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KEY DATA: Spending: +0.3%; Income: +0.3%; Prices: 0%/ Orders: 0%; Capital Spending: -0.4%/ Home Sales: +4.3%/ Confidence: +1.3 points

IN A NUTSHELL: “Today’s data dump points to an economy moving forward but not with any great commitment.”

WHAT IT MEANS: It’s two days before Christmas and all through the data mills, the numbers are being released before the crunching goes still. So, with all the numbers being pumped out, is there any way to determine what is happening? Yes. Today’s mixed reports point to an economy that is not quite hitting on all cylinders. One bright spot is the consumer. In November, households spent money on everything – durable and non-durable goods as well as services. And people have the money to spend. Income growth was solid and importantly, there was another strong rise in wages and salaries. Worker compensation has lagged greatly during this expansion but that seems to be changing, finally. On the inflation front, prices were largely flat and excluding food and energy, they were up only modestly. As long as energy costs continue to decline, it will be hard for the Fed’s 2% target to be met. However, any moderate rise in oil prices would lead to a jump in the inflation rate and the Fed’s target would come into view quickly. The budget agreement that allows for oil to be exported is likely to stabilize the price of oil in the U.S. and even cause prices to rise in those places that have benefited from the massive oversupply created by the surge in domestic production.

The improving gains in compensation may be increasing consumers’ confidence. The University of Michigan’s Consumer Sentiment moved up in December. Rising confidence and accelerating wage gains provide hopes that spending will be solid if not strong in 2016.

While consumers are spending, businesses are being cautious about investing. Durable goods orders were largely flat in November. There was a sharp drop in civilian aircraft orders but the Pentagon got back into the aircraft businesses heavily. But most importantly, the measure that mirrors business capital spending was off. Still this came after two months of strong increases, so we shouldn’t make too much of the decline.

Yesterday we saw a sharp drop in existing home sales. That might be explained by changes in mortgage rules that have lengthened the purchase process. In contrast, contracts for new home sales were up solidly in November, despite a major fall off in demand in the Northeast. It is unclear why that happened. Prices are stabilizing as they were up modestly over the year.

MARKETS AND FED POLICY IMPLICATIONS: The mixed nature of today’s data encapsulates the state of the economy: Some components, such as the labor markets and consumer spending, are clearly on the rise. On the other hand, oil-patch problems, the rising dollar and shaky Chinese and European economies create uncertainties for businesses. The Fed understands that the competing factors will be with us for a while and that is why it is easy for the members to say that rates will be increased gradually.