Economic Growth and Signs of Cooling Inflation End 2022

2023-01-26T16:25:51-06:00

The U.S. economy continued to grow in the fourth quarter of 2022. As consumer spending and private inventory investment helped increase GDP, residential fixed investment dragged down the contribution to percent change in real GDP by 1.29 percentage points. More importantly, the data from the GDP report suggests that inflation is cooling. The GDP price index, rose 3.5% for the fourth quarter, down from a 9.0% increase in the second quarter and a 4.4% increase in the third quarter. Also, the Personal Consumption Expenditures (PCE) price Index, capturing inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior, rose 3.2% in the fourth quarter, compared with a 7.5% increase in the first quarter of 2022. Looking forward, only a mild recession is expected for this cycle due to the Federal Reserve tightening financial conditions. According to the “advance” estimate released by the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) increased at an annual rate of 2.9% in the fourth quarter, following a 3.2% increase in the third quarter. In 2022, real GDP contracted in the first half and then rebounded. For the full year, real GDP increased 2.1% in 2022, down from a 5.9% increase in 2021 and slightly better than NAHB’s forecast of 1.9%. This quarter’s increase reflected increases in private inventory investment, consumer spending, government spending, and nonresidential fixed investment, partially offset by decreases in residential fixed investment and exports. The increase in private inventory investment was led by manufacturing as well as mining, utilities, and construction industries. Consumer spending rose at an annual rate of 2.1% in the fourth quarter, reflecting increases in both services and goods. While expenditures on services increased 2.6% at an annual rate, goods spending increased 1.1% at an annual rate, led by motor vehicles and parts (+7.4%). Meanwhile, federal government spending increased 6.2% in the fourth quarter, led by an increase in nondefense spending, while state and local government spending rose 2.3%, led by an increase in compensation of state and local government employees. The deceleration in real GDP in the fourth quarter mainly reflected a downturn in exports and decelerations in nonresidential fixed investment, state and local government spending and consumer spendings. Nonresidential fixed investment increased 0.7% in the fourth quarter. An increase in intellectual property products was partly offset by a decrease in equipment. Additionally, residential fixed investment (RFI) decreased 26.7% in the fourth quarter. This was the seventh consecutive quarter for which RFI subtracted from the headline growth rate for overall GDP. Within residential fixed investment, single-family structures declined 26.7% at an annual rate, multifamily structures rose 17.3% and other structures (specifically brokers’ commissions) decreased 23.1%. Related ‹ Housing Share of GDP Lower in the Fourth Quarter of 2022New Home Sales Uptick in December But Market Weakness Remains ›Tags: economics, gdp, inflation, macroeconomics, macroeconomy, residential fixed investment

Economic Growth and Signs of Cooling Inflation End 20222023-01-26T16:25:51-06:00

State-Level GDP in the Third Quarter of 2022

2023-01-05T08:32:44-06:00

Real gross domestic product (GDP) increased in 47 states and the District of Columbia in the third quarter of 2022 while Indiana, South Dakota, and Mississippi saw modest GDP declines. According to the U.S. Bureau of Economic Analysis (BEA), the percent change in real GDP ranged from 8.7 percent increase in Alaska to 0.7 percent decline in Mississippi. Nationwide, growth in real GDP, measured on a seasonally adjusted annual rate basis, increased 3.2 percent in the third quarter of 2022, after real GDP declined in the first half of 2022. Information services; professional, scientific, and technical services; and mining were the leading contributors to the increase in real GDP across the country. Regionally, real GDP growth increased in all the regions from the second quarter of 2022 to the third quarter of 2022. The percent change in real GDP ranged from 7.3 percent increase in the Southwest region (Arizona, New Mexico, Oklahoma, and Texas) to 1.3 percent increase in the Great Lakes (Illinois, Indiana, Michigan, Ohio, and Wisconsin) region. Overall, 16 out of 21 industry groups contributed to the increase in real GDP. Mining, quarrying, and oil and gas extraction; arts, entertainment, and recreation; and information were the leading contributors the increase in real GDP in the third quarter of 2022. At the state level, mining industry was the leading contributor to the increase in real GDP in Alaska, Texas, Oklahoma, Wyoming, North Dakota, and New Mexico, the six states with the largest increases in real GDP. The construction industry was the leading contributor to the decrease in Mississippi and Indiana, two of three states with decreases in real GDP. Related ‹ Construction Job Openings Likely PeakedTags: gdp, macroeconomics, state and local markets, state GDP

State-Level GDP in the Third Quarter of 20222023-01-05T08:32:44-06:00

Economic Growth and Signs of Cooling Inflation in Third Quarter

2022-10-27T12:17:44-05:00

Real GDP grew in the third quarter, after shrinking for the first two straight quarters of 2022. This quarter’s growth was mostly fueled by a decline in the trade deficit. More important, the data from the GDP report suggests that inflation is cooling. The GDP price index, rose 4.1% for the third quarter, down from a 9.0% increase in the second quarter. Also, the Personal Consumption Expenditures (PCE) price Index, capturing inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior, rose 4.2% in the third quarter, down sharply from 7.3%. Looking forward, a mild recession is expected in the coming year as the Federal Reserve continues to tighten financial conditions. According to the “advance” estimate released by the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) increased at an annual rate of 2.6% in the third quarter, following a 0.6% decrease in the second quarter and a decline of 1.6% in the first quarter. This quarter’s increase reflected increases in exports, consumer spending, nonresidential fixed investment, federal government spending, and state and local government spending, partially offset by decreases in residential fixed investment and private inventory investment. In the third quarter, exports increased 14.4%, while imports, which are a subtraction in the calculation of GDP, decreased 6.9%. Net exports rose by $156.6 billion in the third quarter, contributing 2.77 percentage points to GDP growth. Meanwhile, federal government spending increased 3.7% in the third quarter, reflecting increases in both national defense and nondefense spending, while state and local government spending rose 1.7%, led by an increase in compensation of state and local government employees. Consumer spending rose at an annual rate of 1.4% in the third quarter, down from a 2.0% increase in the second quarter. An increase in services was partly offset by a decrease in goods services. While expenditures on services increased 2.8% at an annual rate, goods spending decreased 1.2% at an annual rate, led by motor vehicles and parts (-11.7%) as well as food and beverages (-3.8%). Nonresidential fixed investment increased 3.7% in the third quarter. Increases in equipment and intellectual property products were partly offset by a decrease in structures. Within residential fixed investment, single-family structures declined 36.3% at an annual rate, multifamily structures declined 5.5% and other structures (specifically brokers’ commissions) decreased 21.5%. Related ‹ Housing Share of GDP Continues to DecreaseTags: economics, gdp, inflation, macroeconomics, macroeconomy, PCE, residential fixed investment, the GDP price index

Economic Growth and Signs of Cooling Inflation in Third Quarter2022-10-27T12:17:44-05:00

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