The Monday Morning Quarterback: A quick analysis of important economic data released over the last week
Elliott D. Pollack & Co.
Real Gross Domestic Product—the output of goods and services produced by labor and property in the U.S.—increased at an anemic 1.3% annual rate in the second quarter of 2012 (that is the annualized rate of change between the second quarter of 2012 and the first quarter of 2012). The annualized rate of change from the first quarter to the fourth quarter was 2.0%. This reflects weakness in most sectors although, obviously, several sectors were up in the quarter. Other data reported included U.S. personal income that is now up 3.5% over the past year (August 2012 vs. August 2011) but was up only 0.1% over last month. Disposable personal income was up at about the same rates. Personal consumption expenditures were up 3.6% over the past year and were also up 0.5% (6.0% seasonally adjusted annual rate) over the last month. The U.S. GDP deflator was up a modest 1.7% in the second quarter when compared to a year earlier.
Probably the most interesting statistics released last week were the two different measures of consumer confidence. On September 25, the Conference Board Index of Consumer Confidence for September was released. It showed a jump in the month to 70.3. This was up from 61.3 in August. It was also substantially better than expectations. This was the highest level of confidence in this index since February and was driven by better expectations of the future. On the other hand, on September 28, the University of Michigan Consumer Sentiment final numbers were released for September. At 78.3 vs. 79.2 in August, there was very little change. This index was in line with expectations. While the two indices technically measure slightly different things, it is unusual for such a disparity to occur. We will have to wait until next month to see how this plays out.
U.S. corporate profits and cash flow recovered in the second quarter after declining in the first quarter. While the rebound left corporate profits and net cash flow below the peak reached in the fourth quarter of 2011, they still paint a healthy picture for American corporations. U.S. manufacturers’ new orders for durable goods declined 13.2% in August compared to July and now stand 6.7% below year earlier levels. This follows three consecutive months of increases.
As for Arizona, personal income in the state was estimated to have increased 3.6% compared to a year ago. That compares to 3.3% nationally. The good news is that this is the first time that Arizona personal income grew faster than the U.S. rate in quite some time. The S & P/Case-Shiller index of housing prices showed that housing prices in Greater Phoenix as of August were up 16.6% over year earlier levels and were up 2.2% for the month. Nationally, the 20 city index was up 1.2% for the year and 1.6% for the month.
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