U.S. economic data continue to show moderately improving conditions, while data for the Euro-zone are going the other way. So far the two economies appear to be de-coupled, when in fact they are not. A hard recession in the southern tier of Europe and at least cooler growth, if not a recession, in core Europe, will show up in the trade data as U.S. export growth dials down. January U.S. retail sales increased by 0.4 percent, checked by a 1.3 percent drop in retail sales of autos, even as unit sales jumped for the month with stronger fleet sales. Overall industrial production was flat in January, but that obscures another strong month for manufacturing as output in that sector gained 0.7 percent. A warm-weather-induced decline in utility output dampened the topline production numbers. Housing starts gained 1.5 percent in January as multifamily construction bounced back from a December lull. The newly revised Leading Economic Index chugged ahead in January, up 0.4 percent, its fourth consecutive monthly increase. Both the coincident and lagging indexes were also up, a solid triumvirate for the month. Initial claims for unemployment insurance fell by 13,000 for the week ending February 11, to hit 348,000. A claims number below 350,000 is consistent with monthly payroll job gains in excess of 200,000. Price pressure was relatively benign in January despite rising gasoline prices. That may not be the case in February. The January producer price index for finished goods gained 0.1 percent. Lower natural gas prices offset higher liquid petroleum prices. The consumer price index for January increased by 0.2 percent. Core consumer prices (less food and energy) also gained 0.2 percent.
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