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Economic Week in Review: Rebound from harsh winter continues

April 17, 2014

As temperatures rise across the United States with the onset of spring, the nation's economic data show green shoots of growth following a harsh winter. Retailers posted strong March numbers, while the Federal Reserve found signs of broadening economic expansion.

For the week ended April 18, 2014, the S&P 500 Index was up 2.7% to 1,865 (for a year-to-date total return—including price change plus dividends—of about 1.4%). The yield of the 10-year U.S. Treasury note was up 10 basis points to 2.73% (for a year-to-date decrease of 31 basis points).

Retail sales have largest gain in 18 months

Following an especially harsh winter for much of the country, retail sales posted strong March numbers. Sales increased 1.1% for the month, while February data was adjusted upward from the previously reported 0.3 % increase to a 0.7 % increase.

March figures were 3.8% higher than the previous year. Core retail sales, which exclude autos, gasoline, food services, and building materials, rose 0.8% in March. Sectors showing particular strength included the auto industry (+3.1%), building materials (+1.8%), and general merchandise stores (+1.9%), while gasoline (–1.3%) and electronics and appliance stores (–1.6%) saw declines.

Retail sales

U.S. economy grows at moderate pace

Economic activity grew at an overall modest to moderate pace during the period from mid-February through March, the Federal Reserve said.

In its Beige Book report, the central bank found economic expansion in 10 of its 12 districts. Activity declined in the Cleveland and St. Louis regions. The report marked an improvement from the previous version when only eight districts showed expansion.

Warmer weather has led to improvement in auto sales along with the tourism industry. Overall, employment was growing at a moderate pace, the Federal Reserve said.

Consumer Price Index slightly higher than expectations

The Consumer Price Index (CPI) increased 0.2% in March. Energy prices declined 0.1%, while food prices were up 0.4%. The crisis in Ukraine is putting upward pressure on the market for wheat.

"A 1.5% increase in CPI over last March remains below the Fed's target but is stronger than last month and slightly above consensus expectations. While core inflation came in below 2% as well, there were some signs of the potential for longer lasting price pressures in certain parts of the economy as production activity increased and weather-related effects abated. A strong rise in inflation is not our best case scenario, and it's not for the Fed either, but they're keeping a close eye on prices," said Vanguard analyst Vytas Maciulis.

New construction falls below forecast

Builders broke ground on new homes in March at a slower pace than analysts had forecast. New housing starts rose 2.8% to a rate of 946,000. Permits for future projects declined.

While warmer weather in some areas of the country has spurred housing activity, analysts said higher interest rates, slow wage growth, and tight credit have impeded industry growth overall.

Industrial production

U.S. industrial production climbed 0.7% in March, while February's number was revised upward to 1.2%, double the original figure.

Manufacturing output climbed 0.5%. The data show the economy is rebounding from a difficult winter. During December and January inclement weather negatively impacted production as it prevented many employees from reporting for work, resulting in delays in shipments.

Business inventories rise slightly

U.S. businesses reported a 0.4% increase in their inventories for February. The February number matched the increase for January. February's tepid number reflected a need for businesses to work through excess stock from the last half of 2013 before increasing inventories significantly.

Manufacturer inventories climbed 0.7%, while retail inventories increased only .01%. Wholesalers increased their inventories 0.5%.

The economic week ahead

There's a steady stream of reports scheduled for release next week beginning with the Conference Board's leading indicators on Monday, existing home sales slated for Tuesday, new home sales data on Wednesday, and durable goods numbers on Thursday.

Summary of major economic reports
Date Report Actual
expected value
10-year note yield S&P 500 Index
April 14 Retail Sales (March)
Source: Commerce Department
+1.1% +0.8% +2 bp +0.8%
  Business Inventories (February)
Source: Commerce Department
+0.4% +0.5%    
April 15 Consumer Price Index (March)
Source: Labor Department
+0.2% +0.1% –1 bp +0.7%
  CPI, except food and energy (March)
Source: Labor Department
+0.2% +0.1%    
April 16 New Residential Construction (March, annualized)
Source: Commerce Department
946,000 975,000 +1 bp +1.0%
  Industrial Production (March)
Source: Federal Reserve Board
+0.7% +0.5%    
  Beige Book
Source: Federal Reserve Board
April 17 Initial Jobless Claims (week ended April 12)
Source: Labor Department
304,000 311,000 +8 bp +0.1%
April 18 Good Friday holiday—U.S. financial markets closed
      Weekly change +10 bp +2.7%

bp=basis points. 100 basis points equal 1%. For example, if a bond's yield rises from 5.0% to 5.5%, the increase is 50 basis points.


  • The economic statistics presented in this report are subject to revision by the agencies that issue them. For more information on the reports mentioned in this article, read our Guide to major U.S. economic reports.
  • All investing is subject to risk, including the possible loss of the money you invest.
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