Why were so many economists fooled into thinking that the U.S. economy was starting to roar like a Sochi downhill skier bursting out of the starting gate? After all, holiday retail sales looked miserly. Why did they think a Grinchy Christmas season would inspire a cheerful winter? No one should’ve been surprised when the Bureau of Labor Statistics rolled out a dreary January report (just 113,000 net new jobs). Fox TV asked for my thoughts, and you can click to watch.
Here’s the problem — Just three pillars have propped up the U.S. economy: (1) autos, (2) homes, and (3) Greek yogurt. Of these three, Greek yogurt (as opposed to Greece ) is doing just fine, but homes and autos sales are no longer booming. They’re stable but not heroic. That leaves…what? Ah, that’s the question! The rest of the retail world appears subdued. Just ask McDonald’s and Macy’s, to pick two well-run outfits.
I don’t think January’s jobs report was alarming enough to scare off Fed chair Janet Yellen from the tapering pace of $10bn per month. She’ll testify on Tuesday. But if February’s job picture looks equally glum, you’ll start hearing about “a tapering of the tapering,” to $5bn per month. Emerging market currencies would be delighted.
Finally, I did notice some oddities in the jobs statistics. Construction firms hired 48,000 more workers – that’s terrific – yet housing starts had collapsed 9.8% because of foul weather. What were those extra construction workers doing? Shoveling snow? I guess we finally found those shovel-ready projects! Or maybe they were building igloos in Atlanta a few weeks ago.