Markets Split

“The U.S. economy is “much improved,” Federal Reserve Chair Jerome Powell said on Monday, crediting Congress and the central bank both for providing “unprecedented” support, but at the same time warning that the recovery is still “far from complete.”

“The recovery has progressed more quickly than generally expected and looks to be strengthening,” Powell said in remarks prepared for delivery to a congressional hearing on Tuesday morning. Household spending has risen, he said, and the housing sector has more than fully recovered.” Fed policymakers and many private forecasters are expecting a surge in spending and economic growth in coming months as more Americans get vaccinated and venture out.” (Reuters)

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“Gross domestic product increased at a 4.3% annualized rate, the Commerce Department said in its third estimate of fourth-quarter GDP growth. That was up from the 4.1% pace reported last month but a sharp deceleration from the record 33.4% rate logged in the third quarter.

Corporate profits were weak last quarter. After-tax profits without inventory valuation and capital consumption adjustment, which correspond to S&P 500 profits, contracted at a 1.7% rate after accelerating at a 36.1% pace in the third quarter. Profits fell 3.3% in 2020 after rising 1.8% in 2019.

But that is all history. The economy is forecast to grow by as much as a 7.5% rate in the first quarter. Growth this year is expected to top 7%. That would be the fastest growth since 1984 and would follow a 3.5% contraction last year, the worst performance in 74 years.” (Reuters)

“U.S. consumer sentiment surged in March by the most in nearly eight years as government pandemic relief payments began padding bank accounts and better-than-anticipated progress on vaccinations against COVID-19 bolstered their outlooks, a closely watched survey said on Friday. The 8.1 point rise was the largest since a matching increase in May 2013, and it brought the index to its highest level since last March, when consumer sentiment began crumbling in the face of the pandemic’s onset.

The University of Michigan’s Consumer Sentiment Index rose to a final reading of 84.9 this month from a preliminary level of 83 at mid-month and from February’s 76.8.” (Reuters)

“The number of Americans filing new claims for unemployment benefits dropped to a one-year low last week as economic activity rebounds after weather-related disruptions in February. Initial claims for state unemployment benefits tumbled 97,000 to a seasonally adjusted 684,000 for the week ended March 20, the lowest level since mid-March. Data for the prior week was revised to show 11,000 more applications received than previously reported.

Economists polled by Reuters had forecast 730,000 applications in the latest week. The decline in claims was led by Ohio, which has been dogged by fraudulent filings. There were also large decreases in California and Illinois.

Claims shot up in the second week of March, likely as backlogs after severe winter storms in Texas and other parts of the densely populated South region were processed. The deep freeze in the second half of February, which also gripped other parts of the country, depressed retail sales, homebuilding, production at factories, orders and shipments of manufactured goods last month.” (Reuters)