Monday Morning Quarterback, A quick analysis of important economic data released over the past week
The outlook remains positive but uninspired.
U.S. Snapshot:
Real GDP grew at an annual pace of 3.2% in the fourth quarter. This was a positive result given where we have recently been. Some were worried about impacts from the government shutdown late last year and a re-benching of inventories in the third quarter (extra production improved inventories but it didn’t come at the expense of fourth quarter production). Also of concern was the impact from pessimistic consumers. These potential impacts were less than many feared. Look for Real GDP growth close to 3.0% this coming year (see chart below).
U.S. Personal Income was flat in the fourth quarter. This should pick up a bit as we move into spring.
The U.S. S&P/Case-Shiller home price index was up 13.7% compared to last year at the same time. In Greater Phoenix it was up 16.7%.
Arizona Snapshot
As we review Arizona and Greater Phoenix, care must be taken in how one interprets the figures. Yes, we are indeed creating jobs in some lower value added service sectors. This is true for the entire country. This is also normal for this stage (quality, not duration) of an expansion.
Housing price appreciation has slowed in recent months, but the pace that was being realized last year was not expected to continue. Overall the price trend is still moving up. Resale prices, according to data reported by the Cromford Report, are up 19.3% year-over-year.
Total unemployment insurance claims for the week ending January 25, 2014, are down 20.8% from last year and down 2.2% from the previous week.
The economic base of the state isn’t going to change overnight. Even though we are utilizing more aggressive economic development programs, the private sector is still going to drive growth. The public efforts can enhance or impede this forward momentum. They will not create wholly new opportunities on their own. We need to remember how the economy works if we are to succeed.
