Is the economy weak? You betcha. Is it falling off a cliff? Doesn't seem to be. According to new data today, weekly initial jobless claims fell from 375,000 to 342,000, the lowest level in two months. And outside of the transportation sector, durable-goods orders rose 1.5 percent. From these numbers, the folks at Action Economics conclude the following:
Both the U.S. durable goods and initial claims reports this morning bucked the path that seemed likely following the last round of weak payroll figures, and further truncated downside risks to growth as we enter Q2. Though we will keep our -0.5% GDP forecast intact until we get next week's April jobs report, we have now revised up our Q1 estimate to 0.8%, and there remains little evidence in the available equipment figures that businesses are pulling back on equipment spending beyond simply sustaining the sluggish sideways path of the last two years. The new home sales report for March squelched any hope for good news from this sector, however, as it's clear that if the economy is going to avoid outright declines in the first half of the year, it won't be because of a change in the trajectory for new home construction.