It’s Friday and that means it’s time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don’t worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let’s take a look at this week’s big headlines:
Consumer Confidence Slips… But Should Warm up
In February, the Conference Board’s consumer confidence index slipped to 78.1, down from a revised 79.4 in January, due largely to uncertainty on future economic conditions. Economists were expecting consumer confidence to decline to 80.1 in February, down from an originally-reported 80.7 in January, which was subsequently revised down to 79.4.
Due to the dramatic downward revision in January, the decline expected by economists doesn’t look too bad. However, like all the recent economic data, the severe winter weather likely impacted consumer sentiment, so as the spring arrives, I expect consumers to cheer up as temperatures rise in the upcoming months.
New Home Sales Were Strong Despite Frigid Weather
In January, new home sales surged 9.6% in January to a seasonally adjusted annual pace of 468,000, which is the strongest annual sales pace in more than five years. This was truly a big surprise, since economists were only expecting an annual sales pace of 405,000. Also encouraging is that December’s new home sales were revised up to an annual pace of 427,000.
This was some of the best news this week, and ironically, the strongest sales gains were in the Northeast, which has been frozen for much of December and January. So clearly, the severe winter weather did not impede new homes sales and bodes well for even strong sales in the upcoming months in the spring thaw.
Expect for Hiring to Rebound As We Thaw Out
Last week, new unemployment claims rose 14,000 to a seasonally adjusted 348,000 annual rate. This was a bit higher than economists’ consensus forecast of 335,000 claims. However, the more stable four-week moving average was unchanged at 338,250.
Again, the unusually cold winter has clouded the labor market picture, and much of the slowdown continues to be shrugged off by the market. I’m expecting for hiring to rebound in March as we begin the spring thaw.
Slower Economic Growth Last Quarter
The Commerce Department announced that fourth-quarter GDP grew at a revised annual pace of 2.4%, down from the previous estimate of 3.2% growth, and close to the 2.5% consensus. In addition, the core PCE price index was revised to a 1.3% annual rate from 1.1%; the overall price index was revised to 1.6% from 1.3%.
A larger than initially estimated trade deficit and lower than expected inventory growth were the primary reasons for the downward GDP revision, and while 2.4% is fairly sluggish, it was despite the severe weather at the end of the fourth quarter as well as the government shutdown at the start. So the market has largely taken this number in stride.