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:
Personal Income Misses Estimates
The Commerce Department announced that personal spending rose 0.4% and personal income rose 0.3% in August. By comparison, economists were expecting 0.2% personal spending growth and 0.5% personal income growth. So while spending outpaced expectations, income lagged estimates. Meanwhile, the saving rate slipped from 4.7% to 4.6%. Consumer spending has been steadily increasing in recent months, due to the fact that $2 per gallon gasoline is spreading throughout the U.S. Notably, consumer spending accounted for 3.1% of the second-quarter GDP growth of 3.9%. Meanwhile, incomes have also been rising since spring thanks to a dip in the unemployment rate and job creation.
Consumer Confidence Reaches Highest Level in 8-Years
The Conference Board announced that announced that its consumer confidence index rose to 103 in September, up from 101.1 in August. The decline was greater than economists’ expectations for a 0.2% drop in industrial production and capacity utilization of 77.8%. July’s industrial production estimate was revised to a 0.9% increase, up from the initial 0.6%. A sharp decline of 6.4% in auto and auto parts production drove overall manufacturing output down by 0.5%. Since manufacturing output accounts for about three-quarters of total industrial production, this is the main reason for last month’s decline.
Jobless Claims Surges
For the week ending September 26, initial claims for unemployment increased by 10,000 to a seasonally adjusted 277,000. This was higher than economists’ forecast of 270,000 in claims. Meanwhile, the four-week moving average slipped 1,000 to 270,750. Jobless claims remain near record lows. Better yet, this measure of layoff activity has persisted below the 300,000 threshold for 30 straight weeks now.
Construction Spending Continues Brisk Pace
Construction spending increased again in the August, rising 0.7% to $1.09 trillion. This beat economists’ estimates of a 0.5% increase. A 1.3% boost in residential construction helped spending. A 0.5% increase in public outlays and 0.3% rise in non-residential construction also helped boost results. Construction spending has been moving at a brisk pace over the past 12 months, having increased 13.7% during that time. It is now at a seven year high.
Factory Goods Orders Fall Sharply in August
Orders for U.S. produced goods fell 1.7% in August, more than economists’ estimates of a 1.3% drop. Orders for durable goods declined sharply by 2.3%, while nondurable goods orders dipped by 1.1%. A dip in transportation equipment orders seemed to have a big impact on the results, as these orders slid 6.2% in August. This latest report demonstrates that while consumer spending and the housing market remain bright spots in the economic recovery, there’s still plenty of room for improvement.
That’s all I have for you this week; I’ll be in touch again next week with the latest ratings updates out of Portfolio Grader.
Have a great weekend,