What We Learned Last Week
- The Consumer Price Index (CPI) is flat on a year-over-year basis and up 1.7 percent excluding the impact of volatile food and energy components. The more comprehensive chain price measures for Personal Consumption Expenditures (PCE) that the Fed prefers runs about ¼ point lower.
- Capital goods orders have fallen back according to recent durable goods reports.
- Even the National Income and Products Accounts can’t get their stories right. Real Gross Domestic Product (GDP) rose 2.2 percent annualized in 2014 4Q and by 2.4 percent over the four quarters of 2014. Real Gross Domestic Income (GDI), the lesser-known measure of aggregate income, expanded 3.1 percent annualized in 2014 4Q and by 2.9 percent over the four quarters of 2014.
- By the end of last year, GDP after-tax profits had recovered almost half of the 2014 1Q drop in its share to GDP. The share is still a historically high at 8.6 percent of GDP.
What We Expect to See in the Week Ahead
- Who’s fibbing? GDP says “the economy is slow.” Jobs data say “the economy is solid.” The jobs picture is more timely and more comprehensive, based on what is available so far.
- March car sales are expected to be strong. They have been for a while.
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