Yesterday, we got three disappointing reads on the U.S. economy.Personal income and spending both increased less than expected, the February ISM manufacturing index missed estimates badly, and construction spending unexpectedly contracted.
“I’m not concerned at all. ISM [manufacturing] is noisy short-term, and I’m thrilled about the surge in export orders; that’s a real bonus and suggests US exporters can do well even if Europe is in a mess. … Incomes have been weak but with payrolls rising by 250K per month for the foreseeable future and hours rising too, that problem will fix itself pretty quickly. … Construction looked disappointing [Thursday] but net revision was +1.4%…
“[Jobless] claims are still trending down nicely and Ford reckons February auto sales near 15 million, which is a big gain from February’s 14.1 million. … Note that real consumption has been hit hard by a long run of warmer-than-usual weather, with six straight monthly declines in spending on utilities. … Spending on utilities is now 10% below long-term trend and has to rebound. … I remain resolutely relaxed and optimistic.”
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