We don't yet know the effects of oil prices, but first quarter consumption spending drove GDP to a 4.8% increase. Personal outlays ran ahead at a very high rate, so high that personal savings was a negative $50 billion. But has saving come to an end? In a boom we expect savings to rise with the business cycle. That's not happening right now. But that may also indicate that workers expect those nice productivity gains to continue, so it will be easier to save later.

William Polley thinks the inflation data in the report means the Fed will slow down the pace of Fed funds rate increases. I'm still favoring an increase in May, an increase in June, and then a holiday until 2nd quarter data come in. David Altig's analysis of the futures markets concurs. Since I think the next quarter will not be this good, I expect the holiday to be extended.

Why will it be extended? One word: housing. Bernanke thinks so. When even the industry people are saying "soft landing", there is only one direction it can go.