Friday Economic Snapshot: Still slow going
This week’s economic indicators arrived under a cloak of normalcy, with a shocker hidden inside — the American economy actually shrunk during the previous quarter. While most economists aren’t panicking over the figure, and expect that positive growth has already resumed, it’s a concrete sign that the lingering recovery remains a few steps short of full steam ahead.
Let’s take a look.
From the Bureau of Economic Analysis comes the somewhat surprising news that the U.S. gross domestic product — the output of goods and services produced by labor and property — decreased at an annual rate of 1 percent in the first quarter of 2014. In the previous quarter, Q4 ’13, GDP increased 2.6 percent.
This is the first time since 2011 that the economy has tangibly contracted, although the data suggests much of the drop is attributable to companies reducing inventory levels, a general reduction in construction spending, as well as an impact from the now-legendary late-winter weather.
While the housing market isn’t as hot as it was last spring, home values in most markets continue to appreciate. Adding color to the picture, the National Association of Realtors released its latest Pending Home Sales Index, showing that contract signings increased 0.4 percent in April from 97.4 in March. This is 9.2 percent below April 2013 when the index hit a heady 107.7.
The consensus on the latest figures show that the national home market is cooling off but still healthy, which could be a good sign that the U.S. economy is taking a pause before marching headlong into another housing bubble.
For the week ending May 24, the seasonally adjusted initial unemployment claims stood at 300,000, a significant drop of 27,000 from the previous week’s level. Even better, these weekly figures put the 4-week moving average at 311,500. That is a decline of 11,250 from the previous week’s average, and the lowest average level since August 11, 2007.
These unemployment figures are good. Great, however, would be seeing this translate to both middle- and upper-income job and wage growth to bolster the American Middle Class.