January 2016 ended with mixed metrics about the state of the U.S. economy. For one, the Bureau of Economic Analysis reported on Friday that real U.S. GDP increased at an annualized rate of just 0.7 percent in the fourth quarter of 2015, according to its “advance” estimate. In the third quarter, real GDP increased at an annualized 2 percent.
The deceleration in real GDP in Q4 reflected a deceleration in personal consumption expenditures (people spending their money, plus downturns in nonresidential fixed investment (including CRE), and also in exports, and in state and local government spending. Those downward trends were partly offset by a smaller decrease in private inventory investment, a deceleration in imports, and an acceleration in federal government spending.
Another mediocre metric published on Friday: Consumer Confidence. It’s remained largely unchanged, with the final January reading coming in at 92.0, down from 92.6 in December, according to the University of Michigan. The university noted that the small downward revisions were due to stock market declines that affected household wealth negatively, as well as weakened prospects for the national economy.
Also on Friday, there was a somewhat more positive report from the Federal Reserve Bank of Philadelphia about its coincident indexes for the 50 states. For December 2015, the indexes increased in 39 states, decreased in only seven, and remained stable in four. Over the past three months, the indexes increased in 41 states, decreased in seven, and didn’t change in two.
The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements adjusted by the consumer price index. Long-term growth in the state’s index matches long-term growth in its GDP.