This analysis covers this week’s U.S. economic data through Thursday, May 29. We are not including Friday’s release of April income and spending data.
The most eye-catching data event of the week was the widely anticipated downward revision to 2014Q1 real GDP growth, now set to –1.0 percent on an annualized basis. While the direction of the revision was anticipated, the magnitude was a surprise. We joined the consensus expectations at –0.5 percent. Fortunately, the bigger than expected downward revision to –1.0 percent comes with a silver lining.
The revision was bigger than expected because 2014Q1 inventory accumulation was revised down more than expected, and there is the silver lining. A bigger inventory correction in Q1 implies less drag from inventories in subsequent quarters.
We still expect to see real GDP growth in the range of 2.5 to 3.0 percent for the current second quarter. The first estimate of Q2 real GDP growth will be released on July 30.
Initial claims for unemployment insurance fell by 27,000 for the week ending May 24, to hit an even 300,000. This is a very good number, consistent with moderate-to-strong job creation and a declining unemployment rate. Continuing claims for the week ending May 17 dipped by 17,000 to hit 2,666,000.
The Case-Shiller 20-City Composite House Price index for March was stronger than expected. The composite index was up 12.4 percent over the previous 12 months. Nineteen out of 20 cities reported monthly price gains. Only New York showed a small month-to-month house price decline.
For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly 05-30-14.