US spending and factory orders up but weakness elsewhere as usual

The US economy continued to hum along in February, but not for the first time, the news from the rest of the world is not as good.

Yesterday, the Commerce Department reported that personal consumption expenditures rose 0.5 percent in February, while personal income increased 0.3 percent.

Separately, the US Census Bureau reported that new orders for manufactured goods rose 0.2 percent in February. New orders for manufactured durable goods rose a revised 0.5 percent, higher than the previously-published 0.3 percent increase. New orders for manufactured nondurable goods decreased 0.2 percent, though.

More ominously, the housing market continues to unwind in Britain. House prices fell a seasonally-adjusted 0.6 percent last month, according to a report by building society Nationwide. Separately, data from the Bank of England showed that equity withdrawal fell to £6.9 billion in the fourth quarter of 2004, down from £11.29 billion in the third quarter and less than half the £16.8 billion in the final three months of 2003.

These reports followed the release of figures on Wednesday showing the first fall in average incomes for more than a decade and weak retail conditions.

In Japan, business confidence at large manufacturers worsened sharply in the three months to March, the Bank of Japan said in its quarterly Tankan survey. The index for large manufacturers stood at plus 14, down from plus 22 three months ago. The index for large non-manufacturers was at plus 11, unchanged from the previous survey three months ago.

So what is the outlook for the world economy? Well, this question has been much debated recently in the economics blogosphere, mainly framed around the likelihood of a hard or soft landing and the actions of Asian central banks in directing capital flows. The discussion has been driven to a large extent by the macroblog.

Like Kash at Angry Bear, though, I find the answer elusive.