KEY DATA: Openings: +260,000; LEI: +0.1%; Phil. Fed: +15.2 points; Claims: +7,000

IN A NUTSHELL: “The economic data are firming up and while the Fed appears worried about growth, it has nothing to do with the U.S. economy.”

WHAT IT MEANS: Janet Yellen believes that the lack of wage growth is a sign there is still some slack in the labor market. There may be some truth in that observation, but there isn’t a whole lot of slack. Job openings rebounded in January after having softened at the end of last year. Interestingly, hiring, terminations and quits eased. Firms are looking for a lot more people and they are also holding onto their own workers as hard as possible. I suspect the decline in hiring was due to a lack of supply, not demand. The labor market continues to defy traditional economics, which says that if you have excess demand, prices (in this case wages) should rise. Still, there just aren’t enough people around to fill all the openings and the steady acceleration in wage gains should continue.

Adding to the view that the labor market is tight was the weekly jobless claims number. Yes it rose. However, adjusted for the size of the labor force, claims are at historic lows. In addition, the number of people continuing to collect unemployment insurance is going down and percent of those receiving aid is also at the lowest in history.

On the manufacturing front, the Philadelphia Fed’s Manufacturing Survey jumped sharply in early March. Orders went from declining modestly to rising solidly. This report reinforces the similar results seen the New York Fed’s Empire State survey that was released on Tuesday.

Looking forward, the Conference Board’s Leading Economic Index rose in February after declining the previous two months. This is another indication that whatever slowdown we had been seeing is behind us.

Fed Policy Commentary: A Day Later: Yesterday, the FOMC backed off on the number of expected rate hikes this year. Why, I really don’t know, but they did. If you look at the recent data, and the members are supposed to be data dependent, it is clear that whatever economic issues concern them, it cannot be U.S. economic weakness. Which brings me to the conclusion that there are real problems with the way the Fed is seeing things. How can you go from expecting four 2016 rate hikes in December to only two in March while the data indicate the labor market is at full employment and inflation is on the rise? Their dual mandate is close to being met. The change in expectations was not a small one: It cut this year’s projected rate increase in half! Solid job gains and the recent indications that China and Europe are not falling apart would seem to support as strong if not stronger U.S. growth this year, but the members downgraded their GDP forecast from 2.4% to 2.2%. Huh? I can understand their downward revision to overall inflation since few were expecting the subsequent huge decline in energy costs. But why was core inflation revised downward when all indications are that it is accelerating? The consensus forecast mystifies me and that raises questions about how many rate changes we will actually get. All this information was supposed to provide transparency. Instead, it seems to provide reasons to think the members have little idea what is going on.