This Economy's Strength Is No Joke

Padinha's in no mood to kid about labor market tightness.
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Measured Out With Coffee Spoons

JACKSON HOLE, Wyo. -- Not one of the numbers to follow is in any way a joke.

Personal income rose 0.5% in February.

Personal income will end up showing as big an increase during the first quarter of 1999 as it did during the fourth quarter of 1998 (5.5%). Personal income was rising at a 3.5% year-on-year rate six months ago, and it's rising at a 5.1% rate now; income growth is accelerating. The real (inflation-adjusted) first-quarter personal income gain will go down as the biggest since the fourth quarter of 1997.

Wages and salaries grew 6.4% during the fourth quarter. They'll end up showing a 7.4% increase during the first. Disposable (after-tax) personal income rose 5.4% during the fourth quarter. It'll end up showing a 5.9% increase during the first; that'll go down as its biggest increase since the first quarter of 1997.

Personal consumption rose 0.7% in February.

Consumption was rising at a 5.5% year-on-year rate six months ago, and it's rising at a 6.3% rate now; consumption growth is accelerating.

Real consumption rose 4.1% during the third quarter of 1998 and 5% during the fourth; it'll end up showing a 5.2% (perhaps bigger) increase during the first quarter of 1999.

Construction spending rose 2.2% in February.

Construction spending rose 5.4% during the fourth quarter. It'll end up rising 17.6% during the first. Construction spending was rising at a 6.4% year-on-year rate six months ago, and it's rising at a 10.7% rate now; construction-spending growth is accelerating.

Real construction spending rose 0.7% during the fourth quarter. It'll end up showing a 17.3% increase during the first. Real residential construction spending rose 2.8% during the fourth quarter, which contributed 0.44 percentage point of the 6% by which

gross domestic product

grew. Real residential construction will end up showing an 11.3% first-quarter increase. Real nonresidential construction spending rose 8.3% during the fourth quarter, which contributed 0.16 percentage point of the 6% by which GDP grew. Real nonresidential construction spending will end up showing an 11.3% first-quarter increase.

The National Association of Purchasing Management's Purchasing Managers' Index (PMI) rose to 54.3% in March from 52.4% in February.

The PMI rose to 52.1% during the first quarter from 46.9% during the fourth; that marked the end of a string of five straight quarterly declines. The NAPM notes that the January-March PMI average of 52.1% corresponds to GDP growth of 3% and that the March PMI of 54.3% corresponds to GDP growth of 3.7%.

The production subindex rose to 59.6% in March from 56.9% in February. This hints at a decent

industrial production

number. The new orders subindex rose to 58.2% in March from 57.2% in February. This hints at a decent

durable goods

number. The prices subindex rose to 35.9% in March from 32.5% in February. This hints at an increase in the

producer price index

for core intermediate goods.

The export subindex held above the 50% mark in both February and March following a 14-month period during which it held below that level. This hints at an increase in

foreign

demand.

The employment subindex rose to 48% in March from 45% in February. This hints at a smaller decrease (and perhaps even an increase) in

manufacturing

employment.

First-time claims for unemployment insurance totaled 289K during the March 27 week.

The trend in claims (measured as a four-week moving average) has now held under 300K for eight straight weeks. Claims levels now sit roughly 40K lower than they did throughout 1994, when the economy was generating an average 320K jobs per month.

The economy is just plain booming and the labor market is just plain tight. Any fool ought to know that by now.

Peace.

Best egg?

Nest.

Cream.

Cadbury.

Three-minute.

Sunny-side drippy.