Higher personal spending, positive improvements from the previous month’s employment landscape, and an upward revision to 2022’s third quarter were all positive impacts on last December’s economic state.
Naturally, it wasn’t a glowing report across the board, but Kevin Canterbury of Arizona highlights the most critical factors — the good, the neutral, and the bad.
The Positives
The US GDP‘s second release for the third quarter rose to 2.9% from 2.6%, representing a 0.3% increase.
The difference came following a 0.3% revision for personal consumption and 1.4% in fixed business investments. However, experts note that higher government consumption and net exports also played a role in the second release’s figures.
The GDP price deflator for 2022 Q3 went up from 4.1% to 4.3% in the second release, showing maintained inflation pressures.
As per the Atlanta Fed’s GDP, the final quarter shows positive growth of 2.8%, and it has continued climbing higher since the start of November.
That said, most economists at this time weren’t explecting a bullish economy. Instead, they predicted upcoming recessions as the clock ticked over into 2023.
On top of that, the employment situation experienced positive growth, with nonfarm payrolls rising by 263,000 — 63,000 above the expected figure.
Leading employment sectors were leisure and hospitality, healthcare, government, construction, social assistance, and manufacturing. However, retail, transportation, and warehousing jobs declined by 45,000 in total.
Average weekly earnings across the country rose by around 0.6% in December, boosting 12-month increases to 5.1%.
The Neutrals
October saw personal income rise by 0.7%, exceeding the expert-given forecast of 0.4% and representing the 0.5% wage gain in the same period.
Due to the income increase, personal spending saw a similar boost, climbing by 0.8% — as expected considering the above.
Both spending and income are up by 8% and 5%, respectively, compared to December 2021. However, inflation has made such increases feel nominal.
The FHFA house price index rose by 0.1%, according to the report published in September 2022. This was a welcome surprise for experts who anticipated a 1.2% decline.
New jobless claims fell by 16,000 to 225,000, a substantially smaller figure than the expected 235,000. Although, continued claims rose by 57,000, above the increase anticipated by economists.
The Negatives
The ISM Manufacturing Index fell by 1.2 points, reaching 49.0 and displaying a decrease larger than experts anticipated. For context, any reading under 50 on this index signifies industry contraction.
Supplier deliveries experienced a half-point increase. However, the boost wasn’t enough to remove from the contraction zone. Anecdotal evidence suggests that the falling new customer orders from Europe and the lower labor requirements in the country are contributing to this negative outcome.
Construction spending fell by 0.3% during this period too, despite public nonresidential spending receiving a 0.5% increase.
All 20 cities on the Case-Shiller home price index experienced declines of some severity, leading to an overall index drop of 1.2% as the year drew to a close.
Finally, the Conference Board index of consumer confidence saw a drop of two points, with future expectations falling.
