Economic data at year-end 2011 provided a measured dose of holiday cheer. November personal income and consumer spending numbers were softer than expected as income increased by only 0.1 percent for the month. Inflation took the month off as the PCE price index was unchanged. Consumer spending was similarly somnambulistic, increasing by just 0.1 percent as energy prices fell. The two-month extension to the payroll tax cut means no step down for spending in January and February. New orders for durable goods bounced back after a weak couple of months, gaining 3.8 percent in November. Commercial aircraft orders surged by 73.3 percent. Sales of new homes increased marginally to a 315,000 unit annual rate in November, the most since last April. Existing home sales for November increased by 4.0 percent, up to a 4.42 million unit sales pace, the strongest sales rate since January 2011. The median sales price of an existing home is down 3.5 percent from a year ago. Residential construction numbers for November were better than expected. Total housing starts gained a solid 9.3 percent to hit a 685,000 unit pace. Starts were juiced by strong multifamily construction. Permits for new construction increased by 5.7 percent to a 681,000 unit rate, the strongest monthly permits number since March 2010. Third quarter GDP growth was revised down for the second time, to 1.8 percent growth after an initial estimate of 2.5 percent. Corporate profits for Q3 increased by $32.5 billion, below the Q2 gain of $61.2 billion. Nondurable goods manufacturers and nonfinancial services tended to drag on Q3 profits. The leading economic index for November increased by 0.5 percent. On face value, the leading index implies a muscular start to 2012. However, financial stress in Europe, accompanied by a deepening recession there, along with easing growth in China, do not show up as risk factors in the leading index. The University of Michigan’s consumer sentiment index increased to 69.9 for December. Initial claims for unemployment insurance fell by 4,000 for the week ending December 17, to hit 364,000.
Click here for the complete Comerica Economic Weekly for December 23: CMAEconWeekly122311.