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Economy in Brief
U.S. Mortgage Applications Continue to Weaken
The MBA Loan Applications Index fell 1.2% (-54.5% y/y) in the week ended May 20...
German Climate Reading Continues to Skid Toward the Abyss
Germany's GfK consumer climate reading improved ever so slightly in June...
U.S. New Home Sales Plunge in April as Prices Jump
The new home sales market is unraveling...
U.S. Energy Prices Rise Further
Retail gasoline prices increased to $4.59 per gallon in the week ended May 23...
S&P Flash PMIs Are Mixed in May As Manufacturing Erodes Slowly
Among the early reporting countries in Europe and Japan, the S&P PMI readings for May tilt toward weakness...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
State Coincident Indexes in April 2022
State Labor Markets in April 2022
Profits & Margins Plunge In Q1: Expect More Margin Contraction As Fed Squeezes Inflation
The Many Links of Inflation Cycle: Hard Landing Is Needed to Crack Them
Peak Inflation and Fed Policy: A Relationship which Should Worry the Fed and Scare Investors
| GDP GROWTH | 2006 Q1 | 2006 Q2 | 2006 Q3 | 2006 Q4 | 2006 Q4 | 2006 Q4 | |
|---|---|---|---|---|---|---|---|
| Actual/A,P,F | Actual | Actual | Actual | Advance | Prelim | Final | Yr/Yr |
| Real GDP | 5.6% | 2.6% | 2.0% | 3.5% | 2.2% | 2.5% | 3.1% |
| PCE | 4.8% | 2.6% | 2.8% | 4.4% | 4.2% | 4.2% | 3.6% |
| Durables | 19.8% | -0.1% | 6.4% | 6.0% | 4.4% | 4.4% | 7.4% |
| Nondurables | 5.9% | 1.4% | 1.5% | 6.9% | 6.0% | 5.9% | 3.7% |
| Services | 1.6% | 3.7% | 2.8% | 2.9% | 3.3% | 3.4% | 2.9% |
| Business Invst. | 13.7% | 4.4% | 10.0% | -0.4% | -2.4% | -3.1% | 6.0% |
| Structures | 8.8% | 20.3% | 15.7% | 2.7% | -0.8% | 0.9% | 11.2% |
| Equipment | 15.6% | -1.4% | 7.7% | -1.8% | -3.1% | -4.8% | 4.0% |
| Housing | -0.3% | -11.1% | -18.6% | -19.2% | -19.1% | -19.8% | -12.8% |
| Inventories($B)* | $41.2 | $53.7 | $55.4 | $35.3 | $17.3 | $22.4 | $35.4 |
| Farm | $4.3 | $1.9 | $2.5 | $2.1 | $2.4 | $2.4 | $1.5 |
| Nonfarm | $36.8 | $52.2 | $53.3 | $33.4 | $14.6 | $20.0 | ($24.8) |
| Net Exports($B)** | ($636.6) | ($624.2) | ($628.8) | ($581.4) | ($585.1) | ($582.6) | $54.0 |
| Exports | 14.0% | 6.2% | 6.8% | 10.0% | 10.5% | 10.6% | 9.4% |
| Imports | 9.1% | 1.4% | 5.6% | -3.2% | -2.2% | -2.6% | 3.3% |
| Government | 4.9% | 0.8% | 1.7% | 3.7% | 3.3% | 3.4% | 2.7% |
| Real Final Sales | 5.6% | 2.1% | 1.9% | 4.2% | 3.6% | 3.7% | 3.3% |
| For Yr/Yr: * average, ** Change from Yr ago Qtr | |||||||
by Robert Brusca March 29, 2007
GDP and its main components are displayed in the table above. The most recent four quarters appear in the table as well as the three passes at estimating GDP in the current quarter and the current Yr/Yr value. GDP is still growing by more than 3% Yr/Yr. Q4 GDP’s estimate has fluctuated starting out at 3.5% dipping to 2.2% and now finalizing at 2.5% - that is we call this the final estimate for GDP. It is until benchmark revisions are done. In some sense GDP is never really finalized, but we call this the final estimate. The final estimate was made stronger mainly due to stronger inventory growth and weaker imports. Since imports subtract from GDP, weaker imports boost GDP. But imports are a function of the strength of domestic demand. So, weaker imports also are an indication of weaker domestic demand conditions. The slippage in capital spending in the final estimate on equipment and software is another example of fundamental weakness that is obscured by the upward revision to GDP in 2006-Q4. On balance, after revision, GDP is stronger but its trend looks weaker.
The chart on the left contains the Q/Q as well as the Yr/Yr plot for GDP to show trend and volatility. On it you can seen that GDP growth is still gradually eroding, but amid enough volatility to make the trend less than certain.
The GDP report highlights the recent statement made by the Fed Chairman about how the outlook has become more uncertain. While this report shows strong consumer spending, the consumer has been sluggish early in 2007, business investment is much weaker than expected, too. Inventories are in an irregular downtrend. A contracting (real) trade deficit, made up of firm exports and withering imports, has added strength to an otherwise lackluster economy. As we look ahead, it is clear that the economy needs a pick-up from some sector. Certainly the consumer must do better. But with housing askew the economy can ill afford for the business sector to be a drag on growth. Yet that is precisely what appears to be in train for the first quarter.
