Photo: draXus, Flickr
Looking back over the latest few weeks of economy data, something stands out: Things are playing out almost 100 per cent different from what people expected.Think back to mid-to-late February. There were two competing trends. Housing appeared to be creaking back to life, construction was generally jumping, and car sales were surging month after month. Basically, all the “big” animal spirits stuff seemed to be happening.
But there was a counter-force in the form of gasoline prices. They were surging, and the big fear is that just as things were creaking back to life, gasoline prices would come in and slug the consumer.
As we pointed out, the fact that there was a duel between the big stuff (cars and houses on one side) and the day-to-day stuff (gasoline prices threatening the consumer) is what made the current environment very different from 2007-2008, the last time the economy went into recession.
We thought we’d be watching closely, the high-frequency indicators, like same-store sales numbers and initial claims, to get the first signs of problems, but that hasn’t been how things have developed at all.
The weekly retail data has been great. Today’s number was one of the best in a year. We had a few dicey weeks right when the gas surged, but everything’s hunky dory on this front.
On the other hand, the big stuff has been not good.
Every single piece of recent housing data has been a miss.
And then today, it came out that the March auto sales numbers dipped sharply from February.
Also, construction numbers beyond housing have been poor.
So basically, the high-frequency consumer stuff has been fine, and the big money, investment stuff has backslid.
Frankly we’d rather have it be the other way, though this is just a few weeks’ worth of data, and you don’t want to read too much into a handful of numbers.