Economy’s Pace Fastest in a Decade The U.S. economy posted its strongest growth in more than a decade during the third quarter, supported by robust consumer spending and business investment.
(…) “The Fed is likely to look through much of the weakness” in inflation figures “with such impressive growth,” BNP Paribas economist Bricklin Dwyer said. (…)
The growth was buoyed by consumer spending on health care and restaurant meals, business investment in equipment and new software, and a rise in exports.
But the economy likely hasn’t maintained the third quarter’s heady growth pace during the fourth quarter in part because the summer months were supported by an unusually large increase in military spending that analysts don’t expect to be repeated.
- GDP from 3.5% to 3.9% to 5.0%.
- Domestic final demand from 3.2% to 4.1%.
- Consumer spending from 2.2% to 3.2%.
- Business investment from 7.1% to 8.9%.
No wonder the Fed says it will be patient, having to wait until the third revision to get the true picture.
(…) “Who would have thought yields have stayed below 3% with 5% growth and record stock prices?’’ said David Coard, head of fixed-income trading at Williams Capital Group, a broker-dealer. (…)
If you care, here’s what they think:
Personal income rose 0.4% in November following +0.3% in October and +0.2% in September. Nice acceleration, especially given that wages jumped 0.5% in Nov. after +0.3% and +0.2% in the previous 2 months. Real disposable income was also up 0.5% in November (+0.3% and +0.1%). Real expenditures exploded 0.7% in November (+0.2% and +0.2%).
Consumer sentiment is inversely correlated with gas prices:
Total new orders fell 0.7% after declining 0.4% in total in the previous 2 months. Nondefense cap. goods ex. aircrafts were unchanged after declines of –1.9% in Oct. and –1.1% in Sep.
Construction Costs Rising as Economy Improves Building costs are rising at the fastest pace in six years, according to a new report by Rider Levett Bucknall, a property and construction consulting firm.
The firm–which tracks the costs of new commercial, residential and other buildings– said its index of construction costs in the U.S. increased 1.66% between July 1 and Oct. 1, the largest three month increase since early 2008. (…)
The index, which started at 100 in April 2001, hit a record 161.11 in October, up from 158.48 in July. It was at 153.09 in October 2013. (…)
S&P said it’s considering cutting Russia’s credit-rating to junk, or below investment grade, for the first time in a decade as the looming recession spurs concern that the nation’s banks will face mounting bad loans. Hours before S&P released its statement yesterday, lawmakers sought to address that very concern, pushing through legislation that will allow President Vladimir Putin’s government to bail out struggling lenders.
The move “stems from what we view as a rapid deterioration of Russia’s monetary flexibility and the impact of the weakening economy on its financial system,” S&P said.
Inventories Rise at China Auto Dealers Chinese car dealers are sitting on their highest inventories of unsold cars in almost 2 ½ years, in the latest sign of slowing growth in the world’s largest auto market.
(…) In China, analysts regard 1 ½ months’ of sales on lots as the “alert level” in which dealers should begin to be concerned about high inventory. By contrast, dealers in developed markets can hold bigger inventories mainly because they rely less on selling new cars to make money. (…)
CADA said that some big dealer groups had stopped buying cars from auto makers in November, otherwise inventory levels could have been much higher. (…)
The China Association of Automobile Manufacturers said passenger-car sales in November rose 4.7% from a year earlier to about 1.8 million vehicles.
Iran Exits Recession With 4% Growth in Six Months, Rouhani Says Iran’s economy expanded 4 percent in the six months from March 21, President Hassan Rouhani said today, in a return to growth following two years of recession.
In the 16 months since it came to power, the government has also “curtailed inflation from 40 percent down to 17” percent, Rouhani said in a speech in the eastern city of Birjand, according to the Iranian Students News Agency. “Economic revival has begun.”
Online Bargain Hunters Push Korean Retailers to Slash Prices South Korean department stores are slashing prices to compete with overseas online retailers like Amazon.com, eBay and the Gap as more consumers hunt for bargains from online vendors abroad.
(…) Combined sales at the country’s top three department stores—Lotte Department Store, the largest by revenue; Shinsegae; and Hyundai Department Store ; which together account for more than 80% of the nation’s department store sales—fell 5.6% in November from a year earlier, down for a third straight month, according to the Finance Ministry.
By contrast, imports of goods ordered through overseas online shops increased roughly 30% in November from a year earlier, according to the Korea Customs Service. The most popular sites with Korean shoppers are based in the U.S., including Amazon, eBay and Gap.
A representative at eBay Korea, which operates two online shopping retailers, Gmarket and Auction, said Korean purchases of foreign goods via its websites have increased fourfold to more than 210 billion won ($189 million) in the past three years. (…)