Economic Update

Posted by Bruce W. Woolpert on Mar 18, 2015


Recent economic data in the period of time just before Thanksgiving was generally positive. Here are some October economic statistics:

  •  The Conference Board’s Leading Economic Index increased 0.9% in
  • October, which was significantly better than the 0.1% increase in September.
  •  Retail sales climbed 0.5% in October. Sales of electronics and building supplies led the way as retail sales increased for the fifth consecutive month.
  •  Industrial production rose 0.7% in October, thanks to a 3.1% increase in auto production.
  •  Durable Goods orders fell in October as demand for aircraft and business equipment declined. Durable goods orders have been generally stronger than expected throughout this recession.
  •  New residential construction was up. Home builders brought on about the same number of houses in October as they did in September. However, building permits, a measure of future construction, rose nearly 11% from September. The increase was supported by a 30% jump in apartment permits.
  •  U. S. Personal Income increased by 0.4% in October.
  •  Existing home sales for October increased by 1.5% to a 4.97 unit annual rate.
  •  The University of Michigan Consumer Sentiment Survey edged up in October and November.

Third Quarter Gross Domestic Product (GDP) growth was revised downward to 2% from 2.5%. GDP is the measure of the value of all goods and services produced in the United States. Year-to-date, the U. S. Economy has grown 1.5%, so the higher Third Quarter number may well indicate stronger growth is occurring in the Fourth Quarter. However, growth above 3% is needed to bring down the unemployment rate so the economy is still making it difficult for many American families. However, there was some good news also in the lower revision for the Third Quarter; the downward revision was necessary because more businesses used inventories to meet the demand for goods. However, lower inventories could result in increased orders for goods to replenish inventories which could help push economic growth higher next year.

U.S. retail sales during the Thanksgiving weekend climbed 16% to a record as shoppers flocked to stores earlier and spent more. Consumers are spending 67% at stores and 33% on-line at sites like Amazon. Analysts had projected a 3% increase in holiday sales this year, down from the 5% growth in 2010. However, with the good start to the holiday buying season, results for this year could be much stronger.

Concerns about imported oil and the need for significantly increased highway funding combined together with a proposal by Republican House Members to propose an expansion of domestic oil production to fund a long-term transportation spending bill. House Speaker John Boehner stated that the bill will accomplish two major U.S. objectives – generate new jobs and support infrastructure expansion and maintenance. The bill is expected to take the form of a well-head tax on new wells. In California, voters are likely to see an initiative on the November 2012 ballot that would direct California’s oil and natural gas taxes to public school and university funding. Public education has sought a dependable source of tax revenues. Tax proceeds to education could encourage State and local governments to approve greater oil production in California.

All of this information, positive although not stellar performance data about the economy, does tend to reduce the likelihood of a double-dip recession which is welcome news indeed.

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