Households have taken a clue from the drop-off in the stock market. The economy is weakening but not many of them have seen it in their own lives. Conditions are still fairly good, but there's a heightened awareness that the economy is at risk, and that can make people cautious.
Retail hiring between October and December was by far the smallest in years. We wonder if those 'not hired' for Christmas will 'not be let go,' as traditionally would happen, in January. If so, that will look like a gain in the seasonally adjusted numbers.
The Fed is selling us a bill of goods. The Fed has plenty of evidence that the economy is boiling. They don't care. 'Let it boil,' they say.
The Fed has identified consumer confidence as the most important concept right now. They are extremely worried that the problems in the stock market and the weakness in the manufacturing sector will lead to pessimism and lower spending.
With the U.S. economy hot and global growth accelerating, the issue of Fed tightening has become the conceptual equivalent of pondering a possible California earthquake. It's going to happen, but probably not tomorrow, and participants would rather not think about it.
Being either stubborn or persistent, depending on whether this month's forecast turns out to be right, I believe that the March employment report should, finally, show the long-awaited jobs pop.
