Economy Watch: GDP Expands More Than Thought; Pending Home Sales Strongly Up; Unemployment Claims Down
- Nov 30, 2012
The Bureau of Economic Analysis revised its estimate of real U.S. GDP to an annualized 2.7 percent in the third quarter, compared with the initial estimate of 2 percent. The final figure for the second quarter was an annualized increase of only 1.3 percent.
The increase during the third quarter was spurred by personal consumption expenditures (which is governmentese for people buying stuff), private inventory investment (businesses buying stuff), federal government spending (bureaucrats buying stuff), residential fixed investment (people buying and repairing houses), and exports (foreigners buying our stuff). These increases were partly offset by drops in nonresidential fixed investment, and state and local government spending. Imports, which are a subtraction from GDP, increased slightly.
Real nonresidential fixed investment decreased 2.2 percent, compared to an increase of 3.6 percent during the second quarter. Much of that was shrinking CRE spending, which was down 1.1 percent in the third quarter. By contrast, real residential fixed investment increased 14.2 percent for the third quarter, compared with an increase of 8.5 percent during the previous quarter.
Pending Home Sales See Gain
More evidence that Americans are trying to satisfy a pent-up demand for housing: the National Association of Realtors said on Thursday that pending home sales were up strongly in October. The organization’s Pending Home Sales Index, a forward-looking indicator, increased to 104.8 in October from an upwardly revised 99.6 in September and is well above October 2011, when it was 92.6.
There was considerably regional variation in pending sales, however. The association found that contract activity surged in the Midwest and showed healthy gains in the South, but was down slightly in both the Northeast and West. The Northeast saw some impact from Hurricane Sandy; the NAR said that inventory shortages were an issue in the West.
The Pending Home Sales Index is based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the deal hasn’t closed. According to NAR, the index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales.
Unemployment Claims Start to Drop
The U.S. Department of Labor reported on Thursday that for the week ending Nov. 24, initial unemployment claims dropped to 393,000, down below 400,000 for the first time in three reports. Weekly claims, which tend to wobble up and down anyway, have been extra jumpy (and extra elevated) because of the impact of Hurricane Sandy, an effect that seems to be wearing off. The unusually high recent weekly numbers mean that the four-week average is up, too: 405,250 for the week ending Nov. 24, compared with 397,750 the week before.
Wall Street made modest gains on Thursday, with the Dow Jones Industrial Average up 36.71 points, or 0.28 percent, and ended above 13,000 again. The S&P 500 advanced 0.43 percent and the Nasdaq gained 0.68 percent.