January retail sales were disappointingly slow.
Architecture billings looked quite promising until a few months ago.
Terrible winter weather had a predictable impact on housing starts and builder sentiment.
But despite these signs of a slowdown, commodity prices remain firm. In fact, they haven't budged from their flat trend of the past two years.
Commercial and Industrial Loans have actually picked up in the past several months, and are now at a new all-time high. Banks are more willing to lend, and businesses are more willing to borrow on the margin, and that means confidence is coming back. A lack of confidence has been one of the major headwinds in this recovery, and the return of confidence is therefore one of the most promising developments.
Swap spreads, shown in the chart above, are about as low as they have ever been. This is an absolutely critical variable, and it shows no signs of any fundamental deterioration in the economy or in financial markets. Sooner or later the bad winter weather will pass—and we in California dearly hope the rains will resume—and the economy will likely continue to grow at a modest pace.