Week in Review: February 26, 2021

Economic data for the week was generally positive. Notably, despite a surge in personal income consumers remain wary about the near-term economic outlook.

Headline durable goods orders jumped 3.4% in January propelled by a surge in civilian aircraft orders. Core business spending, excluding aircraft orders and defense spending, was more muted, slowing to 0.5% from 1.5% in December.

Consumer data was mixed. Consumer confidence ticked up modestly, while consumer sentiment pulled back slightly. Both surveys experienced declines related to the short-term outlook, suggesting that consumers are unsure about just how rapidly the economy might recover in the near term.

Personal income surged 10% in January, reflecting the benefits of $600 stimulus checks and enhanced unemployment benefits passed in late December. At the same time, consumer spending rose a more modest 2.4%.  That resulted in the saving rate jumping by 7% to 20%, the highest level since last May.

Another busy week for housing data saw pending home sales fall 2.8% in January, while new home sales rose 4.3%, aided by historically low mortgage rates and a dearth of existing homes for sale. Compared to a year ago, new home sales increased 19.3%, while the median price rose 5.3% to $346K,

Weekly jobless claims fell by 111K to 730K, the lowest level in three months.  Though welcomed, current levels remain far above pre-pandemic levels pointing to ongoing difficulties for labor markets.  Continuing claims fell 100K to 4.42M.