Economic Update 03/02/15

CPI SHOWS ANNUAL DEFLATION

Dipping 0.7% in January, the Labor Department’s Consumer Price Index posted a 0.1% annual retreat – its first yearly decline since 2009. As the core CPI rose 0.2% in January and gas prices are moving north, the headline CPI’s stint in deflation territory may be short-lived. The federal government also announced its second estimate of Q4 GDP last week – a passable 2.2% – and a 2.8% boost in hard goods orders for January.

HOUSEHOLD CONFIDENCE DECLINES

The Conference Board’s monthly survey of consumers slipped 7.4 points in February to a reading of 96.4. At the end of January, the University of Michigan’s consumer sentiment index reached 98.1; the final February index came in lower at 95.4.

PENDING HOME SALES, HOME PRICES RISE

The National Association of Realtors said housing contract activity increased 1.7% in January, and December’s S&P/Case-Shiller index showed a 4.5% overall annual increase in existing home prices. The Census Bureau noted an 0.2% dip in new home sales in January, however; the NAR found resales falling 4.9% in that month.

FEBRUARY WAS FANTASTIC FOR STOCKS

Look at these monthly gains: S&P 500, 5.49%; Dow, 5.64%; Nasdaq, 7.08%. Last week, the S&P lost 0.27% and the Dow 0.04% while the Nasdaq rose 0.15%. Final numbers: DJIA, 18,132.70; Nasdaq, 4,963.53; S&P, 2,104.50. Oil fell 1.32% to $49.27 on the NYMEX, gold rose 1.21% to $1,213.60 on the COMEX.

THIS WEEK: ISM’s January manufacturing index appears Monday, plus January’s consumer spending report and earnings from Progressive, NutriSystem and Molycorp. On Tuesday, the Street examines earnings from Best Buy, AutoZone, Smith & Wesson, Revlon, Bob Evans, TiVo and Dick’s Sporting Goods, and Federal Reserve chair Janet Yellen speaks on bank regulation in New York. Wednesday brings February’s ADP employment change report, a new Beige Book from the Federal Reserve, ISM’s February services index and earnings from Abercrombie & Fitch, American Eagle, Korn/Ferry, PetSmart, Jamba, Tribune Publishing, Scripps Co. and H&R Block. February’s Challenger job cuts report arrives Thursday along with the latest bank stress test results from the Fed, new initial claims numbers and a report on January factory orders; earnings roll in from Chesapeake Utilities, Marcus & Millichap, Costco, Martha Stewart Living, Fresh Market, Quiksilver and Kroger. The Labor Department’s February employment report comes out Friday, as well as earnings from Foot Locker, BigLots! and Staples.