Headline housing starts rose 7.2% in January to nearly 1.5 million units' annual pace. On the flip side, chemistry-intensive single-family starts lost 2.8%, pulled down by plummeting starts in the Northeast (down 33%, as winter weather was highly disruptive) and, to a lesser extent, the South (off 6%, with the region itself accounting for 58% of total single-family starts in January). Single-family starts rose in the West and Midwest. The headline national number was propelled by multifamily starts, which zoomed 29%. Forward-looking building permits declined 5.4% in January. All the regions saw permit losses except for the Midwest. Compared to a year ago, headline housing starts gained 9.5% Y/Y while building permits were off by 5.8% Y/Y.

Existing home sales rose 1.7% in February to a 4.09 million seasonally adjusted annual rate (SAAR) after slumping 5.8% in January. Inventories rose 2.4%. Compared to a year earlier, sales dropped 1.4% Y/Y while inventories grew 4.9% Y/Y. At the current sales pace, inventories represent 3.8 months' supply, up from 3.6 months' supply a year ago. The median sales price rose 0.3% Y/Y to $398,000.

Consumer prices rose 0.3% in February after adding 0.2% the previous month. The February increase was driven by shelter (+0.2%), food (+0.4%), and energy (+0.6%). Core prices advanced 0.2%, propelled by gains in health care, apparel, household furnishings, airfares, and education. On the flip side, prices for communications, used cars and trucks, auto insurance, and personal care declined. Compared to a year ago, the headline CPI was up 2.4% Y/Y while core prices were up 2.5% Y/Y; both indexes witnessed the same respective Y/Y increases in January. The March CPI to be released next month will show the effect of rising oil and gas prices amid the ongoing war in Iran.

Consumer spending expanded by 0.4% in January, repeating the increase seen in December. January's gain was led by rising spending on services such as health care, housing & utilities, and financial services & insurance. On the flip side, spending on motor vehicles, gasoline, and clothing & footwear declined. After adjusting for inflation, real consumer spending was up 2.4% from a year ago, higher than the 1.6% increase seen in December. Real disposable personal income grew 1.8% Y/Y in January, the fastest pace since September. The Fed's preferred inflation measure, the price index for personal consumption expenditures (PCE) was up 2.8% Y/Y, slightly down from December's 2.9% Y/Y advance. Excluding food and energy, the core PCE price index was up 3.1% Y/Y, the largest increase since March 2024.

Borrowing rose in January as consumer debt grew at a 1.9% annual rate, down from a revised gain of 6.0% in December. Credit card balances rose 4.3% after jumping 11.3% the prior month, while balances on nonrevolving debt, such as student loans and car loans, advanced 1.1% on top of a 4.1% rise in December.

Durable goods orders were flat in January after losing 0.9% in December. Gains in computer and primary and fabricated metals orders were more than offset by declining orders of transportation and electrical equipment. Motor vehicle and parts orders lost 0.4% while defense aircraft orders plunged 24%. Core business orders (nondefense capital goods excluding aircraft) were flat after adding 0.8% in December. Compared to a year ago, orders were up 10.3% Y/Y. Core orders gained 4.3% Y/Y, down from a 6.3% Y/Y increase seen in December.

U.S. trade deficit dropped $18.4 billion in January to $54.5 billion. The decline reflected a drop of 0.7% in imports versus growth of 5.5% in exports. Imports of pharmaceuticals, autos & parts, other vehicles, and nonmonetary gold declined, while imports of computers and telecom equipment increased. Concurrently, exports of nonmonetary gold, other precious metals, computers & accessories, and civilian aircraft rose while exports of pharmaceuticals fell.

BEA's second estimate of Q4 GDP shows an increase of 0.7% seasonally adjusted annual rate (SAAR), down from the initial estimate of 1.4%. The downward revision reflects lower exports, consumer spending, government spending, and investment than initially estimated. Moreover, imports (which subtract from GDP) decreased less than previously reported.

Small business optimism declined slightly in February as the headline index lost 0.5 points to 98.8. Three out of the 10 index components increased, particularly earnings trends. Four components declined and three were unchanged. Expected real sales declined the most. The Uncertainty Index moved lower.

According to data released by the Association of American Railroads, chemical railcar loadings fell 5.9% to 34,464 for the week ending March 7. Loadings were up 0.2% Y/Y (13-week MA) and up 3.0% YTD.

Energy Wrap-Up
• Brent oil prices surged again this week to over $101/bbl (highest since 2022) as producers in the Gulf region reduced or stopped production amid full storage facilities and limited shipping options. Traffic in the Strait of Hormuz has largely halted following attacks on vessels and Iran's installation of mines in shipping lanes. Oil prices continued to rise despite IEA's announcement of the largest ever coordinated release of strategic oil reserves (400 million barrels).
• Compared to previous oil crises, the U.S. is relatively less dependent on Persian Gulf supplies which accounts for only 3-4% of petroleum consumed in the U.S. Most of those imports come from Iraq and Saudi Arabia. This compares around 10% in the 1980's and 90's.
• U.S. natural gas prices were also higher, but price impacts were relatively muted.
• European natural gas prices remained elevated at around the equivalent of $17/mmbtu.
• The combined oil & gas rig count rose by two to 543.

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