Friday, April 29, 2016

Consumer Sentiment Continues to Slide

Consumer sentiment fell to 89.0 in April, down 2 points from the previous month, according to the University of Michigan Consumer Sentiment Index.

The Current Economic conditions index improved 1.1 points to 106.7 in March, while the Index of Consumer Expectations continued its decline, falling 3.9 points to 77.6.

“The size of the decline [in future expectations], while troublesome, is still far short of indicating an impending recession,” said Richard Curtin, Chief Economist of UM Surveys of Consumers The decline is all the more remarkable given that consumers’ assessments of current economic conditions, including their personal finance, have remained largely unchanged at very positive levels during the past year.”

Personal Income and Consumption Rose in March

Personal income increased 0.4%, $57.4 billion, in March, according to the Bureau of Economic Analysis, up from a 0.1% gain in February. Personal consumption expenditures also increased, rising 0.1% or $12.8 billion.

Real disposable income – personal income less personal taxes – increased 0.3% in March, compared to a 0.2% increase in February.

The personal savings rate – personal savings as a percentage of personal income – was 5.4%, up 30 basis points from the previous month.

Wages and salaries increased $29.2 billion in March, compared to a decrease of $4.6 billion last month. The majority of the increase was due to a $26.3 billion increase in private sector wages and salaries. Government wages and salaries also increased, rising $2.8 billion.

The price index for PCE increased 0.1% in March, compared to a 0.1% decrease in February. Excluding food and energy, the index increased by 0.1%.

Read the BEA release.
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Thursday, April 28, 2016

GDP Growth Slowed to 0.5% in the First Quarter

Real GDP for the first quarter of 2016 grew at an annual rate of 0.5%, according to the Bureau of Economic Analysis’s first estimate, down from the fourth quarter’s growth rate of 1.4%. The first quarter’s slower growth reflected positive contributions from personal consumption expenditures, residential fixed investment and state and local government spending, which was partially offset by negative contributions from nonresidential fixed investment, private inventory investment, exports and federal government spending.

Consumption was the largest contributor to GDP, accounting for 1.3% of growth, down from 1.7% during the fourth quarter. Consumption spending grew by $52.5 billion during the first quarter of 2016, compared to $68.3 billion during the fourth quarter of 2015.

Non-residential fixed investment was a significant drag on GDP, subtracting 0.8% from growth. The fall in non-residential investment was partially offset by a $19.4 billion increase in residential fixed investment, which contributed 0.5% to GDP.

Inventories subtracted 0.3% from GDP growth in the first quarter, as both farm and nonfarm private inventories declined. Net exports also subtracted 0.3% from GDP growth, as the decline in exports was greater than the decline in imports.

State and local government spending grew during the quarter, contributing 0.3% to GDP. This was offset by a decrease in Federal government spending, which was a 0.11% drag.

Read the Census release.
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Wednesday, April 27, 2016

Fed Holds Steady in April Meeting

The Federal Open Market Committee (FOMC) decided to maintain the current target for the federal funds rate at 25-50 basis points, as the stance of monetary policy remains accommodative.

The post meeting statement noted that economic activity “appears to have slowed” during the intermeeting period, even as labor market conditions improved further. Inflation has continued to run below the Committee’s 2 percent long-run objective, partly reflecting lower energy prices and prices of non-energy imports. The Committee expects inflation to rise to 2 percent over the medium term.

Language from the previous meeting’s statement, which said that “global and financial developments continue to pose risks,” was omitted. The Committee instead asserted that it will closely monitor global economic and financial developments.

Against this backdrop, all but one member voted to maintain accommodative policy at this meeting. Kansas City Federal Reserve President Esther George voted against this action, believing that a 25 basis point increase was warranted.

Read the FOMC statement.
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Tuesday, April 26, 2016

Home Price Increases Slowed in February

The 20-City Case-Shiller Composite Index increased 5.4% year-over-year in February, down from January’s gain of 5.7%. The 10-City Composite Index increased by 4.6% from the previous year, down from a 5.0% annual increase last month. The National Index, which covers all nine census divisions increased by 5.3%, unchanged from January.

On a seasonally adjusted monthly basis, the National Index increased by 0.4%, the 10-City Composite increased by 0.6%, and the 20-City Composite increased 0.7%.

“Home prices continue to rise twice as fast as inflation, but the pace is easing off in the most recent numbers,” said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The slower growth rate is evident in the monthly seasonally adjusted numbers: six cities experienced smaller monthly gains in February compared to January, when no city saw growth.”

Home prices rose on the month in fourteen of the twenty cities covered by the index, but fell in the remaining six cities. Seattle and San Francisco saw home prices increase by 1.1% over the month, while Cleveland and New York saw home prices fall by 0.6% and 0.5% respectively.

Read the S&P release.
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Durable Goods Orders Increased in March

New orders for manufactured durable goods increased 0.8% to $230.7 billion in March, following a 3.1% decrease in February, according to the U.S. Census Bureau. The majority of the month’s increase was driven by a 2.9% increase in new orders for transportation equipment. Excluding transportation, new orders fell 0.2%.

New orders excluding defense fell 1.0% on the month, as orders of nondefense aircraft and parts and nondefense capital goods slipped. Nondefense aircraft and parts orders fell 5.7% to $9.6 billion, while nondefense capital goods orders fell 1.1% to $71.6 billion.

Shipments of manufactured durable goods, down three of the last four months, fell 0.5% to $237.0 billion, following a 1.0% decrease in February.

Inventories of manufactured durable goods were virtually unchanged at $394.1 billion, following a 0.3% decline in the previous month.

Read the Census release.
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Monday, April 25, 2016

New Home Sales Slipped in March

New single family home sales fell to a seasonally adjusted annual rate of 511,000 in March, according to the U.S. Census Bureau. The March rate is 1.5% below the revised February rate of 519,000, but is 5.4% above the year ago estimate of 485,000.

Sales were mixed across regions, rising by 18.5% in the Midwest, and 5.0% in the South, but falling 23.6% in the West. Sales in the Northeast remained virtually unchanged from the previous month.

The median price of a new home was $288,000, down from $297,400 in February. The average price was $356,200, up from $342,100 in the previous month.

At the end of March, there was an estimated supply of 5.8 months at the current sales rate, up from a 5.6 month supply in February.

Read the Census/HUD release.
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