Category Archives: Diane Swonk

CPI Rebounds from Winter Lull

The Consumer Price Index (CPI) rose  0.2% in March from February, well in-line with expectations and was up 1.5% from a year ago, a little hotter than we saw just a month ago. The portions of the country that escaped the polar vortex suffered a drought, which is pushing up feed prices. In response, prices [...]

Consumer Pulse Still Beating

Retail sales rose 1.1% in March, following upward revisions to February, as consumers came out of hibernation and began to spend again. Vehicle sales were particularly robust, as consumers returned to dealer showrooms and tapped the pent-up demand built during the worst months of winter. We also saw strong gains in building materials and garden [...]

Private Sector Recovers Job Numbers, not Quality

Payroll employment jumped 192,000 in March and was revised up by 37,000 for the previous two months; that puts the total number about where we expected it. Private sector employment crossed its previous peak. The quality of jobs generated, however, is not comparable in any way to those we lost. The overwhelming majority of job [...]

U.S. Trade Deteriorates

The trade deficit widened more than expected in February, as imports rose and exports fell. Imports of vehicles were particularly strong; that could be a problem for domestic vehicle producers going forward even as sales come back, which they did strongly in March. Japanese and Korean producers, in particular, now have unusually large pricing advantages [...]

In Defense of Janet Yellen

During a speech in Chicago this week, Federal Reserve Chair Janet Yellen clarified her view of the economy and what she believes is the appropriate monetary policy.  I reread her words and listened to the responses, which ranged from cheers to jeers. The cheers came from Wall Street, as market participants finally received the message [...]

Construction Activity Remained Weak in February

Construction spending rose 0.1% in February, after being revised down slightly for the month of January. Losses in single-family construction, most likely due to unusually harsh winter weather, offset gains in multifamily construction. Inventories of new single-family homes remain extremely tight. Commercial construction also showed some pockets of weakness, most notably in office construction for [...]

Affordable Care Act Distorts Income and Spending Data Again

Real (inflation-adjusted) disposable income rose 0.3% in February after being revised down to a 0.2% gain for January. A jump in Medicaid payments associated with the Affordable Care Act (ACA) continued to provide a lift for transfer payments during the month, while gains in wages and salaries were more moderate. Real consumer expenditures rose 0.2%,

Durable Goods Post Hollow Gains

Durable goods orders rose a larger-than-expected 2.2% in February. Much of the increase was concentrated in the volatile, lagged orders of aircraft and parts. Orders for motor vehicles and parts were also up after two months of declines, reflecting a bit of a comeback after unusually harsh winter weather took a toll on sales in [...]

New Home Sales Slacken in February

New single-family home sales dropped 3.3% in February to a 440,000-unit annualized rate, the slowest monthly pace since September 2013. Moreover, sales for the month of January were revised lower. More of the weakness in the new home market can be attributed to unusually harsh winter weather; builders in the worst-affected areas were literally sidelined,

Existing Home Sales Continue to Disappoint

Existing home sales remained depressed in February, falling an additional 0.4% to a 4.6 million-unit annualized rate.  That is the lowest pace for sales since July 2012. The National Association of Realtors (NAR), which typically attempts to put a positive spin on the data, punted and acknowledged that harsh winter weather could only account for [...]