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Week In Review


The establishment survey showed an increase of just 98,000 jobs in March, far below consensus. Revisions to the previous two months’ reports subtracted a combined 38,000 jobs. The household survey, however, indicated job growth of 472,000 jobs. This caused the unemployment rate to drop from 4.7% to 4.5%, as labor force growth did not keep pace with added jobs. Labor force participation was steady at 63%, while average hourly earnings rose 0.2%.

Our Take

Which survey should be believed? The household survey is notoriously volatile, yet March jobs growth in this survey comes on the heels of outsized growth in February as well. The establishment survey was decidedly poor. Weather may explain some of the divergence between the surveys, but the trend in employment is anyone’s guess at this point. The Fed will likely focus on the unemployment rate, meaning the chances of a rate hike in June may have risen slightly due to Friday’s report.

FOMC Minutes

The Federal Reserve Open Market Committee (FOMC) released the minutes from its March meeting. Although still hawkish, the overall tone of the minutes was a bit more tempered than the comments from Fed members preceding the March meeting. The minutes show a general consensus among members toward continued removal of accommodation with one or two additional rate hikes being appropriate this year. In addition, the minutes reveal a growing consensus to address the central bank’s $4.5 trillion balance sheet. Provided the economy continues to perform as expected, most participants thought it would be appropriate to begin shrinking the balance sheet before year-end.

Our Take

The willingness to address the balance sheet is encouraging, but normalizing monetary policy from here will prove to be difficult. The Fed has put a staggering amount of money into the system. Reversing this position will require near-perfect execution. Removing liquidity too slowly will lead to inflation. Removing liquidity too quickly will slow the economy, risking recession. Unfortunately, the Fed’s track record is not encouraging.

ISM Surveys

The March ISM manufacturing index fell from 57.7 to 57.2, while the non-manufacturing index dropped from 57.6 to 55.2.

Our Take

March weakness points to the chance that economic optimism is not translating to actual gains as quickly as expected. Continued decline in future reports would present a cause for concern, but both indexes still firmly indicate economic expansion.


Kansas City voters approved an $800 million bond package this week. Funds will be used for infrastructure improvements, including repairing roads and bridges, along with a new animal shelter. A gradual increase in property taxes will pay for the borrowing. The $800 million general obligation bond authorization is the largest in Kansas City history.

Our Take

Kansas City, like many other municipalities, has struggled with deteriorating infrastructure. Mayor Sly James and Kansas City lawmakers had been campaigning for the measure to pass. James wanted to address the city’s infrastructure issues since he took office in 2011. The city took the steps to improve its fiscal health and pay down existing debt before bringing this week’s bond package to the voters.