Q1 GDP to Show Hit from Trade Deficit


The trade deficit widened dramatically in March as containers that had been stockpiled during labor disputes at West Coast ports were finally unloaded and made room for new shipments. Indeed, almost all of the increase in imports came from Asia, Read More »

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Construction Spending: Better than the Headline


Construction spending dropped 0.6% in March but was revised up a bit during the previous two months. Losses were concentrated in the public sector with a further pullback in spending at the state and local levels exacerbating losses at the federal level. Residential construction also retreated after better gains in January and February. The bright spot was commercial construction activity; Read More »

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Consumers Catch Up on Spending


Personal consumption expenditures rose 0.4% in March after being revised up slightly for the previous month. The increase was 0.2% faster than the pace of inflation. Personal disposable income growth actually contracted slightly Read More »

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Another Downdraft in Growth


Real GDP rose an almost negligible 0.2% in the first quarter, marking the fifth time that the economy has slowed to a standstill or worse since the onset of the “recovery” in 2009. Some of the weakness may be attributed to transitory factors Read More »

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Limited Rebound in Durable Goods Orders


Durable goods orders rose a much stronger-than-expected 4% in March, driven by strong gains in volatile aircraft orders. Orders for both private and defense aircraft surged over the month. Overall, durable goods orders, however, remain essentially flat Read More »

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New Home Sales Slow


In March, new home sales slowed to a 481,000-unit rate after a surprisingly strong February, which was revised even higher to a 543,000-unit pace. That slowdown may seem discouraging but some giveback after the pop in February was expected. More interestingly, the median sales price of new homes actually contracted 1.7% on a year-over-year basis. That price movement should bode well for sales volume Read More »

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Five Themes for the Week


Economic Struggles in China and Greece

  • Chinese authorities sprang into action just a few days after announcing a disappointing first quarter GDP growth rate. The People’s Bank of China (PBOC) last night reduced the banks’ reserve requirement by 1% to 18.5% with the intended goal of free, loanable funds in the banking system in order to stimulate the economy. It was not the first move by the Chinese central bank to support the economy: Just a few weeks ago, the PBOC slashed the required down-payment for purchasing a home; we expect more action to come. The benchmark one-year lending rate currently stands at 5.35% after two cuts in November and February; we anticipate an additional cut soon. The speed and size of the Chinese authorities’ response betrays serious concerns about the state of the economy.
  • Growth at 7%, as recorded in the first quarter, just sits at target level for the year, leaving no margin of error for the rest of the year if growth fails to reaccelerate Read More »
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Bending the health care cost curve over 15 years


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My favorite chart from this morning’s CPI release


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Consumer Prices in Line with Expectations


The headline numbers in the Consumer Price Index (CPI) rose 0.2% in March, buoyed by higher energy prices, mainly motor fuel, which rose 3.9% in March. Read More »

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