That's a load off the Fed's mind, as was the University of Michigan's report that consumer confidence actually went up for a change in the first weeks of March, rising to 91.8 from 90.6 in February and topping forecasts for a drop to 89.5. Both reports will figure heavily in the Fed's calculations as it readies for its March 20 meeting. TIME senior economics reporter Bernie Baumohl reads the tea leaves for you.
TIME.com: What can we glean from that consumer confidence report?
Bernard Baumohl: Well, it's something that could still change, but after February's Michigan numbers, which were revised up, I count this as the second straight rise in consumer confidence after several months' slide. It seems to suggest that perhaps the worst may be over in terms of consumer sentiment, which is critical to the length and breadth of this slowdown.
So of course the markets sold on the news....
BB: Fridays are usually bad in a down market like this, because nobody wants to go into the weekend with a stable of losers. But consumer sentiment has been a major concern of Greenspan's for a while, and when good news came traders suddenly got worried that the Fed wouldn't feel as much need to cut interest rates if the confidence numbers were turning around.
There's been an increasing expectation, with the market sell-offs of the last few days, that he should cut 75 basis points (three-quarters of a perccent), instead of 50 (half a percent), and the selling today was a reflection of concern that he might not feel the need.
On the other hand, the other big number from Friday, the PPI, means that inflation is very tame. Which leaves him room to err on the side of easing if he wants to cut more than 50 points.
Are there any changes to the long-term picture based on Friday's reports?
BB: The consumer confidence numbers don't reflect this week's big drops on Wall Street, so they may drop again when UM comes out with its updated numbers at the end of the month. But this definitely raises the possibility that we'll look back at March as the inflection point for this downturn.
We've never had the markets continue to go south in the face of three interest rate cuts, and that's certainly what we'll have on Tuesday, no matter what the size. As long as Greenspan doesn't seriously disappoint with a 25-point cut, this may well be the month that we start to see a turnaround, in both consumer sentiment and in the markets.