Recent statistics on housing construction and industrial production for March present a mostly positive outlook for growth, albeit with some important caveats. On the bright side, housing starts surged past expectations, reaching levels not seen since 2008. Similarly, industrial production experienced a 0.4% increase last month, slightly outperforming forecasts. However, this generally favorable news is counterbalanced by a decline in new housing permits for March and a slight decrease in the manufacturing sector of industrial output. What is causing this mixed picture? Let’s delve into the details of the data.
The recent sell recommendation from Goldman Sachs may be driving current trends. Additionally, widespread fear regarding a rapid slowdown in China’s economy is raising global GDP concerns. Regardless of the cause, the price of gold experienced its most significant drop in three decades yesterday. For gold enthusiasts who invested heavily in the metal, it’s been a tough 24 hours. If you believed predictions that gold would soar to $5000, yesterday’s crash could serve as an opportunity to buy more; however, the challenge lies in the inherent difficulty of estimating expected returns from gold—and commodities in general—compared to stocks, bonds, and real estate. Gold, after all, generates no income, yields no earnings, and has no fundamental economic value apart from its limited industrial uses.
Upcoming reports on industrial production for March are expected to reveal a modest 0.2% increase, as per The Capital Spectator’s average econometric forecast (seasonally adjusted). This anticipated gain signifies a notable slowdown from February’s 0.8% rise. Notably, this March projection aligns closely with the consensus forecasts from economists.
In the anticipated update for March, housing starts are projected to reach 938,000, as indicated by The Capital Spectator’s average econometric forecast (seasonally adjusted annual rate). This figure marks an increase from the 917,000 reported for February. The forecasted rise for March slightly exceeds the expected increases reported in a variety of consensus predictions based on surveys of economists.
● Pathology of the Capitalist Spirit: An Essay on Greed, Loss, and Hope
By David Levine
Excerpt via publisher, Palgrave
Since the eighteenth century, the framework established by economists has shaped our understanding of capitalism, revolving around economic growth, freedom, and power. Initially, capitalism was viewed as a model for generating wealth and alleviating poverty, or at least it appeared to create opportunities for such outcomes. Over time, the concept of freedom became increasingly significant, as capitalism was either equated with freedom or seen as a prerequisite for it. Concurrently, a third theme emerged: capitalism as an institutional and legal framework facilitating the accumulation of wealth by a few at the cost of the many.
Today’s retail sales report for March appears disappointing. It may be a short-term setback attributable to cold weather or an early Easter holiday. This is the optimistic interpretation. Conversely, this decline in consumption might indicate more significant challenges for the business cycle in the near future. Time will ultimately reveal the truth, but currently, it’s difficult to overlook this discouraging data point. While it may be premature to draw dire conclusions, the latest figures make it hard to maintain a positive outlook.
Initial jobless claims saw a notable decrease last week, providing a timely respite from the rises observed in previous weeks—rises that were starting to raise concerns. The number of new jobless benefit filings plunged by 42,000 last week to a seasonally adjusted total of 346,000. Once again, these latest claims are approaching the post-recession low of 333,000 from mid-January. Could this report indicate that the recent uptick in claims was merely incidental noise within this typically volatile series? It’s a possibility, though more definitive evidence will emerge over the coming weeks.
Tomorrow’s report on US retail sales for March is expected to reveal a modest 0.2% increase, based on The Capital Spectator’s average econometric forecast. This projection is a significant drop from the 1.1% growth reported by the Census Bureau for February. Additionally, this March forecast aligns moderately above several consensus predictions from various economists’ surveys.
The US stock market reached an all-time high yesterday, as represented by the S&P 500. Furthermore, US equities presently show exceptional strength compared to all other major asset classes.
Has the stock market finally decoupled from inflation expectations? If this is the case, could it signify a pivotal moment for the market, inflation forecasts, or the broader economy? Many questions linger, yet concrete answers remain elusive. Meanwhile, a marked divergence is evident: the equity market is climbing, while inflation expectations are on a downward trend.
