Although this week's numbers offer a mixed bag, the big picture points to a slow climb out of recession. Retail sales and consumer sentiment are down (but just slightly), and residential starts are way up, surprising even industry analysts.

Housing starts: Housing starts for January hit 1.68 million (seasonally adjusted and annualized), up from December's 1.58 million, a jump that surprised many in the industry. This, the largest rate of construction increase in two years, no doubt received help from unseasonably mild weather and low mortgage rates. (Download details in a PDF file from the U.S. Department of Commerce)

Retail sales: January's figures show a slight decline (.2%) relative to December. The decline is due in large part to a dip in auto sales, which had risen last fall and winter because of attractive incentive financing. If you discount auto sales, retail sales actually rose 1.2%. This bolsters the concept that consumer sentiment is keeping the economy as a whole afloat. (U.S. Department of Commerce)

Consumer sentiment: University of Michigan preliminary figures reveal that in early February the consumer sentiment index dropped from 93.0 in January to 90.9. The trend is still good overall, however. It is up from the average of 2001, when sentiment hit a low of 81.8 in September after the terrorist attacks (the lowest since the 1991 recession).

Industrial output: This decline may actually mean good news. Although the manufacturing sector has largely symbolic value for the economy (it comprises only 13% of U.S. jobs), it has been a strong indicator of the end of past recessions. Historically, when the manufacturing sector's decline bottoms out, we are at the end of a recession. And manufacturing may have reached that point in January. Industrial production, which has been in decline since mid-2000, experienced its smallest index drop since last summer (from 136.7 to 136.5). (Federal Reserve, Statistical Release G.17.)

AIA Work-on-the-Boards Survey: Although billings at architecture firms declined in January—as they have in every month since August 2001—the good news is that client inquiries about potential new work skyrocketed, particularly for residential architects. Read the full story in last week's issue of AIArchitect.

—Kermit Baker, PhD, Hon. AIA, Chief Economist

Copyright 2002 The American Institute of Architects. All rights reserved.