- U.S. industrial production fell 2.2% in February, the first monthly decline in five months
- Federal Reserve officials forecast the U.S. economy will grow at a 6.5% pace in 2021
- U.S. retail sales fell by 3.0% in February compared with the prior month
Top Three Market Headlines
U.S. Industrial Production Dips in February: After four consecutive months of gains, U.S. industrial production declined in February as severe winter weather disrupted business operations in parts of the country. According to the Federal Reserve, industrial production—a measure of manufacturing, mining and utility output—fell 2.2% from the prior month. A key driver behind the decline was the frozen conditions across the south central region of the country in mid-February, which forced some petroleum refineries, petrochemical facilities, and plastic resin factories offline for the rest of the month, resulting in decreased output.
Federal Reserve Holds Policy Steady Amid Stronger Outlook: After a two-day policy meeting last week, Federal Reserve officials released an updated forecast that the U.S. economy, propelled by fiscal stimulus and the nationwide vaccination campaign, will grow at a 6.5% pace in 2021, up from their December forecast of 4.2%. At the same time, the central bank now projects inflation to hit 2.4% in 2021, up from their December projection of 1.8%. As this updated inflation estimate accords with their current strategy of letting inflation temporarily exceed their long-term target of 2%, officials voted unanimously to maintain the Fed’s current monetary policy consisting of monthly bond purchases of $120 billion and keeping the federal-funds rate near zero.
U.S. Retail “Feels the Chill” in February: Sales at retail establishments contracted in February as winter storms shuttered stores and limited shoppers’ activity. The U.S. Department of Commerce reported last week that sales at online retailers, restaurants, and brick-and-mortar stores fell by 3.0% in February from the prior month. The decline followed a surge in January, when stimulus checks fueled a 7.6% rate of growth (revised up from previous estimates of 5.3%). With the latest round of stimulus checks starting to hit consumers’ bank accounts last week, observers will be watching to see if sales rebound in March.