Economic Preview: Spring is here again — and that probably means a reinvigorated U.S. economy

Ah, spring. Blooming flowers, flowering trees — and a more vigorously growing U.S. economy. That’s been a recurring pattern since the U.S. emerged from the cauldron of the 2007-2009 Great Recession. And it looks like it might happen again. Read More...

sales at retailers have been up and down the past few months — just like the U.S. economy.

Ah, spring. Blooming flowers, flowering trees — and a more vigorously growing U.S. economy.

That’s been a recurring pattern since the U.S. emerged from the cauldron of the 2007-2009 Great Recession. And it looks like it might happen again.

Mind you, few Wall Street soothsayers predict the economy will record a similar 4.2% spurt in growth like it did in the spring of 2018. Still, most see the U.S. expanding at a nearly 3% pace in the second quarter — twice as fast as the predicted rate of growth in the first three months of the year.

Signs of green shoots have already emerged: A hiring rebound in March, layoffs falling to the lowest level since 1969, improved auto sales and a small pickup in manufacturing.

More evidence is likely to be on display this week.

Faster sales of new cars and trucks are likely to give a big shot in the arm to U.S. retail sales when the numbers are reported on Thursday. Less welcome to consumers, so will higher gas prices. The cost of filling up rose 10% in March to the highest level since last November.

Even if autos and gas are stripped out, though, retail sales are expected to show improvement after an up-and-down start in 2019. Wall Street is looking for a 0.8% increase in March, or about half that if auto dealers and gas stations are left out.

“Consumer spending was whipsawed at the turn of the year by snowstorms, [stock] market gyrations, the federal shutdown and lower tax refunds,” noted deputy chief economist Michael Gregory of BMO Capital Markets.

The Dow Jones Industrial Average DJIA, -0.15% and S&P 500 SPX, -0.17% , for example, suffered their biggest monthly decline in December since 1931 before recovering early in 2019.

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What will also be watched closely is construction on new homes. Home builders were dogged in February by one of the wettest and snowiest months in decades.

Construction almost certainly bounced back in March during a period a milder weather, aided by tumbling mortgage rates. Interest in buying a home has perked up given the cheaper cost of borrowing. A strong labor market and rising incomes should also lending a helping hand.

The Federal Reserve’s periodic review of the economy known as the Beige Book, meanwhile, is likely to take a more upbeat tone in the period extending from March to early April after a more dour assessment for February.

The Fed is basically prepared to sit still for awhile, leaving interest rates at current low levels, as it tries to figure just what the heck is going on with inflation.

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Price pressures are still little in evidence despite the lowest layoffs and unemployment rate in 50 years and the fastest increase in worker wages in a decade — not to mention a nearly record-long economic expansion that’s almost 10 years old.

“Simply put, the [Fed] thought that wages and prices would start heating up at a higher unemployment rate than has proven to be the case,” said economist Avery Shenfeld of CIBC World Markets. “Can we blame them? Show me a forecast from a few years ago that predicted both 3.8% unemployment and a core inﬂation rate still below 2%.”