This past week showed some encouraging news on the economic front.
First, last Monday, the Census Bureau reported that March Retail Sales surged 0.7 percent. This is the biggest gain of the first quarter. As a result, retail sales rose at an annual rate of 4.7 percent in the first quarter. While inflation may remove half of this growth, it seems that solid consumer spending remains on track. And while I expect the overall economy to post a modest gain in the first quarter, the fact that consumer spending remains steady is very encouraging.
Second, on Tuesday, the Federal Reserve released its report on industrial production. It turns out that industrial production fell by -0.2 percent in March. This decline was a reflection of weather more than anything else. Last month was the 2nd warmest March on record going back to 1895. This reduced the demand for utilities to warm homes and buildings, evidenced by the fact that utility output fell by 7 percent last month.
Elsewhere, the report gave encouraging news for the manufacturing sector, which has been underperforming the overall economy since the third quarter of last year. Manufacturing output increased a health 0.7 percent in March, fueled by solid gains many sectors including computer and electronics, machinery, fabricated metals, chemicals and plastics and food products.
At the same time the on-going downturn in housing continues to have a major negative impact on other manufacturing industries, such as wood products, furniture, and textile products, all of which posted falling output last month.
Coming up this week, we have consumer confidence and GDP by industry on Tuesday, Durable goods orders on Wednesday and finally the initial estimate of GDP growth in the first quarter.
What will the numbers tell us about the state of our economy? Stay tuned!!