The data that's coming in right now is incredibly important.
We're now well into the period where everyone is seeing the impact of the expiration of the payroll tax holiday on their paychecks.
People have wondered: Will this increase in taxes derail the recovery?
The answer so far? No.
Here are a few charts we've gotten that show things aren't just muddling, but chugging along nicely.
First, here's New Orders from both the ISM Manufacturing and ISM Services surveys. Both ticked up nicely in February.
 FRED |
Now here's a look at the year-over-year change in revolving consumer credit (credit cards).
The data is improving at its best pace in 3 months and generally keeping pace with the steady rate of growth in this area. Credit expansion is key ot economic recovery, and we're seeing that consumers are not going back into debt-paydown mode (what that means longer-term is a different story).
 FRED |
And here are initial jobless claims. With yesterday's reading of 340K, we're close to the best levels since the recession.
 FRED |
Bottom line: The data isn't deteriorating at all according to some important measures.
Of course, there are still the sequester spending cuts, and we'll have to see the impact of those in the coming months.
But the private sector expansion — helped by credit and real estate — should outweigh the GDP impact from the government belt-tightening.