Fed’s interest rate forecasts may confuse more than clarify

More Than Forecast

Consumer spending and service industries gained in March. Retail sales in the U.S. rose more than forecast last month as Americans snapped up everything from cars and furniture to clothes and electronics, with sales rising 0.8 percent in March and 1 percent in February.

Service industries in the U.S. grew in March, capping the strongest quarter in a year and indicating the world’s largest economy will keep generating jobs.

The Institute for Supply Management’s non-manufacturing index fell to 56 from a one-year high of 57.3 in February, the Tempe, Arizona-based group’s data showed April 4. Last month’s reading still topped the average for the previous economic expansion.

Other reports since the March 13 FOMC meeting signal the economy may lose momentum. Employers in the U.S. added 120,000 jobs last month, the least in five months. Housing starts dropped 5.8 percent to a 654,000 annual rate, the least since October and less than the lowest estimate of economists surveyed by Bloomberg.

Biggest Economy

The world’s largest economy probably expanded by 2.5 percent in the first quarter, according to the median of 53 estimates in a Bloomberg News survey before the Commerce Department report on April 27. That’s down from 3 percent growth in the fourth quarter of 2011.

“The U.S. economy is moving forward, but it does have its ups and downs,” said Jeffrey Joerres, chief executive of Manpower Inc., the largest U.S. provider of temporary staffing, in an April 20 earnings call. “Choppy growth is a little bit difficult on a day-to-day basis, but it is pointing in the right direction.”

Bloomberg News

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