Economic News in Review Greenville SC
Here is last week’s economic news in review Greenville SC.
Spending was up while incomes saw only very slight gains, which resulted in increased consumer caution, according to last week’s financial headlines. Meanwhile, current employment performance was on par with previous weeks, and new home sales took a dip in December, thanks to winter cold.
Consumer Spending and Incomes
Consumer spending grew in December, despite middling income performance, the Bureau of Economic Analysis reported last week. Personal incomes only increased $2.3 billion, or less than 0.1 percent, for the month, while personal consumption expenditures (PCE) increased $44.1 billion, or 0.4 percent, the Bureau reported.
Factoring in personal taxes, which increased $6 billion in December, disposable personal income (DPI; income after taxes) actually decreased $3.8 billion, or less than 0.1 percent, in December. Personal outlays — PCE, personal interest payments, and personal current transfer payments — grew by $42 billion in December, which was down from November’s $72.7 billion increase.
This put personal savings — DPI less personal outlays — at $495.2 billion in December, down from November’s $541 billion in November. The personal saving rate — personal saving as a percentage of disposable personal income — for December, dipped to 3.9 percent from November’s 4.3 percent.
Could December’s income performance hint at a possible slowdown in consumer spending? Raymond James & Associates chief economist Inc. Scott Brown told the Wall Street Journal that December’s income scores "raise a degree of caution for the near-term outlook because some pullback in spending growth seems likely.”
“We came into the year priced for a strong recovery, and now it looks like it might stumble a bit," he added.
Consumer Confidence
Keeping Brown’s sentiments in mind, consumer confidence scores dipped a bit in January, the University of Michigan and Thomson Reuters news service reported in their joint Surveys of Consumers last week. The Consumer Sentiment Index dipped to 81.2 in January survey, dropping slightly below December’s 82.5. That said, January’s score was considerably improved from January’s 73.8.
The Survey chalked up the dip to a few things, such as larger home heating bills, and a general response form more than half the respondents that their household incomes would likely not see a gain in the coming year. The Current Conditions index, which tracks consumers’ opinion of their current economic status, dipped to 96.8 in January from December’s 96.8. The Expectations Index, which tracks how consumers expect their economic situation to fare in the near future, skirted down to 71.2 in January from 72.1 in December.
“Despite the recent economic gains, consumers’ outlook for their finances as well as the national economy over the longer term have remained more resistant to improvement than in past recoveries,” Surveys of Consumers chief economist Richard Curtin wrote in his report, “This deeply rooted uncertainty about future economic conditions was first sparked by the Great Recession.”
“... Optimism about long term job and income prospects are essential for maintaining high levels of economic motivation,” he added. “Too few consumers have regained that optimism.”
Employment
In recent employment scores, first-time claims for unemployment benefits filed by the newly unemployed during the week ending Jan. 25, hit 348,000, the Employment and Training Administration reported. This represented an increase of 19,000 claims from the preceding week's revised figure of 329,000.
Looking at the four-week moving average, a steadier gauge of current unemployment, claims barely rose to 333,000, a gain of 750 claims from the prior week's revised average of 332,250 claims.
New Home Sales
Lastly, sales of new, single-family homes took a 7 percent dip in December, dropping to an annual rate of 414,000 from the revised November rate of 445,000, the Census Bureau reported last week. Most experts chalked up the drop to winter weather and said they expected a rebound given low housing inventories.
“I'm not very worried,” said IHS Global Insight director of long-term forecasting, Patrick Newport, told USA Today. “There's a high probability housing will be a major contributor to economic growth this year. We've been under-building for too long."
The median price of new homes in December in was $270,200 and the average sales price was $311,400. The inventory of new homes for sale at the end of the month was 171,000, representing a 5-month supply at December’s sales rate.
This week we can expect:
- Monday — December construction spending from the Census Bureau; January car and truck sales from the auto manufacturers.
- Tuesday — December factory orders from the Census Bureau.
- Thursday — Initial jobless claims for last week from the Employment and Training Administration; the December balance of trade from the Census Bureau; preliminary productivity scores for the Fourth Quarter from the Bureau of Labor Statistics.
- Friday — December consumer credit totals from the Federal Reserve; January unemployment, payrolls, earnings and average workweek from the Bureau of Labor Statistics.
Economic News in Review Greenville SC
Have a Big day,
Randy
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