Early economic indicators show that it looks like 2013 ended tepid and 2014 is off to a weak start.
Gross domestic product (GDP) declined from its previous quarter, the Commerce Department reported Thursday, with GDP up 3.2% in the fourth quarter, down from the third quarter’s 4.1%.
Year over year, the story looks even worse. The real GDP increased 1.9% in 2013 from the 2012 annual level, where the change from 2011 GDP to 2012 was 2.8%.
But demand was not as strong. Final sales of domestic demand gained 2.8% after a 2.5% boost in the third quarter. Final sales to domestic purchasers slowed to 1.4% in the fourth quarter after a 2.3% increase the prior quarter. The softening was largely due to a drop in government purchases. So, in the private sector, demand is moderately healthy.
The deceleration in real GDP in the fourth quarter reflected a deceleration in private inventory investment, a larger decrease in federal government spending, a downturn in residential fixed investment, and decelerations in state and local government spending and in nonresidential fixed investment that were partly offset by accelerations in exports and in PCEs (personal consumption expenditures) and a deceleration in imports.
It’s been a week of weak to bad indicators.
Pending home sales free fell 8.7% month-over-month, as bad as it was back in May 2010. While some blamed it on the weather – despite warm weather on the West Coast and the regularity of winter weather in December – Larry Yun at the National Association of Realtors added that rising home prices are more to blame than the thermometer.
December’s durable-goods report showed a drop of 4.3% for December.
Personal consumption spending rose a paltry 2.3% for the fourth quarter of 2013 compared to fourth quarter 2012 – not what you want to see right after Christmas and a sign of the retail death rattle.
There’s been no post-holiday rebound for consumer spending, either. According to Bloomberg, consumer confidence dropped last week to the lowest level in two months as more Americans said it was not a good time to shop. However, this contrasts with a new report from The Conference Board, suggesting that consumer confidence recently reached a five-month high.
The Bloomberg Consumer Comfort Index declined to minus 31.8 in the week ended January 26 from a minus 31 reading the prior period. The buying-climate gauge slumped to a three-month low.
Initial jobless claims rose by 19,000 filings to 348,000, much higher than expected by the cheerleader media, boding ill for January overall and making it appear December’s abysmal numbers were not a distant outlier.
The four-week average for initial claims is up only to 333,000, which is 6% below the December four-week average.