The three-month average of the Chicago Fed National Activity Index (CFNAI) is expected to tick higher in the February update that’s scheduled for Monday (Mar. 21), based on The Capital Spectator’s average point forecast for several econometric estimates. The average projection for -0.08 reflects a slight improvement over the previous month, which indicates US economic activity running moderately below the historical trend rate of growth. Only values below -0.70 signal an “increasing likelihood” that a recession has started, according to guidelines from the Chicago Fed. Using today’s average estimate for February as a guide, CFNAI’s three-month average is expected to confirm an expansion that’s moderately below the historical trend but well above the tipping point that marks the start of a new US recession.
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The US stock market continued to climb out of a hole yesterday. The S&P 500 closed at its highest level so far this year. Yesterday’s rise comes a day after the Federal Reserve decided to hold off on rate hikes, citing increased macro risks–here and abroad. But if equities are reacting positively to revived expectations for keeping interest rates lower for longer, is the commensurate rise in the Treasury market’s inflation forecast a potential spoiler for the newly minted party in the stock market?
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● Streak of Low Jobless Claims Longest in More Than 4 Decades | WSJ
● US Job Openings Increased in Jan to 5.54 Million | Bloomberg
● US Job Market’s January Stumble Likely to Prove Temporary | AP
● US Leading Economic Index ticks higher in Feb | CB
● US Consumer Comfort Index Increased Last Week to 1mo high | Bloomberg
● Philly Fed mfg index turns positive–first time in 7 months | MarketWatch
● Dow closes positive for year as commodities rally, dollar dives | Reuters

Recent economic reports suggest that the US economy will continue to grow at a modest pace. Although macro risk has increased in recent months, the probability is low that a recession started last month and the near-term outlook suggests that the economy will continue to sidestep a new downturn, based on current data.
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● US Housing Starts Climbed More Than Forecast in Feb | Bloomberg
● US Industrial Production Down 0.5% in Feb | WSJ
● US core inflation posts biggest 12-mo increase in nearly 3 years | LA Times
● Fed Scales Back Rate-Rise Forecasts amid Global Risks | Bloomberg
● Atlanta Fed’s Q1 GDP estimate holds steady at +1.9% | Altanta Fed

This morning’s US economic updates on housing construction and industrial output—the final batch of numbers ahead of this afternoon’s monetary announcement from the Federal Reserve—delivered a mixed bag of macro news, albeit with a moderately positive spin. The main takeaway: industrial production is still contracting at the headline level but manufacturing is expanding at a faster rate. On the housing front, new residential construction continues to trend higher. Overall, the numbers offer support for expecting moderate economic growth in the near-term future.
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If the crowd’s worried about the possibility of rising interest rates, the anxiety isn’t showing up in utility stocks. This interest-rate sensitive corner of equities is comfortably in the lead among US sectors, based on a set of ETF proxies.
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● Weak US Retail Sales In Feb Raise Concern About Growth | NY Times
● NY Fed factory index has first positive reading in 8 months | MarketWatch
● US Wholesale Inventories Unexpectedly Rise 0.3% In Jan | RTT
● US home builder sentiment holds steady in Mar | CNBC
● US Redbook YoY retail sales index virtually flat in 2nd wk of Mar | TE
● China’s Li pledges more reform, tries to reassure on growth | WaPo
● Fed to Signal Worst Is Over, Hikes Coming | Bloomberg

US industrial production is expected to remain unchanged in tomorrow’s February report vs. the previous month, according to The Capital Spectator’s average point forecast for several econometric estimates. The prediction reflects a sharp deceleration after the previous month’s strong increase.
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Housing starts are expected to total 1.126 million units (seasonally adjusted annual rate) in tomorrow’s February update, according to The Capital Spectator’s average point forecast of several econometric estimates. The projection represents a moderate increase over the previous month’s level of residential construction activity.
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