GDP Estimate Up, So is Personal Income

February ended with a modicum of good news for the U.S. economy. Real gross domestic product increased at an annualized rate of 1 percent in the fourth quarter of 2015, according to the second estimate released by the Bureau of Economic Analysis, compared with an increase of 0.7 percent posited by the initial estimate, which was released last month. That’s better, but 1 percent is still a sluggish quarter; in the third quarter, real GDP increased at an annualized 2 percent.

Next month, there will be a final estimate, and it too will probably be an increase, if history is any guide. According to the BEA, the increase in real Q4 GDP reflected positive contributions from personal consumption expenditures (PCE, people spending their money), residential fixed investment (housing), and federal government spending; but those were partly offset by negative contributions from exports, nonresidential fixed investment (partly commercial real estate), state and local government spending, and private inventory investment.

Other good news at the end of February that came from the Bureau of Economic Analysis was that U.S. personal income increased 0.5 percent in January. PCE also increased or 0.5 percent. Real PCE—PCE adjusted to remove price changes—increased 0.4 percent in January, compared with an increase of 0.2 percent in December. People making more money and spending more money is decidedly good for retail properties, and indirectly good for other kinds of properties.

Also on Friday, the University of Michigan reported that its Consumer Sentiment Index nearly recovered the entire small loss it recorded at mid-month, finishing February at 91.7, compared with 92.0 at the end of January. Although consumers aren’t as optimistic as at the start of last year, the Sentiment Index is just 6.5 percent below the most recent peak of 98.1, which was set in January 2015.