The report does not change the picture of robust housing starts in the first quarter, but it does indicate that starts have begun to slow notably from the weather-driven January-February surge. |
The strength across all labor-market indicators does suggest the Fed will likely raise rates in March. |
They are likely to acknowledge the firmer data since the January meeting. |
They highlighted the long-term rise and not the recent decline. Their concern about core inflation's potential to increase has not been eased by the recent decline in energy prices. |
They will tend to think of that at the upper end of the neutral range and in this situation, where we've have such a steady decline in the unemployment rate and there are concerns about tightening resource utilization, they'd just as soon go up to the upper end of that range...to try to ensure that inflation doesn't pick up. |
This trade number doesn't change that at all. |
We do not think the flat yield curve is signaling economic weakness. We do expect it will become steeper over time as it becomes clear economic growth is continuing at a robust pace. |
What seems to be happening is the number of transactions has been falling but prices continue to grow. Over time, the rate of price increases is likely to slow this year. |
You would need a dramatic slowdown in domestic U.S. demand to bring down the U.S. trade deficit, and we think that is unlikely. |