A quick analysis of important economic data released over the past week
Elliott D. Pollack and Co.
Arizona Snapshot:
Light week for State data. Weekly unemployment insurance claims seem to have stalled. But, at least it has occurred at a level that is a significant improvement over a year ago. Both statewide and metro Phoenix lodging performance continues to improve.
U.S. Snapshot
Initial claims for unemployment insurance showed modest improvement over a year ago. Revised first quarter GDP now shows modest growth. Corporate profits were modestly down but remain strong as does net corporate cash flow. Consumer confidence strengthened. Personal income was up and disposable personal income was up less than personal consumption expenditures. Thus, the savings rate was down. Housing prices continue to increase.
Arizona
Total claims for Arizona weekly unemployment insurance seem to have plateaued over the past month. Total claims have been in the 63,000 range for the last 5 weeks. The good news is that claims are about 40% lower than a year ago. Lodging performance continues to improve. For the state as a whole, occupancy rates in April were 62.7% compared to 60.5% in April 2012. This is due to a combination of a 3.5% increase in demand and a 0.1% decline in supply. For Metro Phoenix, occupancy rates increased to 65.4% compared to 61.6% in April a year ago from a 5.9% increase in demand for rooms and a 0.2% decline in supply.
National
Initial claims for unemployment insurance are now only 7.3% below year earlier levels. This is mediocre but in line with the lackluster performance of employment in this recovery. In that regard, revised 1st quarter real GDP shows that the 1st quarter was up at a 2.4% annual rate and is up a modest 1.8% over a year ago. Corporate profits in the first quarter were up 3.6% from a year ago but were down 2.2% from the 4th quarter. They remain at a high level. Net cash flow was at a record level in the first quarter. It was up 3.2% from a year ago and 6.2% from the fourth quarter. This is good news.
Consumer confidence, as measured by both major surveys, increased in May. The University of Michigan survey was up to 84.5 from 76.4 in April. Rising home prices and a rising stock market are two key factors that are boosting consumer confidence. The improving job market is also a factor. The increase in confidence is a positive in view of the increases in payroll taxes and the effects of sequestration. Personal income, while flat in April compared to March, was up 2.8% over a year ago. Disposable personal income, while modestly down from March, was up 1.7% above a year ago. Personal consumption expenditures, while also down from March, were 2.7% above a year ago. The savings rate was flat at 2.5%.
Finally, the Case-Shiller home price composite 20 city index indicated that home prices in March stood 10.9% higher than a year ago and 1.4% above February. These increases continue to be positive news for the economy as fewer homeowners will be under water and those with equity in their homes will now have more equity. Both, through the wealth effect, will help the economy.
