Thursday, January 30, 2014

It's The Economy Stupid: GDP, Jobless Claims

The U.S. economy continued to expand, with GDP coming in at a 3.2 percent pace in the fourth quarter as Americans’  spending climbed the most in three years, laying the ground for further improvement in 2014.  The annualized gain in gross domestic product matched the median forecast in a Bloomberg survey and followed a 4.1 percent advance in the prior three months. Growth in the second half of the year was the strongest since the six months ended in March 2012. Consumer spending, which accounts for almost 70 percent of the economy, rose 3.3 percent.  The pickup in demand allowed the economy to overcome cutbacks in government outlays caused by the partial federal shutdown in October. Diminishing fiscal challenges and progress in the labor market will probably sustain consumer and corporate demand in 2014, helping explain why the Federal Reserve decided yesterday pare its monthly stimulus by $10 Billion per month.

 

Applications for unemployment benefits in the U.S. rose more than forecast last week to the highest level in more than a month, partly reversing a post-holiday slump.   Jobless claims climbed by 19,000 to 348,000 in the period ended Jan. 25, which included the Martin Luther King holiday. The reading was the highest since mid-December. The median forecast of 55 economists surveyed by Bloomberg projected 330,000.  Claims are sometimes difficult to seasonally adjust during holiday weeks, although a Labor Department spokesman said there was nothing unusual in the data. Federal Reserve policy makers said yesterday that while labor market data since the end of last year have been “mixed,” there are signs of improvement.

 

Economic Event

Period

Economic Survey

Actual Reported

Original Prior

Revised Prior

GDP Annualized QoQ

4Q A

3.2%

3.2%

4.1%

--

Personal Consumption

4Q A

3.7%

3.3%

2.0%

--

GDP Price Index

4Q A

1.2%

1.3%

2.0%

--

Core PCE QoQ

4Q A

1.1%

1.1%

1.4%

--

Initial Jobless Claims

41664

330K

348K

326K

329K

Continuing Claims

41657

3000K

2991K

3056K

3007K

ISM Milwaukee

Jan

54.5

52.82

54.27

--

 

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"Advice is what we ask for when we already know the answer but wish we didn't." ~ Erica Jong

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us

 

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