Less ambiguous was the news that housing starts and permit applications are falling off too. Although the declines were modest, they're a signal that construction companies see demand for new homes dropping in the months ahead and that's the slowdown again, in a sector whose surprising winter strength was supposed to mean that the worst of it wasn't going to be so bad.
And yet the Federal Reserve reported that U.S. industrial output from the moribund manufacturing sector, after a 0.4 percent dip in February, jumped 0.4 percent in March, surprising analysts and raising anew the old question: Will the Fed move sooner, or later? TIME senior economics reporter Bernie Baumohl weighs the data and shines up his crystal ball.
TIME.com: What do the numbers add up to?
Bernard Baumohl: This is more news that reinforces the view that the economy is in serious trouble. In fact, its pulse is barely noticeable, and in danger or flatlining.
We got a negligible increase in the CPI, the smallest rise in seven months, which is not unexpected in a slowdown. The bad news is that there's obviously no room for companies to raise prices to try and bulk up their profits, and that's going to keep the corporate earnings outlook pretty grim for a while. The good news is that this would seem to give the Fed tremendous latitude to cut rates quickly.
Construction companies obviously see the same slowdown they're cutting back on housing starts, concluding that the drop in consumer confidence will impact their interest in buying homes in the months ahead. And not only new homes, but building permits are also falling down 3.6 percent in March after falling 2.8 percent in February. There's just less incentive for builders to build when they don't see the buyers out there anytime soon.
But industrial production is up. Isn't that a good sign?
I see this as something of a dead cat bounce. Automakers have been heavily discounting their inventories to clear them out, and I think that's why auto sales have held up so well. This number seems to me to be evidence that the discounting worked so well that they're having to rev up again.
Overall, though, industrial production in the first quarter was down 4.7 percent, which is the weakest since the first quarter of 1991, the last recession. And this increase is the first in six months, and it's so modest that it can probably be chalked up to one sector autos.
So the big picture is still pretty bleak.
We've got rising unemployment, weak stock prices, and a daily drumbeat of low corporate earnings and big layoff announcements, with Cisco and Texas Instruments the latest. There's cutbacks in retail sales, and now housing. The cumulative set of statistics that we've seen lately may very well indicate that there is a recession getting under way right now.
All in all, I find it hard to believe that the Fed can sit back and wait until the middle of May to cut interest rates again. Today was more evidence that the last leg holding up this economy, the consumer, is buckling. They're looking for a lifeline from the Fed, and the Fed is not providing it.