U.S. data from the last week of February ranged from moderately disappointing to very positive. We remain on course for weak-to-moderate expansion in Q1. Recently higher gasoline prices are not yet high enough to derail the economy. The second estimate of 2011Q4 real GDP growth was revised slightly to 3.0 percent, up from the first estimate of 2.8 percent. Nothing earth shattering here, but confirmation of a broadening economic expansion through the second half of last year. A sour note was struck by the durable goods report for January, which showed a sizeable 4.0 percent decline in new orders for durable goods. This is a very volatile series that has recently been juiced up by lumpy commercial aircraft orders. Consumer confidence strengthened in February according to the Conference Board as their consumer confidence index ticked up sharply from 61.6 to 70.8. House prices remain soft. The Case-Shiller U.S. House Price Index for 2011Q4 fell another 1.7 percent. The backlog of foreclosures implies weak prices through the remainder of this year. Total personal income increased by 0.3 percent in January after a strong 0.5 percent gain in December. After inflation and taxes, real disposable income fell by 0.1 percent. After inflation, real consumer spending was unchanged in January. The goose-egg in real consumer spending for January is a negative for real GDP growth in the first quarter. The ISM manufacturing index for February ran counter to strong regional manufacturing reports and fell from 54.1 in January to a still-decent 52.5 in February. Construction spending in January was essentially unchanged. Initial claims for unemployment insurance fell by 2,000, to hit 351,000. February auto sales zoomed to a 15 million unit pace, and that is very positive.
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