Despite getting off to a good start, stocks wavered throughout much of last week, ultimately closing lower. The major benchmark stock indexes lost ground, with the S&P 500 finishing the week lower for the fifth time in the last six weeks after reaching record highs in mid-February. Several negative factors weighed on traders, including hotter-than-expected core consumer prices and a slowdown in consumer spending.
Last Week’s Economic News
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Gross domestic product (GDP) increased at an annual rate of 2.4% in the fourth quarter of 2024, according to the third and final estimate released by the U.S. Bureau of Economic Analysis. In the third quarter, GDP increased 3.1%. The increase in GDP in the fourth quarter primarily reflected increases in consumer spending and government spending that were partly offset by a decrease in investment. Imports, which are a subtraction in the calculation of GDP, decreased. Compared to the third quarter, the decrease in GDP was primarily attributable to downturns in investment and exports, while consumer spending increased from 3.7% in the third quarter to 4.0% in the fourth quarter. For 2024, the GDP rose 2.8% from 2023.
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According to the latest information from the Bureau of Economic Analysis, personal income increased 0.8% in February. Disposable personal income (less personal income taxes) rose 0.9% last month. Personal consumption expenditures (PCE), a measure of consumer spending, increased 0.4%. The PCE price index, a preferred measure of inflation for the Federal Reserve, increased 0.3% in February. Excluding food and energy, the PCE price index increased 0.4%. Over the last 12 months, the PCE price index increased 2.5%. Excluding food and energy, the PCE price index rose 2.8% over the past 12 months.
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Sales of new single-family houses in February were 1.8% above the revised January rate and were 5.1% higher than the February 2024 estimate. The median sales price of new houses sold in February was $414,500. The average sales price was $487,100. The estimate of new houses for sale at the end of February represented a supply of 8.9 months at the current sales rate.
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New orders for manufactured durable goods in February, up two consecutive months, increased 0.9%, according to the U.S. Census Bureau. The February increase followed a 3.3% January advance. Excluding transportation, new orders increased 0.7% last month. Excluding defense, new orders increased 0.8%. Transportation equipment, also up two consecutive months, led the increase after rising 1.5%.
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The international trade in goods deficit was $147.9 billion in February, down $7.7 billion, or 4.9%, from January. Exports of goods for February were $178.6 billion, $7.0 billion, or 4.1%, more than January exports. Imports of goods for February were $326.5 billion, $0.6 billion, or 0.2%, less than January imports.
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The national average retail price for regular gasoline was $3.115 per gallon on March 24, $0.408 per gallon less than a year ago.
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For the week ended March 22, there were 224,000 new claims for unemployment insurance, a decrease of 1,000 from the previous week’s level.
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Eye on the Week Ahead
The employment figures for March are out this week. February saw jobs increase by 151,000, while the unemployment rate ticked up to 4.1%.
Have a nice week!
Sincerely,
Robert G. Carpenter