Recent data depict a robust economy. The consumer finally returned as retail sales rose for the first time in four months, gaining +0.6% m/m to a +4.5% y/y rate. Auto sales rose +2% m/m after four straight months of declines which were caused by hurricane replacement sales in the fall. Core retail sales rose +0.4% m/m, the first increase in four months to a firm +3.8% y/y. Housing starts and permits both rose to y/y rates of +10.9% and +7.5%, certainly a positive, but the data is volatile. Industrial production rose +0.5% m/m to 4.3% y/y, twice the long-term average, and down only -0.1% from February’s seven-year high. Manufacturing gained +0.1% m/m to a six-year high of +3% y/y. The Fed’s Empire State Survey also showed strength in manufacturing production, but the six- month expectations component plunged from 44.1 to only 18.3, only half the long term average and the lowest in two years. The culprit was metals tariffs and fears of a trade war.
