I think this report will lead the Fed to be much more aggressive than we would have expected a month ago. An inter-meeting cut seems far more likely now, and a cut at the May (policy makers) meeting seems all but certain.
This is a series that bounces around from one month to the next. There's enormous potential for particular incidents -- the weather, the timing of Easter, the release of a new movie -- to push retail sales around from one month to the next.
Given the absence of core inflation, it seems to me as good a time as any to pause and see what's happening for a few months rather than overshoot and risk a recession.
We're still several months away from job growth catching up with labor force growth and driving the unemployment rate back down, but that's really just a matter of time. Our economy is moving again, and once that happens it's actually quite hard to stop the forward momentum.
We knew that it was a wet month and that rain tends to keep people away from shopping, so I thing a large part of this is actually a weather story.
The unemployment situation won't truly improve until businesses increase hiring a lot more than they did in February. It takes roughly 150,000 new jobs per month just to keep the unemployment rate steady, as population growth increases the work force.
It takes something on the order of 150,000 new jobs a month to absorb the natural increase in the labor force. As long as we keep getting smaller positive numbers than that, the unemployment rate should be trending up rather than down.
It fits in with the picture that the labor market is turned, inflation has turned and in a few more months they'll be tightening.
All the evidence on consumer confidence would tell us that all spending on big-ticket items is liable to plummet in the next month or two.
But you have to come back to the fact that another good month is another good month. And that is good news for the economic recovery.
I think the economy's momentum is still upward, but the data that have come out in the past month have weakened my confidence in that prediction. I haven't changed my forecast, but I've become a lot less certain about it.