While OPEC recently announced an agreement to reduce output by roughly 1.5 million barrels a day in an effort to firm prices, history suggests that it will be tough to keep oil producing countries from cheating on their production quotas. Another sign that the Asian crisis is beginning to impact our economy was seen in the January and February industrial production reports which showed no increase in output. Purchasing managers reported a sharp drop in their expectations for export orders as did the National Association of Manufacturers. Trade will continue to be a drag on economic growth. T-Bill rates are bond equivalent yield.
All figures are quarterly or yearly averages, rounded to one decimal point.
Strong Except for the weakening trade situation and softer industrial production figures, economic indicators released over the past month continue to show remarkable strength. Retail sales increased 0.5 percent in February, slightly weaker than expected, but because the prices of goods have fallen, real retail sales have picked up quite a bit. While nominal retail sales are up just 2.5 percent from last year, because the prices of goods have dropped, real retail sales have actually increased by 4.5 percent - consumers are able to buy more with fewer dollars. Job growth continues at a non-sustainable pace. Nonfarm payrolls increased to 310,000 in February, the fifth monthly report that was well ahead of expectations.