Looking at Some Economic Indicators

After zigging upward last week, interest rates zagged downward – but not as much – this week, enough to change the ratings on some interest rate sensitive indicators, like mortgages. And consumers continue to spend, despite all the shocks and sluggishness in things like the labor market in the past 15 months.

Partial of “Weekly Indicators for March 30 – April 3” at Seeking Alpha, New Deal Democrat

“Interest Rates Decline Even As Oil Shock Worsens”

Economic Summary

• All time frames remain at least slightly positive, with long leading, short leading, and coincident indicators showing stability or improvement.
• Yield spreads and mortgage rates turned more positive, while corporate spreads and mortgage applications are close to shifting ratings.
• Short leading indicators are stable; layoffs remain minimal and regional Fed new orders are positive despite some commodity and currency volatility.
• Consumer spending is robust, but slowing tax withholding and elevated gas prices could pressure discretionary purchases if trends persist.

Recap of Monthly Reports

March data started out with a positive jobs report including lower unemployment and most leading indicators therein positive as well, although wages and payrolls showed further deceleration. There was also a positive, and improving, ISM manufacturing report, but showing increased price pressures.

February data included an increase in both nominal and real retail sales, an increase in nominal total business sales, and improved Conference Board consumer sentiment, although the future expectations component declined.

January data included continued deceleration in house price gains in both the FHFA and Case Shiller national indexes.

Employment metrics

Initial jobless claims

• 202,000, down -9,000 w/w, down -9.4% YoY
• 4-week average 207,750, down -3,000 w/w, down -6.8% YoY.

(Graph at St. Louis FRED.)

Jobless claims were positive for most of 2024, except for hurricane-influenced weeks during the autumn. Then they turned moderately negative through midyear this year. But since the beginning of last July, more often than not readings have been lower YoY, generally turning this metric positive. Seasonality is likely no longer an issue, although I suggest some caution because they may be affected by the disappearance of some immigrant employees.

Temporary staffing index (from the American Staffing Association) (graph at link)

• Up +1 to 87 w/w.
• Up +4.3% YoY (low -13.6%- high 4/3/26 +4.3%).

This series had been negative since early 2023. YoY comparisons continued to be negative throughout 2024. I suspect this was due to a secular change and giving a false signal as a result. The YoY reading was trending “less bad” for many months, then neutral, and finally in late last summer it turned positive. The big downturn at the end of last year was seasonal; and has it has rebounded since.

Coincident indicators

Tariff payments

• February 2026 vs. 2025: $28.6 B vs. $8.9 B (+$19.7 B).
• March 2026 vs. 2025: $25.1 B vs. $9.6 B (+$15.5 B)

I inaugurated this measure last spring after “Liberation Day.” The above information comes directly from the Daily Treasury Statement. These fees are either absorbed by the importer or passed on to the consumer, or some proportion of each, and are removed from potential consumption on other items.

As per my above comments, the regional Fed reports indicate that these tariffs have had a substantial upward impact on prices paid for materials, with only about half of those increases – but nevertheless half – being passed on to consumers.

Note that the U.S. Supreme Court ruling adverse to the Administration did not specify what the remedy would be, so it is very likely that that aspect of the litigation will drag out for a year – or possibly more.

Consumer spending

• Johnson Redbook up +6.9% YoY, 4 week average +6.5% (high 7.6% 1/2/26 & 12/5/25; 4.8% 7/3/2025) United States Redbook Index.

The overall trend in this metric since three years ago has been not only positive, but increasingly so over time. Last August and September it increased sharply to very positive before fading somewhat in October and November. It picked up sharply after mid-November, and is still very much in the upper half of its 52 week range.

Consumer inflation by Truflation (Independent, economic & financial data in real time on-chain | Truflation)

• Down -0.03% to +1.75% YoY (High 2.68% 7/2/25 – Low 0.72% 2/13/26).

This is a daily update to inflation, similar to the “billion prices project” of the last decade (which required a subscription). I have not added this to my list below of coincident or leading indicators, but needless to say it is an up-to-the-moment reading on this very important indicator. This series has been volatile, and the YoY comparisons had been turning higher since September, but has been very low in the last several months, although it did make another new two month high seven months ago. Since the beginning of this year, it plummeted to new 52 week lows, before increasing in the past two months.

Real Consumer Spending

• Up +5.2% YoY (high – 6.3% 2/20/25; 12 month low 1.7% 12/16/24).

One of my most important mantras is that consumption leads employment. Real retail sales have a long history of doing so, but are only reported on a monthly basis.

The weekly result is derived simply by subtracting YoY inflation as measured by Truflation from the YoY change in nominal consumer spending as measured by Redbook. While it will be somewhat noisy, it should anticipate changes in the monthly measures ahead of time. made another 12 month high several months ago. After mainly weeks in the upper part of its 12 month range, it was tepid at the beginning of the year, before backing off. considerably along with nominal consumer spending in the past several months. With the big jump in consumer spending YoY in the past several months, this measure has improved as well.

Summary and Conclusion

All time frames remained at least slightly positive this week.

Among the long leading indicators, yield spreads became even more positive, even as across the spectrum they declined. Mortgage rates also declined enough to improve their rating. On the other hand, spreads between Treasurys and corporates have increased, although not quite enough yet to warrant a change in rating. Mortgage applications are also on the cusp of a change in rating.

The short leading indicators remained also completely stable. Perhaps the most positive metric is that (relatively speaking) almost nobody is getting laid off.

The coincident indicators continue to show strong consumer spending, but tax withholding payments have slowed down again. So far there is no evidence of consumers “pulling in their horns,” although if gas prices remain elevated, other purchases will presumably come under stress.