The sudden-seeming impact of the coronavirus has been a surprise this week. It is certainly possible that the pathogen’s spread will accelerate, so of course it’s important to monitor developments. At such times, however, it’s also important to monitor the fundamentals of the economy. A key indicator is the Conference Board’s measure of consumer confidence, which ticked higher in February and is currently holding at six-month highs. And recent developments in the labor market show that jobs are plentiful, with unemployment claims holding at 50-year lows. The February preliminary Markit PMI was 50.8; the ISM PMI on March 2 will provide a broader perspective on the impacts of the coronavirus and the production slowdown at Boeing. Thus far, the economy seems to be managing the issues; certainly, managing well enough to prevent the Federal Reserve from joining the fray and cutting interest rates precipitously.
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