Time for the U.S. economy to live within its means

Commentary: Follow the right formula for federal spending

Inflation fears this week abruptly gave way to concern for the economy, with long-term rates and stocks dipping accordingly. Overriding all financial news: The miraculous outbreak of an authentic effort to repair the nation’s finances.

One at a time: By the end of last week, inflation worrywarts had begun to expect Federal Reserve tightening this year. On Monday, Federal Reserve Board Vice Chairman Janet Yellen and New York Federal Reserve President Bill Dudley blew them up altogether. Fed tightening now is inconceivable.

Forecasters have called for 4 percent-plus U.S. Gross Domestic Product growth, but a crowd is elbowing for the exit, revising suddenly as low as 1.5 percent. March retail sales were soggy, a 0.4 percent gain and only 0.1 percent ex-gasoline.

New claims for unemployment insurance spiked 27,000 to 412,000 last week, the highest in two months. The March survey of small business, by the National Federation of Independent Business, retreated from all gains since last October — in sharp contradiction to the Fed’s Beige Book, brimming with happy-talk fairytales from inflation-hawk regional Fed presidents.

The one bright spot has been manufacturing: March industrial production beat estimates, gaining 0.8 percent, and capacity in use, up to 77.4 percent, is the highest in post-Lehman times.