With Washington, D.C.'s failure to dodge the bullet of mandatory budget cuts last week, attention on Wall Street and Main Street return to the real-world economy. And this week, the highlight among scheduled economic data is the monthly jobs report, due at 8:30 a.m. Friday (all times eastern).
Indeed, the economy has seemed virtually bulletproof from Washington's self-inflicted wounds, based on recent reports.
Recent trends positive
Last week, we got reports on consumer confidence, new home sales and new claims for unemployment benefits pointing toward improvement. While personal income dipped largely because of the evaporation of the payroll tax cut (another Washington creation), the Commerce Department reported that consumer spending rose slightly in January. That spending was at the expense of savings, which fell to its lowest level in several years.
Many employers and consumers appear to be taking the mandatory budget cuts in stride. Economist Joel Naroff, president and founder of Naroff Economic Advisors, says most Americans remain unconvinced that the sequestration will directly affect them. Says Naroff, "I think people are fatigued, but they are more angry than fatigued. People don't see the connection to their particular business."
Are people finding jobs?
Naroff expects the February unemployment report will show that the job market remains steady. Last month, the Labor Department reported that employers added nearly 160,000 jobs to payrolls. Based on recent new applications for unemployment benefits, Naroff says payrolls could have grown by 175,000 or 180,000 in February. As for the jobless rate, he says it could slip from 7.9 to 7.8 percent.
Economist John Canally with LPL Financial puts a different twist on raising the bar. He says expectations for the report "have moved higher over the past week, perhaps setting the market up for a disappointment." Canally says the "big northeastern blizzard in February could be a big swing factor" in producing fewer-than-expected jobs.
As he puts it, "The claims are not indicative of a negative reaction to the situation (in Washington)."
White collar sector snapshot
Also on the economic docket this week, the Institute for Supply Management releases its services index at 10 a.m. Tuesday. The previous report, covering January, showed expansion in the white-collar sector for a 37th straight month, but at a slightly slower pace. Naroff doesn't see much change in the updated report.
Successful knockoff turns 101
On March 6, the Oreo cookie turns 101 years old. It was in 1912 that Nabisco introduced the Oreo, said to be the best-selling cookie in the United States. It was launched to knock off the Hyrdox sandwich cookie, which had been introduced four years earlier by Sunshine Biscuits. Oreo went on to own the market, despite having been a knockoff. But that's as they say, the way the cookie crumbles.