March 31, 2007

IS A RECESSION ON THE WAY? James Pethokoukis says not if consumers can help it:

And indeed, real consumer spending rose 0.2 percent in foul February. Even a so-so March, JPMorgan added, “would imply a 3.6 percent pace for the quarter. There now appears significant upside risk to our 3 percent consumer spending forecast for the quarter.” As it is, real consumer spending has increased at a 3.7 percent annual clip the past three months.

So there you go. Americans are working, getting paid good dough, and spending it. (The big surge in government tax revenues is another sign that there is plenty of juice out there.) That points to an economy that will continue to expand–2006 fourth-quarter gross domestic product was just revised up to 2.5 percent from 2.2 percent–going forward.

Oh, and this just in: The Chicago Purchasing Managers Index posted its largest one-month movement ever in March, rising to 61.7 from 47.9, thanks to big jumps in new orders, production, and backlogs.

That means that it’s time for economists and pundits to go back to worrying about inflation!