Today’s North American Economic Data

June 28, 2012

The 1.9% annualized increased of U.S. real GDP in the first quarter was unrevised from the prior estimate.  Personal consumption growth of 2.5% accounted for 93% of GDP’s rise during the quarter.  Private investment, net foreign demand, and inventories supported growth modestly but were collectively neutralized by a 4.0% annualized drop in public-sector spending that depressed the overall GDP growth rate by 0.8 percentage points.  Government spending was 0.8% lower in 1Q12 than its level four years earlier in 1Q08.  GDP grew 2.0% between 1Q11 and 1Q12, similar to on-year growth of 2.2% in both the year to 1Q10 and 1Q11.  After eleven quarters in the current recovery cycle, real GDP is 6.7% higher on balance than in 2Q09, the final quarter of the Great Recession.  At a similar 11-quarter milestone of recoveries following the next two severest post-WW2 recessions, U.S. real GDP had rebounded by 17.6% through 3Q85 and by 13.7% through 4Q77.

Not only has this been a subnormal recovery, but other data indicate that momentum is subsiding lately.  The Kansas City Fed manufacturing index dropped back to +3 in June from a reading of +9 in May and a high-water mark for 2012 of +13 in February.  New jobless insurance claims averaged 386.75K in the latest four months to June 23, which is up from 374.5K per week in the four weeks to May 26 and 354.75K in the four weeks to March 3.  Claims are back to the level in November-December when such averaged 387.75K per week in the four weeks ended December 10.  On Wednesday, a 1.1% rise of U.S. orders for durable goods was announced for May, which reversed just slightly more than a quarter of the drop between February and April.  One bright spot today was news that consumer comfort had ticked upward in the week of June 24 for the fifth time in six weeks, reaching a two-month high.

Canada’s sole data release today was encouraging too.  Average weekly earnings climbed another 1.0% in April, which boosted the 12-month increase to 3.1% from 2.1% in March and 1.8% in February.  Canadian real GDP also increased 1.9% at an annualized rate in the first quarter of this year, which translated to an on-year pace of 1.8%.  Canada has a lower unemployment rate of 7.3% than the United States’ 8.3% currently, but on-year Canadian job expansion of 1.2% was marginally smaller than the 1.4% increase of U.S. non-farm payroll employment between May 2011 and May 2012.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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