Private nonfarm payrolls in the US are projected to increase by 213,000 (seasonally adjusted) in tomorrow’s March update of the ADP Employment Report, based on The Capital Spectator’s median point forecast for several econometric estimates. The median projection represents an incrementally higher increase vs. February’s rise.
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Federal Reserve Chairwoman Janet Yellen told the crowd last week that rate hikes are coming. The rise will be gradual, she said, but there’s an upward bias for the road ahead. “With continued improvement in economic conditions, an increase in the target range for [the federal funds rate] may well be warranted later this year,” Yellen advised. But getting from here to there faces a rough road, including what’s shaping up to be a disappointing start for growth in this year’s first quarter. Meantime, the Treasury market is nonplussed by Janet’s latest comments. Yields on government bonds remain well below recent highs, effectively telling the Fed that the future looks somewhat different relative to the narrative that the Fed chair is pushing.
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● US consumer spending barely increases in Feb despite rising incomes | LA Times
● Pending Sales of US Homes Rose More Than Forecast in February | Bloomberg
● Eurozone deflation fears ease as price fall slows | MarketWatch
● Eurozone unemployment edges lower to 11.3% | FT
● German Unemployment Rate Falls To Record Low | RTT
● German Retail Sales Growth Slows Less Than Expected In February | RTT
● French Consumer Spending Rises For Fourth Month | RTT
● US small-business borrowing slips in Feb, up on year: PayNet | Reuters

Consumer spending in the US revived last month, rising 0.1% in February vs. January, the Bureau of Economic Analysis reports. The gain is slightly below expectations among economists, although the increase is the first monthly advance since last November. The directional shift back into positive territory is encouraging, but a closer look at the trend suggests that a softer run of growth persists. It’s still reasonable to wonder if the harsh winter is the source of the weaker growth, in which case warmer weather is the antidote. Based on today’s update, however, it’s clear that spending’s rise in the consumer sector continues to decelerate in annual. In fact, the same is true for disposable personal income, which continued to post a lesser rate of growth last month vs. the year-earlier level.
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The US real estate market has been sluggish in recent history, but the latest numbers hint that the sector may enjoy a stronger run of growth in the spring. The supporting evidence is still thin, although the sales trend has clearly improved in February, particularly for purchases of newly built single family homes. Is this a sign that the property market is firming? If it is, the outlook for the US economy will improve a bit.
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● Business group’s outlook for U.S. economy improves | LA Times
● Eurozone economic sentiment improves in March | European Commission
● Economic Confidence Shows Euro-Area Recovery Defies Greek Risks | Bloomberg
● Japan Feb Factory Output Slumps on Weak Exports; Q1 Seen Up | MNI
● UK Financial Services Optimism Strongest Since Dec 2013: Survey | RTT
● U.S. Consumer Sentiment Falls Less Than Initially Estimated In March | RTT
● US Fourth Quarter GDP Growth Unrevised At 2.2% | RTT

US personal consumption spending for February is projected to rise 0.3% vs. the previous month in tomorrow’s update (Mar. 30), based on The Capital Spectator’s median point forecast for several econometric estimates. The prediction reflects a moderate rebound after January’s 0.2% decline.
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● Invest with the Fed: Maximizing Portfolio Performance by Following Federal Reserve Policy
By Robert R. Johnson, et al.
Essay by co-author (Robert R. Johnson) via ValueWalk
In a recently published McGraw-Hill book – Invest with the Fed – my co-authors, Gerald R. Jensen from Northern Illinois University, Luis-Garcia-Feijoo from Florida Atlantic University, and I, provide a comprehensive analysis of capital market performance across different Fed policy periods from 1966 to 2013. This book is a culmination of over 25 years of rigorous academic study of Fed policy and capital market returns. In it, we examine returns to different asset classes – stocks, bonds, Hedge Funds, alternative assets, and foreign equities – and also study returns to different equity styles (value, growth, and momentum).
One of our most interesting findings is that it isn’t so much the absolute level of interest rates that is related to security returns, but rather, the direction of interest rate changes that is important.
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The historic and ongoing drought in California is getting harder to ignore in terms of its potential impact on the US economy down the road. The Golden State, after all, boasts the country’s largest GDP among the 50 states, representing a bit more than 13% of US output, based on 2013 data via the US Bureau of Economic Analysis. That’s well above the nearly 9% share for Texas, the second-biggest state economy. But as the dry spell persists, now in its fourth year, it’s reasonable to wonder if California’s growth prospects will suffer. In turn, if the biggest state wilts due to drought, what are the implications for the US?
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● Jobless Claims in U.S. Decline to Lowest Level in 5 Weeks | Bloomberg
● Sharpest rise in US service sector business activity for 6 months in March | Markit
● Consumer Comfort in U.S. Matches Second-Highest Level Since 2007 | Bloomberg
● France March Consumer Confidence Highest Since Nov 2010 | MNI
● Japan’s retail sales fall more than expected in February | RTT
● Bundesbank opposes more emergency funding for Greece | RTE