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Some of the worries of 2011 are reappearing in 2012: Higher energy prices, the ongoing euro-zone debt crisis, a drag from Asia.
Thankfully, though, 2012 is not 2011 redux. While risks remain, the recovery isn’t derailing. Those hoping for further Federal Reserve easing likely will be frustrated.
First and foremost, U.S. and global growth last year took a big hit from the supply-chain disruptions from Japan’s devastating earthquake, tsunami and nuclear disaster. The drag coming from Asia this time is the slowdown in China, but that won’t weaken global growth nearly as much as Japan did.
In addition, U.S. consumers and businesses feel more confident now that the economy has another year of deleveraging and job growth under its belt.
Consumers kept shopping in March, posting a 0.8% advance in retail sales. While an early Easter accounted for some of the gain, the increase included non-holiday purchases such as vehicles, furniture and electronics.
Moreover, the recent numbers look weak in part because first-quarter activity was boosted by mild weather.
Some of that payback probably explains April’s slowdown in New York state factory activity and drop in homebuilders confidence. Neither decline suggests a contraction, only that activity in manufacturing and housing this month isn’t as robust compared with the winter.
One positive for the factory outlook is that business inventories are under control.
Inventories held by manufacturers, wholesalers and retailers increased 0.6% in February, while sales rose a faster 0.7%. The inventory-sales ratio–which measures how many months inventories would last under the current sales level–stayed at a lean 1.28.
If inventories looked out of whack with demand, manufacturers would start to cut back their production schedules, leading to layoffs.
One caveat to the inventory picture is the 1.8% jump in vehicle inventories. The retail data suggest a good number of those cars were driven off dealers’ lots in March. But because the auto sector drives so much of the overall industrial data, any unintended gain in vehicle inventories could rein in future factory activity.
The economy doesn’t move in a straight line. The ebb and flow of the data support the view that the recovery is firming but hardly going gangbusters. Worries that growth will take a spring break look overblown.
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dont know about this “job growth” and confidence. it seems rather that this economy is only slogging along and this inhibits severely prospects for hgher wages and movement UP the economic ladder. I believe there is a disconnect between the people in the media, news correspondents, interpeters of economic growth, recipients of government pensions and other public largesse, all politicians, as to the discouragement out there in the REAL world.. these consist of families with children who have no future or beginning some decent job with prospects…these consist of people nearing retirement whose cash perhaps invested in stocks (wiped out year 2000) or the refuge of home price escalation (mightily collapsing over these 4 years), or of people in “private” sector jobs under great pressure due to business cutbacks, layoffs, and stress of management demanding productivity so companies can still hang in there..
there is much anxiety out there in the REAL world, resentment and anger, are rampant.
In short term,Iran ??? ad this to status of gold in the world many out standing considerations of economys! I have known better times.
I love you people who keep feeding the pablum to the suckers.only thing holding up the market is the fed and the drive by media with the propaganda.Madoff”s ponzi is just a drop in the bucket compared to our goverment and wall steet.they nev er do punish the real culprits
Ms. Madigan, You didn’t convince me. And according to your opening paragraph I don’t think you’re convinced either! Chad in CO
With Dr. B. at the helm, we nothing to worry about!
Real Time Economics offers exclusive news, analysis and commentary on the economy, Federal Reserve policy and economics. The Wall Street Journal’s Phil Izzo is the lead editor, with contributions from other Journal reporters and editors. Send news items, comments and questions to realtimeeconomics@wsj.com.
Read more Economics coverage.
Digg
Some of the worries of 2011 are reappearing in 2012: Higher energy prices, the ongoing euro-zone debt crisis, a drag from Asia.
Thankfully, though, 2012 is not 2011 redux. While risks remain, the recovery isn’t derailing. Those hoping for further Federal Reserve easing likely will be frustrated.
First and foremost, U.S. and global growth last year took a big hit from the supply-chain disruptions from Japan’s devastating earthquake, tsunami and nuclear disaster. The drag coming from Asia this time is the slowdown in China, but that won’t weaken global growth nearly as much as Japan did.
In addition, U.S. consumers and businesses feel more confident now that the economy has another year of deleveraging and job growth under its belt.
Consumers kept shopping in March, posting a 0.8% advance in retail sales. While an early Easter accounted for some of the gain, the increase included non-holiday purchases such as vehicles, furniture and electronics.
Moreover, the recent numbers look weak in part because first-quarter activity was boosted by mild weather.
Some of that payback probably explains April’s slowdown in New York state factory activity and drop in homebuilders confidence. Neither decline suggests a contraction, only that activity in manufacturing and housing this month isn’t as robust compared with the winter.
One positive for the factory outlook is that business inventories are under control.
Inventories held by manufacturers, wholesalers and retailers increased 0.6% in February, while sales rose a faster 0.7%. The inventory-sales ratio–which measures how many months inventories would last under the current sales level–stayed at a lean 1.28.
If inventories looked out of whack with demand, manufacturers would start to cut back their production schedules, leading to layoffs.
One caveat to the inventory picture is the 1.8% jump in vehicle inventories. The retail data suggest a good number of those cars were driven off dealers’ lots in March. But because the auto sector drives so much of the overall industrial data, any unintended gain in vehicle inventories could rein in future factory activity.
The economy doesn’t move in a straight line. The ebb and flow of the data support the view that the recovery is firming but hardly going gangbusters. Worries that growth will take a spring break look overblown.
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