US economy shows off its resilience

<p>Kia ora,</p><p>Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news that despite challenges from every direction, the giant American economy is proving quite resilient. Sensible leadership is certainly helping.</p><p>As we had indicated previously in other measures, <a href="https://www.census.gov/retail/marts/www/marts_current.pdf" target="_blank"><strong>American retail sales</strong></a> came in strong, and better than anticipated in January. There were up +12.3% from the same month a year ago, far higher than inflation. The month-on-month gain was +3.8% when a +2% rise was expected. This is strong in anyone's language, led by online retailing, furniture, and cars.</p><p>Also strong was US <a href="https://www.federalreserve.gov/releases/g17/Current/default.htm" target="_blank"><strong>industrial production</strong></a> in January, up in real terms by +4.1% and now <a href="https://fred.stlouisfed.org/series/INDPRO" target="_blank"><strong>above pre-pandemic levels</strong></a>.</p><p>Some of this is due to inventory building, itself a response to the supply-chain problems. In fact, the rise in <a href="https://www.census.gov/mtis/www/data/pdf/mtis_current.pdf" target="_blank"><strong>business inventories</strong></a> in December was the largest since 1992, up +2.1% in one month, up +10% in a year. However, it should also be noted that the inventory-to-sales ratio isn't rising. And that suggests the rising inventories are not a building economic problem.</p><p>American <a href="https://www.mba.org/2022-press-releases/february/mortgage-applications-decrease-in-latest-mba-weekly-survey-x288923" target="_blank"><strong>mortgage applications fell again</strong></a> and by quite a bit, and the third weekly fall in the past four weeks. Probably that is because <a href="http://www.freddiemac.com/pmms/" target="_blank"><strong>mortgage inter