Q4 increase reflected gains in private inventory investment (two consecutive quarters rise), exports, and personal consumption expenditures (PCE). Imports, which reduce GDP, also increased in Q3, signaling improved consumer and producer (intermediates) demand, but the rate of growth fell in Q4. An upturn in nonresidential fixed investment was partially offset by slowdown in federal government spending.
Real personal consumption expenditures increased 2.0% in Q4, down from an increase of 2.8% in the third quarter. Durable goods decreased 0.9%, in contrast to an increase of 20.4% in Q3 2009. Nondurable goods increased 4.3%, compared with an increase of 1.5% in Q 3. Services increased 1.7%, compared with an increase of 0.8% in Q3. This suggests rather anemic holidays season and potential reversal in consumer confidence (see below). It certainly does not add up to a robust change in the crisis-driven increases in marginal propensity to save (up 4%+ in Q4) and enhanced risk-aversion (keeping durables sales down).
Real nonresidential fixed investment increased 2.9% in Q4, in contrast to a decrease of 5.9% in Q3. Nonresidential structures decreased 15.4%, compared with a decrease of 18.4%. Equipment and software increased 13.3 percent, compared with an increase of 1.5 percent. Real residential fixed investment increased 5.7 percent, compared with an increase of 18.9%. All indicating the beginnings of a new business investment cycle - a very good sign.
A note to European policy makers: weaker currency works magic: real exports of goods and services increased 18.1% in Q4, compared with an increase of 17.8% a quarter earlier. Real imports of goods and services increased 10.5%, compared with an increase of 21.3%. This again points to depressed consumer rebound, but it also signals that inventories rebuilding might have been completed by now - a sign that we might expect much weaker contribution to GDP growth from that side of the NA in the next 2-4 months.
Stimulus is thinning out and rapidly, but on the military spending side, not in civilian consumption. Real federal government consumption expenditures and gross investment increased 0.1% in the fourth quarter, compared with an increase of 8.0% in the third. But non-defense spending increased 8.1%, compared with an increase of 7.0% in Q3.
Another lesson to European leaders: cut taxes and see things grow faster. Current-dollar personal income increased $119.2 billion (+4.0%) in Q4, compared with an increase of $35.1 billion (1.2%) in Q3. Personal current taxes decreased $11.7 billion, in contrast to an increase of $3.5 billion in Q3. Thus, disposable personal income increased $130.8 billion (+4.8%) in the fourth quarter, compared with an increase of $31.6 billion (+1.2%) in the third.
The miracle that is the resilient US economy is about to swing into action, assuming no adverse news on the Federal Reserve side.
Charts on Consumer Confidence finding upward support, again... over the downward cycle
but not over a deviation from historic trend...
not yet. Which means that we are now in the optimistic (exuberantly) territory relative to historic trends:
and
No comments:
Post a Comment