Short term interest rates (yields) have risen higher than long term rates, a condition known as an inverted yield curve. Historically it has been a very strong forecaster that a recession will start in around a year, on average. This is a critical development to monitor closely as it indicates that the Fed may have raised interest rates too much. Consumer confidence took an unexpected -7.4 point plunge in March, driven largely by respondents’ assessments of current conditions which fell the most in over 10 years. Assessments of the labor market also fell the most in 10 years, confirming the weak February employment report. The housing market continues to suffer as housing permits fell for the second straight month to -2% y/y while starts fell for the fifth time in six months, losing -8.7% m/m to a -9.9% y/y rate. Existing home sales did make a sharp +11.8% m/m increase, but it was the first in four months and still left the y/y rate at -1.8%.
