The key to keeping the economy on a sustained low-inflation growth path may well be the continued achievement of strong gains in productivity. Information currently available suggests that the economy began the second quarter with considerable forward momentum. There is little in the statistical record which points to any sharp change of pace, but many indicators seem to be coming off their recent highs. Initial claims for state unemployment insurance benefits rose by 26,000 in the week of April 22, although this was from a 26-year low of 257,000 one week earlier. Both continued claims and the state insured unemployment rate have fallen to new lows and labor markets remain very tight.
Consumer confidence is at high levels although some measures are slightly off their peaks.
According to the Conference Board, consumer confidence was little changed in April after two months of easing from an all-time high in January. Press reports suggest that the University of Michigan index of consumer sentiment firmed somewhat in April, but it too has shaded down from a peak in January. Recent readings in retail sales are difficult to interpret because of a late date for Easter this year. There has apparently been some improvement in April, but sales are still reported to be running a little below plan for most retailers. The National Association of Purchasing Management index shaded down somewhat in April, suggesting continued growth in manufacturing but some deceleration over the past six months.