Looking Behind and Looking Ahead

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Dwight Johnston, Vice President and Chief Economist for the California and Nevada Credit Union Leagues.

In this article we’ll recap the events and news over the past month that mattered most to the economy and markets, your credit union, and your members. Then we’ll look ahead at the key upcoming events you need to know.

Behind us – The economic data has been mixed over the past month. Seasonal factors and the shutdown caused some major distortions in most releases, especially the jobs reports, providing little clarity on where the economy stands. Neither stock nor bond prices were significantly changed over the past month. One thing that did change is the expectation of the outcome of China/U.S. trade talks. Instead of being a question or whether a deal will be done, it became a question of when a deal will get done.    

  • Nonfarm Payrolls increased by only 20,000, well before expectations, after the prior two months were well above expectations. Weather, the shutdown, and seasonal adjustment factors have distorted the numbers. These factors should be behind us in future reports
  • The Unemployment Rate fell from 4.0% to 3.8%  
  • Hourly wages jumped on a year-over-year basis to 3.4%
  • Consumer Confidence rebounded from the big January plunge, which was largely due to the shutdown. Business confidence has not rebounded as strongly
  • Auto sales in February fell from the January pace of 17.2 million units annualized to 16.6 million. Weather was a likely factor depressing sales
  • All housing indicators have been weak, but analysts expect the upcoming season to bring buyers back in as long as mortgage rates remain low
  • Multiple Fed officials spoke over the past month in unison. They all said the Fed would be on hold and wait for the economic data to dictate any further moves. Most expressed concerns that the economy was in fact slowing

Ahead for you – Some of the economic data remains delayed as the agencies and bureaus try to catch up from the shutdown, but a clearer picture of the economy should begin to emerge soon as more data is released and the weather and the shutdown impacts fade.       

  • March 11: Retail Sales for January – After the shockingly big plunge in sales in December, this one will be important. Economists are looking for a gain of about .5% and a possible upward revision to December. The Commerce Department will release the delayed February data on March 1.
  • March 12: Consumer Price Index – Given the stability in the core CPI the last few months, traders and investors have pushed this release down the list of important data.
  • March 31:  I retire! – Okay, this is not an economic event, but it’s a big event for me.
  • April 1: Auto sales – This will be one to watch. Economists expect a rebound, but another number below expectations might be cause some caution.
  • April 5: Jobs report – Always a big number to traders, but nothing suggests any trend change is in the works.
  • Anytime: Although a deal with China is now expected, the announcement of a summit date for Xi and Trump will be a big deal. An announcement would indicate a deal is ready to be signed.

Bottom line – The next four to six weeks should bring clarity on the China/U.S. trade deal and too much of the economic data.   

Article by Dwight Johnston, Vice President and Chief Economist for the California and Nevada Credit Union Leagues.

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