After a 10% US equity market correction this year, the important question was whether it would affect the real economy. It hasn’t. Economic activity by consumers and businesses (other than commodity-driven sectors) isn’t affected (at least, not yet) by the turmoil. The latest economic statistics show continued strength in the U.S. domestic demand. Private payrolls grew by a lower-than-expected 151,000 in January, but the unemployment rate dropped from 5.0% to 4.9% and wages posted solid growth. Weekly unemployment claims dropped to a better-than-expected 269,000, reversing part of the uptick in claims seen in the past three months.

Consumer spending rose 0.2% in January (0.4% excluding gasoline) – better than the expected 0.1% –and the previous month was revised to +0.2% from -0.1%. Consumer confidence, which is considered a leading indicator of future spending, declined slightly to 90.7 (see chart) but did not fall off a cliff as some feared.

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