Today’s Feb Durables number came in less than expected, -0.9% vs + 1.2%, consensus. We noted (incorrectly) in the Week Ahead that the risk was for the release to exceed expectations. However, it is known that this number can be volatile, so we suspect this result will be ignored.
Note as we are on the subject that there is a component of this release called Non-Defense Capital Goods Shipments, a good proxy for capital spending. This measure is just a bit above its Q4 level, suggesting capital spending rose only modestly in Q1.
Today’s key Claims number was a tad stronger than expected (fewer claimants); this as predicted. Over the near term the number of claimants will head even lower, our view.
We know the economy is hitting on 6 of 8, and heading, or was heading to 7. We know that two key areas felt to be destined for the dumpster a few months ago - jobs and spending - were gaining momentum.
A new element was inserted into the equation in Feb - our friends in the Mid East. This is why we warned clients yesterday to look for forecasters to shave their forecasts for 2011 GDP.
It wasn’t fun to write those lines; hopefully we are wrong, but this is the risk.
Robert Craven
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