Economy Watch: GDP Growth Strengthens; Home Sales Fall, Jobless Claims Rise
- Jan 31, 2014
The Bureau of Economic Analysis reported on Thursday that real U.S. gross domestic product increased at an annualized rate of 3.2 percent in the fourth quarter of 2013, according to its “advance” – preliminary – estimate. That was stronger than expected, and might point to stronger GDP growth in 2014.
The increase in real GDP during the fourth quarter was largely because of positive contributions from personal consumption, business investment, and spending by state and local governments, which is recovering from their post-recession slumps. These positives were partly offset by downturns from federal government spending and residential fixed investment, according to the BEA. Imports, which are a subtraction in the calculation of GDP, increased.
For all of 2013, real GDP increased 1.9 percent, says the BEA, compared with an increase of 2.8 percent in 2012. The main drag on GDP growth in 2013 turned out to be the pullback in federal government spending. Imports were also up during the year, which also subtracted from real GDP.
Pending Home Sales Drop in December
The National Association of Realtors said on Thursday that its Pending Home Sales Index fell to 92.4 in December from a downwardly revised 101.2 in November. In December 2012, the index was 101.3. The index, which is based on contracts signed but not closed, is at its lowest level since October 2011, when it came in at 92.2.
NAR chief economist Lawrence Yun said that several factors are working against buyers, such as unusually disruptive weather across much of the country in December. Also, he noted in a statement, “home prices rising faster than income is also giving pause to some potential buyers, while at the same time a lack of inventory means insufficient choice.”
Yun forecasts that total existing-home sales this year should hold close to 5.1 million. That’s essentially the same as 2013, but inventory remains limited in much of the country.
Initial Jobless Claims Edge Upward
The U.S. Department of Labor said on Thursday that initial unemployment claims for the week ending Jan. 25 were at an annualized 348,000, an increase of 19,000 from the previous week. The less volatile four-week moving average was 333,000, an increase of only 750 from the previous week.
Wall Street recovered some ground on Thursday, with the Dow Jones Industrial Average rising 109.82 points, or 0.7 percent. The S&P 500 was up 1.13 percent and the Nasdaq advanced 1.77 percent.