Economy Watch: Small Uptick for 4Q GDP

By Dees Stribling, Contributing Editor

The Bureau of Economic Analysis reported on Thursday that real U.S. GDP was up during the fourth quarter of 2012, as opposed to the contraction reported in the bureau’s preliminary GDP estimate a few weeks ago. But the revision didn’t really amount to much: instead of a drop of 0.1 percent, the economy grew by 0.1 percent during the quarter, lower than expected.

The increase in real GDP in 4Q12 reflected positive contributions from personal consumption expenditures—people buying stuff—and nonresidential fixed investment and residential fixed investment (commercial and residential real estate, that is, plus some of the things that go in those structures). But these positive forces were partly offset by declines in private inventory investment, federal government spending, exports, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, were down.

The BEA also confirmed that inflation is low. The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.5 percent during the fourth quarter, 0.2 percentage points more than the preliminary estimate, but still not that much. Excluding food and energy prices, the price index for gross domestic purchases increased 1.1 percent in the fourth quarter.

Mortgage delinquencies slide

Lender Processing Services (LPS) noted on Thursday in its First Look report that U.S. mortgage delinquency rate (counting loans 30 or more days past due, but not actually in foreclosure) decreased from 7.17 percent in December to 7.03 percent in January. The percent of loans in foreclosure declined from 3.44 percent in December to 3.41 percent in January.

The year-over-year declines in delinquencies and foreclosure were even more pronounced, according to LPS. The number of delinquent properties is down about 11 percent in January 2013 compared with a year earlier (413,000 fewer properties), while the total number of properties in foreclosure is down 21 percent (or 461,000 properties) over the same period.

In a related development, the relative health of the housing market has buoyed Freddie Mac. The GSE said on Thursday that its net income for the fourth quarter of 2012 was $4.5 billion, compared to $2.9 billion for 3Q12. The increase was mainly because of a decrease in the volume of newly delinquent single-family loans, besides the continued improvement in U.S. home prices.

Initial jobless claims dip

The U.S. Department of Labor said on Thursday that for the week ending Feb. 23, initial unemployment claims were 344,000, a decrease of 22,000 from the previous week’s revised figure of 366,000. The not-so-volatile four-week moving average was 355,000, a decrease of 6,750 from the previous week’s revised average of 361,750.

Wall Street spent most of the day on Thursday in positive territory—seemingly unconcerned about the sequester—and even flirted with record highs, but in the end it was close but no cigar. The Dow Jones Industrial Average was down 20.88 points, or 0.15 percent, while the S&P 500 and the Nasdaq declined 0.09 percent and 0.07 percent, respectively.