March 2012 – U.S. Economic Snapshot

Update: Final Revisions to Fourth Quarter GDP

Posted on March 30, 2012 by Peter Rupert

Welcome to the Cooley-Rupert Economic Snapshot, our view of the current economic environment. This is the latest version of our snapshot of the U.S. Economy based on the final revisions to fourth quarter data on National Income and Product from the Bureau of Economic Analysis. As in previous snapshots we present the data in a way that we find particularly useful for assessing where we are in the business cycle and tracking the U.S. economic recovery. The paths of all the series presented are plotted relative to the their value at the peak of the respective business cycles. We use the business cycle dates identified by the National Bureau of Economic Research.

We present the data in four sections. The first summarizes the path of Gross Domestic Product and its components. This post primarily updates GDP and its components based on preliminary estimates of fourth quarter activity from the BEA. We also include the most recent labor market data and the summary of activity in credit markets. The final section summarizes the features of industrial production and inflation.

As always we welcome any suggestions for additional data that you would like to see and suggestions for how to improve the presentation of the data. Click here to go to the latest snapshot in one pdf document. Or, read on

Final Fourth Quarter GDP Revisions

The third and final estimate of GDP and its components confirms that real GDP grew at an annual rate of 3% in the fourth quarter of 2011. While there was no change in the total, there were changes to the components of GDP that roughly offset each other. Personal consumption expenditures on goods were revised up further from 4.9% to 5.4% annual growth. Growth in services, however, was revised down further from 0.7% to 0.4% and continues to drag down growth in total consumption. It remains at least 5 percentage points below where its path should be compared to “typical” previous cycles and is showing signs of slowing down. Gross private investment was revised upward to 22.1% from 20.6%. Notably, growth in nonresidential structures was revised up to -0.9% from -2.6% in the ‘second’ estimate and -7.2% in the preliminary estimate.

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Snapshot – The Employment Report For February – Continued Job Growth, Higher Particpation

Posted on March 9, 2012 by Tom Cooley

Welcome to the Cooley-Rupert Economic Snapshot, our view of the current economic environment. This is the latest version of our snapshot of the U.S. Economy based on the new employment numbers released today by the Bureau of Labor Statistics. The complete Snapshot based on the latest revisions to fourth quarter GDP from the Bureau of Economic Analysis can be found in our previous post.

As in all of our snapshots we present the data in a way that we find particularly useful for assessing where we are in the business cycle and tracking the U.S. economic recovery. The paths of all the series presented are plotted relative to their value at the peak of the respective business cycles. We use the business cycle dates identified by the National Bureau of Economic Research.

You can also find the most recent version of the entire snapshot in pdf form here. As always we welcome any suggestions for additional data that you would like to see and suggestions for how to improve the presentation of the data.

The Labor Market

The latest Employment Situation report from the Bureau of Labor Statistics shows non-farm payroll employment rose by 227,000 jobs in February. Prior payrolls were revised upwards for January and December. These indicate a continued improvement in labor market conditions but at the same modest pace of recent months. The total number of unemployed remained essentially constant. This reflects the fact that labor force participation increased in February, perhaps an encouraging sign. The household survey showed an increase in labor force participation of about 0.2%, while participation declined through much of 2011. The new participants kept the number of unemployed at the same high level but the number of unemployed because of job loss declined. For comparison, as we did last month, we plot employment as reported by ADP, an association of payroll processors. Many observers view this as a useful early indicator of the BLS numbers.
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Update – Fourth Quarter Revisions (Second Estimate)

Posted on March 1, 2012 by Peter Rupert

Welcome to the Cooley-Rupert Economic Snapshot, our view of the current economic environment. This is the latest version of our snapshot of the U.S. Economy based on the revisions to preliminary fourth quarter data on National Income and Product from the Bureau of Economic Analysis. As in previous snapshots we present the data in a way that we find particularly useful for assessing where we are in the business cycle and tracking the U.S. economic recovery. The paths of all the series presented are plotted relative to the their value at the peak of the respective business cycles. We use the business cycle dates identified by the National Bureau of Economic Research.

Fourth Quarter Revisions – Confirms Recovery…in What?

The “second” estimate of GDP and its components showed that real GDP grew at an annual rate of 3% in the fourth quarter of 2011. The growth rate was revised up from a preliminary estimate of 2.8%. The new estimate mostly reflected an upward revision in gross private domestic investment led by a revision to growth in nonresidential structures. The preliminary estimate showed nonresidential structures declining at an annual rate of 7.2%, while the second estimate showed it declining at a rate of 2.6%. As this is the only component of private GDP that experienced negative growth, the new revisions were largely optimistic.

This newest data confirms that output growth has regained some momentum seen earlier in the recovery. The slowdown in growth led some to worry of a potential ‘double-dip’ recession as output sputtered in the first three quarters of 2011 (around 13 quarters after the peak of business cycle activity). The slowdown can clearly be seen across most components of GDP. The seasonally adjusted annualized quarterly percent change in Personal Consumption Expenditures (PCE) were 2.7%, 2.9%, 2.6%, and 3.6% for the four quarters in 2010 and then slowed to 2.1%, 0.7%, and 1.7%, for the first three quarters of 2011 then picked up some steam in the fourth quarter, growing at 2.1%. The slowdown is particularly evident in the graph for PCE-goods below. Investment even experienced negative growth after steady recovery, mostly led by a reduction in the change in private inventories. Government consumption and investment also started to show signs of decline beginning around the same time period.
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