Pollack: A great respite from the slow rate of growth

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December 5th, 2016
The Monday Morning Quarterback
A quick analysis of important economic data released over the past week
Last week was a great week for economic news.  Third quarter real GDP was reported at its fastest growth rate since the third quarter of 2014.   After three quarters of weak results, this is very good news.  The unemployment rate continued to dip and employment continued to grow.  Consumer confidence continues to get better and personal incomes continue to grow.  The manufacturing sector continues to improve along with corporate profits.  Auto and light truck sales remained high.  Overall, this is a great respite from the slow rate of growth that had been the norm in this recovery and indicates that the economy is doing well.
U.S. Snapshot:
  • Third quarter real GDP increased by 3.2% after growth of 1.4%, 0.8% and 0.9%respectively over the last three quarters.  The acceleration is attributed to an improvement in private inventory investment, higher exports, an increase in federal government spending, and smaller decreases in state and local government spending as well as residential fixed investment. A decrease in consumer spending and higher imports partially offset these gains.
  • The unemployment rate in November declined to 4.6% from 4.9% in October.  This is the lowest rate of unemployment since August 2007 (see chart below).
  • Total nonfarm payroll employment increased by 178,000 in November.  Employment growth has averaged 180,000 per month so far in 2016 compared to a monthly average of 229,000 in 2015.  In November, employment gains were primarily in professional and business services and in health care.
  • Personal income in October grew by 0.6% over September and now stands 3.9% above a year ago.  Disposable income was also up 0.6% in October when compared to September and was up 4.1% over a year ago.
  • The Conference Board index of consumer confidence rose in November to 107.1, a gain of 6.3 points over October.  A year ago, the index stood at 92.6.  This is the highest level of confidence since 2007.
  • Total auto and light truck sales in November were 17.8 million (annualized rate).    This is compared to 17.9 million at an annual rate in October.  While the rate is down slightly, it is the second highest rate of the year.
  • The ISM manufacturing index rose to 53.2 in November.  This is up from 51.9 inOctober and 48.4 a year ago.  A reading of 50 or above indicates that the manufacturing sector is expanding.
  • Corporate profits rose 6.6% in the third quarter when compared to the second quarter and now stands 2.8% above a year ago.
Arizona Snapshot:
  • The Greater Phoenix S&P/Case-Shiller home price index rose 0.3% in September compared to August and stood 5.3% over year earlier levels.
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December 2016