U.S. Economy Turns in Lackluster First Quarter
- Apr 29, 2011
The broadest measurement of economic activity in the United States, real gross domestic product, increased at an annualized rate of 1.8 percent in the first quarter of 2011 according to the “advance” estimate released by the U.S. Bureau of Economic Analysis on Thursday. That compares unfavorably to the fourth quarter of 2010, when real GDP increased 3.1 percent.
Though a smaller increase than previously, the increase during 1Q11 reflected positive contributions from a variety of factors, such as personal consumption expenditures–up but not as quickly as during 4Q10–and private inventory investment, exports, and nonresidential fixed investment (infrastructure, for example). But these were offset by negatives in federal, state and local government spending, as well as imports, which increased. There was also a sharp upturn in private inventory investment. Still, the GDP numbers may yet be revised upward when a more fine-tuned estimate is released by the BEA in late May.
The BEA also reported that the price index for “gross domestic purchases,” which measures prices paid by U.S. residents, increased 3.8 percent in the first quarter, compared with an increase of 2.1 percent in the fourth quarter of 2010. Excluding food and energy prices–the notorious “core inflation,” notorious for leaving out such essential categories–the price index for purchases increased 2.2 percent in 1Q11, compared with an increase of 1.1 percent in 4Q10.
Hiring sluggish, but not at the golden arches
Initial claims for unemployment were unexpectedly up for the week ended April 23, according to the U.S. Department of Labor, rising by 25,000 to 429,000. Weekly numbers tend to be erratic, though until recently they have been on a downward trend. But for the last three weeks in a row, the claims have been above 400,000. The four-week moving average of claims rose last week by 9,250 to 408,500.
In other jobs-related news, the finally tally for the McDonald’s Corp. McJobs Hiring Event (not the official name) on April 19 is in. The company and its franchisees hired about 62,000 people in the United States. That was more than the anticipated 50,000 hires, so the need for help must have been more than anticipated, though the company declined to specify the number into part- vs. full-time jobs.
It turns out the McJobs are still jobs, and people very much want them. The hamburger purveyor received, it said, 1 million applications for the April event. As one wag (at Zero Hedge) pointed out, that acceptance rate is lower than Harvard’s.
Pending home sales see uptick
The National Association of Realtors said on Thursday that there was an increase in pending home sales in March compared with February. The organization’s Pending Home Sale Index, which is derived from contracts signed but not closed, rose 5.1 percent to 94.1 in March from a downwardly revised 89.5 the month before.
Compared with a year ago, current pending home sales appear sluggish indeed, with the March 2011 index 11.4 percent below 106.2 in March 2010. But a year ago, the market still had the artificial stimulant of the federal tax credit coursing through its veins.
Wall Street didn’t appear to care much Thursday about the lackluster GDP or worrisome unemployment claims. The Dow Jones Industrial Average was up 72.35 points, or 0.57 percent, while the S&P 500 gained 0.36 percent and the Nasdaq advanced a scant 0.09 percent. For the Dow and the S&P 500, these are their highest levels since May 2008; for the Nasdaq, the highest since Dec. 2000.