Consumer spending posts smallest gain in six months
The Commerce Department said on Friday consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.1 percent. That was the smallest gain since August and followed an unrevised 0.2 percent rise in January. (…)
The personal consumption expenditures (PCE) price index gained 0.1 percent last month after jumping 0.4 percent in January. That lifted the year-on-year rate of increase in the PCE price index to 2.1 percent.
Excluding food and energy, the so-called core PCE price index increased 0.2 percent last month after rising 0.3 percent in January. In the 12 months through February, the core PCE price index increased 1.8 percent after a similar gain in January. (…)
Rising price pressures are also eating into consumer spending. When adjusted for inflation, consumer spending fell 0.1 percent in February after declining 0.2 percent in January. (…)
INFLATION WATCH
From The Daily Shot:
HARD FACTS
Not quite hard data but facts nonetheless. From the WSJ:
- A January survey by the Associated General Contractors of America found that 73% of firms had a hard time finding qualified workers. More firms identified worker shortages as a big concern (55%) than any other issue including federal regulations (41%) and lack of infrastructure investment (18%). Demand and salaries for subcontractors (e.g., carpentry and bricklaying) are going through the roof.
- The Western Growers Association reports that crews are running 20% short on average. Boosting wages and benefits—many employers pay $15 an hour with 401(k)s and paid vacation—has been little help. Instead, employers are cannibalizing one another’s farms. In 2015 the country’s largest lemon grower Limoneira raised wages to $16 per hour, boosted retirement benefits by 20% and offered subsidized housing. But now vineyards in Napa are poaching workers from growers in California’s Central Valley by paying even more.
- One Napa grower recently told the Los Angeles Times that paying even $20 an hour wasn’t enough to keep native workers on the farm.
In the FT:
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US hotels cut prices as Trump policies hit tourism World’s biggest travel group says US president is deterring visitors with bans
Dara Khosrowshahi, chief executive of Expedia, the largest online travel agent by gross bookings, warned the US travel industry is preparing for a turbulent year amid falling international interest in visiting the country. (…)
“When we look at our business, the leading indicator is pricing. Pricing has come down.” (…)
But I showed yesterday that RevPar keep rising so far this year. Also, STR data is not showing occupancy weakness just yet as CalculatedRisk illustrates:
Labor force flows add to the notion that labor market are tightening.
Source: @M_C_Klein via The Daily Shot:
The Trump presidency is in a hole
The Economist gives no boost to the Trump trade (and this is the nicer part):
(…) Mr Trump is hardly the first tycoon to discover that business and politics work by different rules. If you fall out over a property deal, you can always find another sucker. In politics you cannot walk away so easily. Even if Mr Trump now despises the Republican factions that dared defy him over health care, Congress is the only place he can go to pass legislation.
The nature of political power is different, too. As owner and CEO of his business, Mr Trump had absolute control. The constitution sets out to block would-be autocrats. Where Mr Trump has acted appropriately—as with his nomination of a principled, conservative jurist to fill a Supreme Court vacancy—he deserves to prevail. But when the courts question the legality of his travel order they are only doing their job. Likewise, the Republican failure to muster a majority over health-care reflects not just divisions between the party’s moderates and hardliners, but also the defects of a bill that, by the end, would have led to worse protection, or none, for tens of millions of Americans without saving taxpayers much money. (…)
Yet the politics of tax reform are as treacherous as the politics of health care, and not only because they will generate ferocious lobbying. Most Republican plans are shockingly regressive, despite Mr Trump’s blue-collar base. To win even a modest reform, Mr Trump and his team will have to show a mastery of detail and coalition-building that has so far eluded them. If Mr Trump’s popularity falls further, the job of winning over fractious Republicans will only become harder. (…)
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Trump Nafta Blueprint Raises Concerns The Trump administration’s early proposal for overhauling the North American Free Trade Agreement disappointed lawmakers who expected the U.S. to take a hard line in the renegotiation, and heartened business-oriented free-traders in Congress.
(…) The blueprint suggests that many of the Trump administration’s harshest warnings to trading partners may not be carried into the talks. (…)
Several key members of Congress with influence over trade policy were tight-lipped about the proposal Thursday. Aides said they are hoping to influence the administration while it is still in the process of completing its final objectives for the talks. (…)
In Canada, the Trump administration’s document appeared to temper hopes for a simple process that were awakened among Canadian business groups when Mr. Trump said Nafta only required “tweaking” when it came to Canada.
The Trump administration is “not proposing to rip up Nafta, but it is opening up the entire deal to renegotiation,” said Jayson Myers, former head of Canada’s biggest manufacturing lobby and now a Guelph, Ontario-based trade consultant. “These are not modest demands and could have far reaching consequences.” (…)
The Federal Reserve Bank of New York’s model, which gives more weight to the soft data, is currently projecting a 3% gross domestic product “print” in the first quarter. By contrast, the Federal Reserve Bank of Atlanta’s model, which incorporates soft data but to a lesser degree, is projecting only a 1% print. Morgan Stanley, too, expects 1% GDP when the Commerce Department releases its initial first-quarter reading on April 28. (…)
