ports disrupted everything from construction to manufacturing activity. Read More »

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Construction Hit by Weather


Construction spending plummeted 1.1% in January as another relentless winter disrupted public and private sector projects alike; that was despite seasonal adjustment of the data. We experienced more weather disruptions in more places in February than January so the noise from distortions will likely get worse before it gets better.

Losses were broad-based Read More »

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Income Continues to Outpace Spending


Real disposable income surged 0.9% in January, extending gains that we saw at the end of 2014. Improving labor market conditions, combined with a pickup in average hourly earnings (driven in part by increases in the minimum wage) and plummeting prices at the gas pump enhanced Read More »

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Inventories Less of a Problem in Fourth Quarter


Real GDP was revised down to 2.2% in the fourth quarter from an initial estimate of 2.6%. A sharp downward revision to inventories was the primary reason for the revision, which leaves less of an overhang for producers to drain in early 2015. Imports were also revised up, reflecting the phenomenal strength of consumer spending Read More »

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Divide in Eurozone Economies


After I wrote this on Twitter (@AdolfoLaurenti):
Among Eurozone economies, the real divide is between the reformed (Spain) and the unreformed (Italy and France).”

I received a question from  @ml8_ml8:
“When you say that Spain is “reformed”, Italy and France not, what do you mean by that?”

My answer is too involved to reply on twitter so I am posting it here with a table compiled by the World Bank that ranks countries for ease of doing business.
By market reform, we mean liberalization of markets for goods and services, labor market reform to add flexibility to wages and contracts, as well as cutting back red tape across the economy. A good proxy is the World Bank ranking on the ease of doing business. As shown in the table, Spain has done a better job on the path to reform, while Italy is lagging. It also shows how France is far from the UK or Germany in competitiveness.

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Durable Goods Orders Rebound


Durable goods orders increased 2.8% in January, only partially offsetting two months of ugly declines. An increase in aircraft orders was the primary reason for the turnaround. Orders for nondefense aircraft and parts surged a whopping 128.5% in January. Other pockets of strength included machinery and computing equipment, Read More »

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Energy Prices Pull CPI Lower


The Consumer Price Index dropped 0.7% in January but only 0.1% from a year ago. Falling energy prices were the primary reason prices fell Read More »

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New Home Sales Maintain Buoyancy


New home sales came in at a 481,000-unit pace in January, nearly even with the better-than-expected showing we saw in December. Moreover, in a shift that started late last year, gains were more concentrated in lower priced homes, which took down the median and average sale price Read More »

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Greece Capitulates to Reality


The temporary “compromise” found between the European Union (EU) and Greece is nothing short of a full capitulation by Athens to economic realities, at least for the time being. On the surface, the can has been kicked down the road for four more months. But it is notable that none of the requests advanced by the new Prime Minister Alexis Tsipras and his Syriza government were acknowledged Read More »

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Existing Home Sales Below Expectations


The number of existing homes sold in January was 4.82 million on an annualized basis. That is the lowest level since May of 2014. All regions were down, led by the Northeast and West. Weather played a role in restricting the number of sales across the nation, but cannot be blamed for all of the weakness in the month’s data. First-time buyers took a step back in January. Read More »

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