Just one day after the Fed announced a $10 billion taper to its monthly asset purchase program, the economic data has not been very good. Of the five economic indicators released on Thursday, four came in weaker than expected. One of those indicators was the Philly Fed report. While economists were expecting the headline reading to come in at a level of 10, the actual reading was 7.0, which represented a slight increase from November's reading of 6.5.
The table to the right breaks down the Philly Fed by each of its subcomponents. As shown, four of the nine components declined this month, led lower by Delivery Time and Prices Paid. The decline in Prices Paid should be a good sign for the Fed as it implies that inflation pressures remain contained. On the upside, we saw the greatest improvement in Average Workweek and Shipments. All in all, this morning's report was pretty much neutral, but with a string of weaker than expected economic data just one day after the "taper" was announced, one wonders if anyone at the Fed is beginning to have second thoughts.