Following recent trends, the latest economic data has been weak. In December new orders for durable goods rose +1.2% m/m, but losses in previous months drove the y/y rate down to +3.5% from +12.1% just five months ago. After stripping our volatile components, core orders, a proxy for business investment, fell -0.7% m/m, the fourth loss in five months, pushing the y/y rate to +1.2% from +6.6% seven months ago. Existing home sales fell -1.2% m/m in January which was the third consecutive loss, and the 17th in 24 months. The y/y rate fell to -8.5%. Housing starts fell a sharp -11.2% m/m in December resulting in a -10.9% y/y decline. Permits rose a scant +0.3% m/m to only +0.5% y/y. Consumer confidence however made a sharp gain, rising +9.7 points. The increase was driven by a +14 point leap in future expectations, the biggest gain in over seven years. Consumers felt relief from the end of the government shutdown, a rising stock market, and trade hopes. Fed Chair Powell made no surprises in testimony to Congress and reiterated the “patient” approach.
