Centaurus Financial® Presents: WEEKLY ECONOMIC UPDATE – MARCH 28, 2011
4Q GDP REVISED UPWARD
The Commerce Department’s final estimate of 4Q 2010 GDP is +3.1%, an improvement from the previous estimate of +2.8%. The revision reflects increased consumer spending, exports and business investment during the quarter – and with this alteration, the Bureau of Economic Analysis now puts U.S. GDP at +2.9% for 2010. Compare that to the -2.6% economic output of 2009.1
WHEN DOES THE REAL ESTATE RECOVERY BEGIN?
By the looks of February’s home sales figures, recovery may not begin for a while. New home sales slipped 16.9% last month according to the Census Bureau, and were 28.0% under year-ago levels. The National Association of Realtors said existing home sales fell by 9.6% last month; the median sales price for a single-family home was $157,000 (-5.2% from a year ago) with distressed homes making up 39% of the market (up 4% from a year ago). While monthly home sales figures are often later readjusted and have a sizable margin of error, the numbers are still troubling; for example, existing home sales were up for each of the preceding three months.2,3
GLOBAL UNCERTAINTY WEIGHS ON CONSUMERS
High gas prices and the unresolved nuclear power plant crisis in Japan likely impacted the University of Michigan’s final March consumer sentiment survey. The final March number was 67.5, the poorest reading the index has registered since November 2009.4
HARD GOODS ORDERS SLIP IN FEBRUARY
Durable goods orders confounded the forecasts of economists, diminishing last month by 0.9%. Minus transportation orders, the decline was 0.6%.5
STOCKS PROVE RESILIENT
While the three major Wall Street indexes are still negative for March, they all posted gains last week: DJIA, +3.05% to 12,220.59; S&P 500, +2.70% to 1,313.80; NASDAQ, +3.76% to 2,743.06. The Russell 2000 was up 3.67% last week and the “fear index”, the CBOE VIX, fell 26.72%.6
THIS WEEK: February consumer spending and January pending home sales reports arrive Monday. The Conference Board’s March consumer confidence index and the January Case-Shiller home price index come out Tuesday, plus earnings from Lennar. Thursday, we have initial and continuing claims and a report on February factory orders. Both the March unemployment report and the March ISM manufacturing report will be released on Friday.
This information should not be construed as tax, legal, or investment advice. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index.
