The Month in Review

• The Bureau of Labor Statistics said U.S. payrolls added 243,000 jobs in January, bringing the unemployment rate down to 8.3%. It was the fifth straight month of lower unemployment.
• The U.S. economy grew at an annual rate of 3% in Q4 2011, a more rapid pace than the 2.8% initial estimate. Once again, the Bureau of Economic Analysis said inventories were a major contributor, though consumer spending and commercial construction also were up.
• Eurozone finance ministers agreed to the terms of a second bailout for Greece, worth €130 billion, after the country’s coalition government approved additional austerity measures and private bondholders (i.e., banks) agreed to swap their Greek sovereign bonds for ones worth almost 54% less. However, the G-20 nations postponed committing more resources for the International Monetary Fund’s contribution to the bailout effort, saying they want to see how European rescue efforts progress.
• Moody’s slapped new credit rating downgrades and/or negative outlooks on several European countries, including the United Kingdom and France, because of their exposure to the more troubled countries’ debt.
• Congress agreed to extend through the end of 2012 both the 2% payroll tax reduction and long-term unemployment benefits.
• Though housing starts, new residential construction, and home resales all improved during the month–they were up 1.5%, 1.5%, and 4.3% respectively–the good news didn’t extend to home prices. The S&P/Case-Shiller national index of home prices hit its lowest point since its mid-2006 peak.
• Manufacturing data was mixed. The Commerce Department said durable goods orders fell, mostly because of a drop in orders for commercial aircraft, but the Fed’s surveys of the New York and Philadelphia regions hit their highest levels in months.
• Inflation at the wholesale level rose 1% in January, putting the rate for the past 12 months at 4.1%. However, not all the increases made their way to the consumer level; according to the Bureau of Labor Statistics, consumer inflation was up 0.2% for the month and 2.9% for the last year. Meanwhile, the Commerce Department said retail sales rose a modest 0.4% in January.

Eye on the Month Ahead

Any suggestion of bailout package problems that might spell trouble for the Greek bond payments due March 20 could spook global markets. Investors also will watch to see if leadership in the equities markets remains with companies that benefit most from the early days of a recovery, and whether that recovery will pick up steam.

Key dates and data releases: auto sales, personal income/spending, U.S. manufacturing, construction spending (3/1); factory orders, U.S. services sector (3/5); labor productivity/costs (3/7); unemployment/payrolls, balance of trade (3/9); retail sales, Federal Open Market Committee announcement (3/13); import/export prices (3/14); wholesale inflation, international capital flows, Philadelphia Fed/Empire State manufacturing surveys (3/15); consumer inflation, industrial production, quadruple witching options expiration (3/16); housing starts (3/20); home resales (3/21); new home sales (3/23); home prices (3/27); durable goods orders (3/28); final Q4 GDP (3/29); personal income/spending (3/30).