Economic data last week was almost universally better than expected. This gave the market a needed “confidence boost” about the current state and trajectory of the economy following the disappointing December jobs report.
First, with regard to the current state of the economy, the first two January economic data points, Empire State manufacturing and Philly Fed, both beat expectations. Importantly, given the context of the jobs report, the employment indices in both reports saw strong gains from December to January (Philly jumped 5.6 points to 10.0 while Empire jumped from zero to 12).
Turning to the trajectory of the economy, several pieces of December data helped remind the market that we are seeing economic growth accelerate.