Initial Jobless Claims totaled 351k, 4k less than expected but last week was revised up by 2k to 353k. It is the lowest since Mar ’08 and brings the 4 week average to 354k from 360k. Continuing Claims fell by 2k and Extended Benefits were down a net 17k. Bottom line, the labor market continues to improve with the pace of firings still moderating and we’ll see next week to what extent hiring’s picked up in Feb. On the weaker side was the data on Jan Income and Spending. Income rose .3% vs the est of .5% and Spending was up just .2%, half what was expected. The Savings Rate fell to 4.6% from 4.7%. Because the PCE inflation deflator rose .2%, REAL income was up just .1% and actually fell .1% looking at disposable income (after tax). Real spending was flat. On a y/o/y basis, headline PCE, Bernanke’s now preferred measure of inflation instead of CPI, rose 2.4% vs expectations of 2.3% but is the lowest since April (still though above both the 10 yr and 20 yr average). Taking out food and energy, core PCE rose .2% m/o/m for the 1st time since Aug. Bottom line, however much the Fed thinks inflation is ‘temporary’ as Bernanke said yet again yesterday, the data points to a still sticky inflation rate, with gasoline prices in particular up another .10 over the past week. For every .10 move, it equates to about $14b annualized in extra consumer gasoline expenditures.
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