Markets & Economy

The keys to this week’s economy-stall conundrum

Long-term rates went up, and mortgage and bond yields jumped

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The big news of the week: The U.S. economy stalled in the first quarter, GDP rising 0.2 percent. And long-term rates, which go down on weak economic news, instead went up. There are several keys to this conundrum. The first: The economy did not stall. The most basic forward momentum in our economy (any economy): 321 million Americans need to spend money every day to live, and “personal consumption expenditures” in the first quarter plodded along at a 1.9 percent annualized rate. Second, there is no new evident weakness in employment, although next Friday’s payroll report could surprise. Home sales are not rocketing, but not bad either: Pending sales in March were 11 percent higher than one year ago. Today’s release of the manufacturing ISM (Institute for Supply Management) index arrived unchanged in April at 51.5, despite weakness in the oil patch and the strong dollar hurting exports. Gross domestic product (GDP) calculations are weird. By the way: Nobody should...