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Economy in Brief
U.S. Consumer Credit Growth Surges in June
Consumer credit outstanding jumped $40.1 billion (7.7% y/y) in June...
Japan's LEI Waffles and Slows
Japan's leading economic index in June slipped to 100.6...
U.S. Foreign Trade Deficit Narrows in June
The U.S. trade deficit in goods and services (BOP basis) fell to $79.61 billion in June...
U.S. Unemployment Claims Remain on an Uptrend
Initial claims for unemployment insurance filed in the week ended July 30 rose 6,000 to 260,000...
RICS Survey Shows Weakening U.K. Housing Market
With the Bank of England hiking its key rate by 50 basis points and planning to squeeze its balance sheet...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
Excess Demand for Goods Caused Supply Constraints
Q2 GDP Does Not Confirm Economic Recession, But It Does Confirm A Corporate Profit Recession
State Coincident Indexes in June 2022
State Labor Markets in June 2022
No Recession Call Can Be Made Before BEA Explains The Record Gap Between Income & Output
by Tom Moeller April 28, 2005
US real GDP growth of 3.1% (AR) in 1Q05 was the slowest in two years and fell short of Consensus expectations for a 3.5% advance. Also a surprise was the 3.3% rise in the GDP Chain Price Index. This strongest gain in four years easily surpassed estimates for a 2.1% increase.
The drag on US output from a deepened foreign trade deficit increased to 1.5 percentage points due to an acceleration in real import growth to 14.7% (10.8% y/y). Growth in auto imports accelerated to 13.7% (5.5% y/y) and nonauto consumer goods imports held steady at 27.8% (15.4% y/y). Capital goods imports slipped to 4.9% (14.3% y/y) and growth in exports more than doubled to 7.0% (5.9% y/y).
The acceleration in the chain price index was due to inventories and a faster 2.2% (1.6% y/y) gain in consumer prices less food & energy. In addition, after two quarters of deflation prices for business equipment & software rose 0.6% (-0.5% y/y). Overall, the price index for domestic demand held about steady at 3.0% but the y/y gain of 2.8% is up from 1.7% a year ago.
Domestic demand growth suffered mostly from slower business investment growth which fell to 4.6% (11.1% y/y) from 14.5% in 4Q. Growth in business fixed investment in computers & software picked up to an even headier 24.3% (15.7% y/y) but spending levels elsewhere fell. Consumer spending growth slipped to 3.5% (3.6% y/y). Less computers real GDP grew 2.5% (3.3% y/y) versus 4.3% growth during 2004.
Faster inventory accumulation contributed the most to output growth in a year. The 1.2% add reflected a change in real private nonfarm inventories of $82.5B which was the fastest since early 2000 and nearly double the 4Q04 rate.
A Big League Economy Tunes Up in Spring Training from the Federal Reserve Bank of Dallas is available here.
Chained 2000$, % AR | 1Q '05 (Advance) | 4Q '04 (Final) | Y/Y | 2004 | 2003 | 2002 |
---|---|---|---|---|---|---|
GDP | 3.1% | 3.8% | 3.6% | 4.4% | 3.0% | 1.9% |
Inventory Effect | 1.2% | 0.5% | 0.4% | 0.4% | -0.1% | 0.4% |
Final Sales | 1.9% | 3.4% | 3.2% | 4.0% | 3.1% | 1.4% |
Trade Effect | -1.5% | -1.4% | -0.8% | -0.4% | -0.3% | -0.7% |
Domestic Final Demand | 3.2% | 4.5% | 4.0% | 4.4% | 3.4% | 2.1% |
Chained GDP Price Index | 3.3% | 2.3% | 2.5% | 2.2% | 1.8% | 1.7% |