This post is for those fond of repeating the axiom “correlation does not imply causation,” because while correlation may not prove causation, it certainly can imply it. In fact, there are instances where the denial of any linkage between correlation and causation proves only that the deniers have their heads in the sand.
On the surface, the January retail sales report released on February 13 doesn’t look so bad, in spite of the hysterical headlines about the big “miss” because of January’s bad weather. Street economists had a consensus guess that the seasonally adjusted headline number would be unchanged from December.
January housing starts stayed in the toilet, running only about flat year to year. The multifamily boom continued while single family languished. The chart tells the story.
The seasonally adjusted headline number for initial unemployment claims came in close to consensus expectations at 336,000 for the week ended February 15. Actual filings totaled 323,151 (see Note below) which was down 7.9% from the same week a year ago.
Yes, we know that the nonfarm payrolls headline number for January was wrong, but those who concluded that job growth is weak are correct. It just was not as weak in January as they thought.