Last week’s economic news was positive overall.

Consumers continued to save rather than spend, but signs of increasing confidence suggest that may change. U.S. business, on the other hand, signaled widely improving confidence, especially in the industrial and manufacturing sector. Finally, employment growth continues strong and is starting to attract discouraged workers back into the labor force even faster—a very encouraging development.

In my latest Market Thoughts video, I discuss the markets and economy in March. After two bad months, everything appears to be moving in the right direction, as markets were up about 7 percent across the board, and even foreign markets fared well. 

It’s time for our monthly look at market risk factors. Just as with the economy, there are several key factors that matter for the market, in determining both the risk level and the immediacy of the risk. Stocks have largely recovered from their recent pullback, but given valuations and recent market behavior, it will be useful to keep an eye on these factors.

Despite all the signs of an economic slowdown in recent months, one thing has just kept going: the job market. Month after month, employers have kept hiring and kept expanding the demand for labor.

Janet Yellen made it very clear yesterday that, as far as she’s concerned, the trajectory for interest rates will be lower for longer. In a speech to the Economic Club of New York, Yellen said that she thinks the risks in the global economy justify continued low rates here in the U.S.

I left off last week with a discussion of the Federal Reserve’s interest rate policy and inflation. As I noted, the Fed may well be forced to raise rates faster than the market is now pricing in, as inflation increases.

Last week’s economic news was discouraging, with weak headline numbers and generally weak details. Nonetheless, the data points more toward continued slow growth, not a collapse.

Two of the big economic stories—interest rates and the stock market—came together in the aftermath of the most recent Federal Reserve meeting. The Fed opted to keep rates where they are (not a surprise), but the statement and Janet Yellen’s press conference were unexpectedly dovish, suggesting that rates are likely to stay much lower than the Fed had previously indicated. The expectation dropped from four increases in 2016 to just two, which surprised and encouraged the stock market.

Yesterday, we concluded that the recent decline in money velocity is due to the money supply increasing faster than economic growth, rather than a collapse in growth itself. So, at worst, slower money velocity is a symptom of potential trouble rather than a cause.

Today, let’s consider another side of the issue: is the fact that growth in the money supply exceeds that of the economy itself either a symptom or cause of future economic trouble?

Recently, concerns about the velocity of money have resurfaced. Several readers have asked whether declining money velocity presages a crash, a recession, or something equally bad. It’s a fair question. As with many such issues, though, we’ve been down this road before several years ago. Low money velocity didn’t mean problems then, and it shouldn’t mean problems now.