It’s only been a few weeks since optimism about the economy bloomed anew. But it’s not too early to rethink what was previously rethought. This is the golden age of revise, revisit, rework and rewrite in the realm of economic forecasting.
The latest batch of numbers lends fresh incentive to ask if the on-again-off-again growth story for the economy is off again. Let’s start with this morning’s news that January’s new housing starts fell 14% from December to a nine-year low. Next, the Federal Reserve yesterday announced that industrial production fell 0.5% last month from December. Zeroing in on the weakness, the accompanying press release noted that “output in the manufacturing sector declined 0.7 percent in January; about one-half of the decrease was a result of a drop of 6 percent in motor vehicles and parts.”
Adding to the fresh bout of gloom is yesterday’s update on the latest weekly jobless claims, which jumped to the highest since last November in the week through February 10.
Is it time to, then, for a new flip-flop to embrace the recession theory anew? “There was a general sense that housing had stabilized,” Amitabh Arora, head of U.S. interest-rate strategy at Lehman Brothers Inc., told Bloomberg News today. “This will cause some reassessment of that view.”