Global| Jun 26 2013U.S. GDP Growth is Revised Lower with Lessened Growth in Domestic Purchases
by:Tom Moeller
|in:Economy in Brief
Summary
Real GDP growth for Q1'13 was revised lower to 1.8% (1.6% y/y) from last month's estimated 2.4% rise. Expectations were for a 2.4% gain. Growth in consumer spending and business investment were significantly reduced, but residential [...]
Real GDP growth for Q1'13 was revised lower to 1.8% (1.6% y/y) from last month's estimated 2.4% rise. Expectations were for a 2.4% gain. Growth in consumer spending and business investment were significantly reduced, but residential investment growth was raised. The increase in the GDP chain price index was raised slightly to a modest 1.2% (1.6% y/y).
After-tax corporate profits fell 1.4% (+4.7%
y/y), less than the initial estimate of a 2.0% decline which followed a
1.8% Q4 rise. The decline reflected weakness across sectors. Rest-of-world
profits fell 4.3% (+7.4% y/y), domestic nonfinancial earnings slipped 0.5%
(+3.1% y/y) and earnings in the financial sector were off 0.7% (+5.0%
y/y).
A reduced gain in final sales to domestic purchasers accounted for
the GDP revision. Sales grew at a revised 1.3% rate (1.5% y/y), down
from last month's estimated 1.9% rise. The gain in personal consumption
expenditures was pared back to 2.6% (1.9% y/y) from 3.4%. Growth in
business fixed investment also was lowered to 0.4% (3.7% y/y) from 2.2%.
Working the other way, residential investment's advance was increased to
14.0% (13.3% y/y) from 12.0%. Unchanged was the decline in government
spending. The 4.8% drop (-2.2% y/y) reflected an 8.7% shortfall (-4.0%
y/y) in federal government spending. Defense outlays were off at a 12.0%
rate (-6.2% y/y). State and local government investment also fell at a
2.1% rate (-1.1% y/y). The effect on GDP growth from inventory rebuilding was unrevised at
0.6 percentage points. It did not, however, recoup the 1.5 point
subtraction during Q4. Trade deficit deterioration still lowered growth
by 0.1 percentage point. It occurred as imports slipped 0.4% (-0.6% y/y)
instead of rising slightly while exports fell at a 1.1% rate (+0.8% y/y)
instead of increasing 0.8%. The GDP chain price index grew at a modest and marginally changed 1.2%
rate (1.6% y/y). This increase was largely influenced by an unchanged
1.0% increase (1.2% y/y) in the PCE price index, held back by lower
energy prices. Also unchanged was the 6.7% rise (3.5% y/y) in the
residential price index. The 0.9% increase (1.0% y/y) in the business
fixed investment price index was slightly firmer than last month's
report. The latest GDP figures can be found in Haver's USECON and USNA
databases; USNA contains basically all of the Bureau of Economic
Analysis' detail on the national accounts, including the new integrated
economics accounts and the recently added GDP data for U.S. Territories.
The Consensus estimates can be found in AS1REPNA. Modest to Moderate Growth Expected for Rest of Year from the
Federal Reserve Bank of Dallas can be found here http://www.dallasfed.org/assets/documents/research/update/us/2013/1304.pdf
Chained
2005 $, %, AR
Q1'13 (3rd Estimate)
Q1'13 (2nd Estimate)
Q1'13 (Advance)
Q4'12
Q3'12
Q1 Y/Y
2012
2011
2010
Gross Domestic Product
1.8
2.4
2.5
0.4
3.1
1.6
2.2
1.8
2.4
Inventory Effect
0.6
0.6
1.0
-1.5
0.7
-0.1
0.2
-0.2
1.5
Final Sales
1.2
1.8
1.5
1.9
2.4
1.8
2.1
2.0
0.9
Foreign Trade Effect
-0.1
-0.2
-0.5
0.3
0.4
0.2
0.1
0.2
-0.4
Domestic Final Sales
1.3
1.9
1.9
1.5
1.9
1.5
1.9
1.8
1.3
Demand Components
Personal Consumption
2.6
3.4
3.2
1.8
1.6
1.9
1.9
2.5
1.8
Business Fixed Investment
0.4
2.2
2.1
13.1
-1.8
3.7
8.0
8.6
0.7
Residential Investment
14.0
12.0
12.6
17.5
13.6
13.3
12.1
-1.4
-3.1
Government Spending
-4.8
-4.9
-4.1
-7.0
3.9
-2.2
-1.7
-3.1
0.6
Chain-Type Price
Index
GDP
1.2
1.1
1.2
1.0
2.7
1.6
1.8
2.1
1.3
Personal Consumption Expenditures
1.0
1.0
0.9
1.6
1.6
1.2
1.8
2.4
1.9
PCE less Food &
Energy
1.3
1.2
1.2
1.0
1.1
1.3
1.7
1.4
1.5
U.S. Mortgage Applications Continue Lower As
Interest Rates Surge
by Tom
Moeller June 26, 2013
The Mortgage Bankers Association reported that total applications for a home mortgage fell 3.0% w/w, extending the declines of the prior six weeks. The latest level was down by one-third since early-May. Last week's decline reflected a 5.2% drop (-38.4% y/y) in applications to refinance an existing loan. Refinancings were down 41.8% since early May. Home purchase mortgage applications increased 2.1% last week (15.9% y/y), up 26.7% since year end.
Evidence of a firming economy is raising interest rates. The effective interest rate on a 15-year mortgage jumped w/w to 3.66% from 3.30%, up from the early-May low of 2.89%. The effective rate on a 30-year fixed rate loan increased to 4.57% last week while the rate on a Jumbo 30-year loan was 4.60%. The 91 basis point spread between 15- and 30-year loan rates was a record. The effective interest rate on an adjustable 5-year mortgage increased to 3.20%, up from its low of 2.59% at the beginning of May.Applications for fixed interest rate loans fell by 30.3% y/y while adjustable rate loan applications rose 20.0% y/y. The average mortgage loan size was $222,500. The average size loan for home purchases was $266,800 last week while for refinancings it was $201,000.
The survey covers over 75 percent of all U.S. retail residential
mortgage applications, and has been conducted weekly since 1990.
Respondents include mortgage bankers, commercial banks and thrifts.
Base period and value for all indexes is March 16, 1990=100.
The figures for weekly mortgage applications are available in Haver's SURVEYW
database.
Why Financial Stability is a Necessary Prerequisite
for an Effective Monetary Policy from the Federal Reserve Bank of New
York can be found here http://www.newyorkfed.org/newsevents/speeches/2013/dud130624.html
MBA Mortgage
Applications (SA, 3/16/90=100)
06/21/13
06/14/13
06/07/13
Y/Y%
2012
2011
2010
Total Market Index
629.2
648.9
670.7
-28.1
813.8
572.3
659.3
Purchase
214.8
210.4
217.0
15.9
187.8
182.6
199.8
Refinancing
3,041.4
3,208.5
3,322.3
-38.4
4,505.0
2,858.4
3,348.1
15-Year Mortgage Effective Interest
Rate (%)
3.66
3.30
3.32
3.22
(6/12)3.25
3.97
4.39
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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