Dollars and Sense: As oil prices go up, the financial big picture looks good

April in the books. To paraphrase T.S. Eliot, April was a cruel month. Oil prices soared, and that has driven gas prices back up. The U.S. dollar fell against the Euro. The Dow Jones industrial average was up for the month, but by a barely discernible 0.1 percent. The markets are at near-record levels, and if they are merely taking a breather as the economy continues to expand, that’s not bad. Most analysts and traders would say that’s much better than a correction. Oil prices had fallen so much that they were creating job cuts in oil patch states and inhibiting new development, so a rebound in oil helps those states. The dollar had been so strong that American products became extremely expensive to foreigners, and exports dropped. As a financial analyst friend of mine is fond of saying, “The foot bone is connected to the shin bone,” which means you shouldn’t look at all these facts in isolation. You’ve got to look at the picture as a whole, and not individual brush strokes.

The bigger picture. That picture came into sharper focus last week when we got the gross domestic product number for the first quarter. The Commerce Department said the economy grew in the first quarter, but by just 0.2 percent. As in last year, weather seemed to play a big role in the first-quarter number. Janet Yellen, the head of the Federal Reserve, said on Wednesday the factors driving down the GDP number in the first quarter were “transitory,” and we would make up the difference later in the year. As the dollar weakens against global currencies, we should see exports pick up, and that will be good for US manufacturing.

Earnings strong, revenue uncertain. Earnings are running ahead of expectations, but—as I mentioned last week— expectations have been pretty low. Drug-maker Merck jumped after reporting earnings and revenue that came in well ahead of what analysts expected. Apple hit a record high early Tuesday, a day after posting strong results because of sales of the iPhone 6 and anticipation of the Apple Watch. On the other hand, The Container Store plunged 15 percent after releasing earnings that were far below estimates. It also issued a disappointing forecast. Harman International, which makes audio systems for cars, and Yelp, an online listings company, fell sharply after posting weak earnings. In general, though, earnings are still running well ahead of expectations, though revenue is no better than barely-in-line with expectations.

Home prices strong. We also got some economic news closer to home: U.S. single-family home prices rose more than expected in February from a year earlier. The number of people filing first-time claims for unemployment fell to 262,000, the lowest level in 15 years, and wages—which had been stubbornly stagnant—rose slightly. Those are both indicators of continuing job growth.

The week ahead. On Friday we get the monthly jobs number, and while that number is always closely watched, I think it will be particularly important this week. With the slow GDP growth and trimmed back corporate earnings, we’re beginning to hear more talk that the recovery may be stalling. This month’s unemployment number will be a key data point in helping analysts, traders, and policy makers make that decision. This week will also see earnings season draw to a close. We sometimes get surprises in the closing days from the late reporters, but it seems unlikely that there will be enough surprises to dampen a fairly strong quarter.