The Monday Morning Quarterback /A quick analysis of important economic data released over the past week
Elliott D. Pollack & Co.
Real GDP grew at 3.9% in the second quarter according to a recent revision (up slightly from 3.7%). This is a good number. Remember, the first quarter grew at just 0.6%. If the rest of the year can grow at even a more moderate 3.0%, we will finish the year close to the 20-year average for Real GDP. Given the nature of this long but weak economic expansion, that would be a welcomed number.
Regarding Arizona fiscal policy, the first two months of the fiscal year yielded more than $30M above forecast. This is in addition to the “extra” revenues added through the last fiscal year (through June 2015). However, monies that come in above forecast do not necessarily imply a booming economy. It is simply a forecast error, and an error that is based on people being responsible. When there is uncertainty in the economy, a more conservative forecast is required to achieve a higher level of budgeting certainty. This is happening now. Policymakers should not confuse forecast error with economic health.
Arizona Snapshot:
Total retail sales in the state were up 10.8% from a year ago in July. Maricopa County saw an 11.2% increase in total retail sales over the same period.
Statewide lodging occupancy in August was 57.0% compared to 55.8% a year ago. This was composed of a 2.4% gain in demand.
Real GDP in Greater Phoenix grew 1.8% in 2014 over 2013. Collectively, real GDP for the U.S. metro areas increased 2.3% over the same period. Of the nation’s 381 metro areas, Greater Phoenix ranked 148th in GDP growth.
U.S. Snapshot:
Optimism in the overall health of the economy improved slightly as consumers concluded that the stock market turmoil had more to do with international concerns than the domestic economy. The final September reading of the Consumer Sentiment index was revised up from 85.7 at mid-month to 87.2. Still, the final reading is the weakest since October 2014.
U.S. new home sales were at a seasonally adjusted annual rate of 552,000 in August. This is 21.6% above a year ago and is the highest rate since February 2008. This is good news for home builders as the strength in sales pulled supply lower to 4.7 months from 4.9 months.
Although sales of existing homes slowed in August, sales are still healthy and trending higher. Existing home sales came in at a 5.31 million annual rate which is down 4.8% from the 8-year high in July but still 6.2% above a year ago.
