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Just after Wall Street strategists revised up their forecasts for US economic activity, the government reported unexpected dips in industrial production and retail sales in February. A combination of post-pandemic reopening and anticipation of the Biden Administration’s $1.9 trillion in helicopter money was supposed to send consumers to the shopping malls or the Shopify website. The opposite occurred.
Excluding autos, February retail sales dipped by 2.7%, when the consensus forecast called for a slight increase following on a strong January. The economists blamed the weather, about which they had complete information when they made their forecast.
Weather and supply-chain constraints – for example, a shortage of semiconductors required by the auto industry –were blamed for a 3.1% drop in manufacturing production. (The consensus forecast had expected a 0.5% increase.)
Plainly, American consumers aren’t as confident as the Wall Street consensus thought, and US manufacturing has numerous weak spots, including supply chain as well as the availability of skilled labor. The US economy won’t collapse in 2021 but neither will it boom in a Pavlovian response to yet another fiscal stimulus.
Medium-term bond yields plummeted on the news, especially the bellwether 5-year inflation-indexed Treasury. After all the talk about rising bond yields in the face of a strong economy, this benchmark bond yields negative 1.89%, a hair’s breadth above its all-time low yield of negative 1.93%.
Stocks first rose because bond yields fell, but then the stock market ha a Wile E. Coyote moment: It did a double-take at the economic data, and fell along with it.
asiatimes.com
=====================================================
US overall industrial production down 2.2% in February
Worse-than-expected figured caused by winter storms that knocked factories offline in parts of the country
A swinging bench hangs from a tree after a disastrous snow storm on February 18 in Fort Worth, Texas. Photo: AFP / Ron Jenkins / GETTY IMAGES
US overall industrial production fell 2.2% in February, the Federal Reserve said on Tuesday, a worse-than-expected figured caused by winter storms that knocked plants offline in parts of the country.
“The severe winter weather in the south central region of the country in mid-February accounted for the bulk of the declines in output for the month,” the central bank said.
The overfall industrial production figure that fell 2.2% includes not only manufacturing but also other outputs. The manufacturing output component alone fell 3.1% in the month and mining lost 5.4%, the report said. But utilities output increased 7.4% compared with January.
And overall production remains 4.2% below the February 2020 level.
Severe and unusual winter storms shuttered businesses and knocked out power in Texas, the country’s second most-populous state.
“Most notably, some petroleum refineries, petrochemical facilities, and plastic resin plants suffered damage from the deep freeze and were offline for the rest of the month,” the Fed said.
The central bank noted that without that storm, manufacturing would have fallen only around 0.5% nationwide, while mining would have increased by the same amount.
February’s decline was the worst since the Covid-19 pandemic began last year and also partly fueled by the global shortage in semiconductors, said Oren Klachkin of Oxford Economics.
But he predicted government stimulus spending and the deployment of Covid-19 vaccines would restore growth in months ahead, though its pace could moderate as the service sector reopens later in the year.
“Healthy goods demand, healing business investment and historic fiscal stimulus are set to propel solid industrial sector growth,” he said.
asiatimes.com
Excluding autos, February retail sales dipped by 2.7%, when the consensus forecast called for a slight increase following on a strong January. The economists blamed the weather, about which they had complete information when they made their forecast.
Weather and supply-chain constraints – for example, a shortage of semiconductors required by the auto industry –were blamed for a 3.1% drop in manufacturing production. (The consensus forecast had expected a 0.5% increase.)
Plainly, American consumers aren’t as confident as the Wall Street consensus thought, and US manufacturing has numerous weak spots, including supply chain as well as the availability of skilled labor. The US economy won’t collapse in 2021 but neither will it boom in a Pavlovian response to yet another fiscal stimulus.
Medium-term bond yields plummeted on the news, especially the bellwether 5-year inflation-indexed Treasury. After all the talk about rising bond yields in the face of a strong economy, this benchmark bond yields negative 1.89%, a hair’s breadth above its all-time low yield of negative 1.93%.
Stocks first rose because bond yields fell, but then the stock market ha a Wile E. Coyote moment: It did a double-take at the economic data, and fell along with it.
US economy unexpectedly sags - Asia Times
Just after Wall Street strategists revised up their forecasts for US economic activity, the government reported unexpected dips in industrial production
asiatimes.com
=====================================================
US overall industrial production down 2.2% in February
Worse-than-expected figured caused by winter storms that knocked factories offline in parts of the country
A swinging bench hangs from a tree after a disastrous snow storm on February 18 in Fort Worth, Texas. Photo: AFP / Ron Jenkins / GETTY IMAGES
US overall industrial production fell 2.2% in February, the Federal Reserve said on Tuesday, a worse-than-expected figured caused by winter storms that knocked plants offline in parts of the country.
“The severe winter weather in the south central region of the country in mid-February accounted for the bulk of the declines in output for the month,” the central bank said.
The overfall industrial production figure that fell 2.2% includes not only manufacturing but also other outputs. The manufacturing output component alone fell 3.1% in the month and mining lost 5.4%, the report said. But utilities output increased 7.4% compared with January.
And overall production remains 4.2% below the February 2020 level.
Severe and unusual winter storms shuttered businesses and knocked out power in Texas, the country’s second most-populous state.
“Most notably, some petroleum refineries, petrochemical facilities, and plastic resin plants suffered damage from the deep freeze and were offline for the rest of the month,” the Fed said.
The central bank noted that without that storm, manufacturing would have fallen only around 0.5% nationwide, while mining would have increased by the same amount.
February’s decline was the worst since the Covid-19 pandemic began last year and also partly fueled by the global shortage in semiconductors, said Oren Klachkin of Oxford Economics.
But he predicted government stimulus spending and the deployment of Covid-19 vaccines would restore growth in months ahead, though its pace could moderate as the service sector reopens later in the year.
“Healthy goods demand, healing business investment and historic fiscal stimulus are set to propel solid industrial sector growth,” he said.
US overall industrial production down 2.2% in February - Asia Times
US overall industrial production fell 2.2% in February, the Federal Reserve said on Tuesday, a worse-than-expected figured caused by winter storms that
asiatimes.com
