Macro and Markets Dashboard: United States (March 26, 2016 — PDF)
GDP figures for the fourth quarter of 2015 were revised upward on Friday. Corporate profits in the quarter, however, fell for the first time since 2008, which has traditionally been considered a bad omen. On the bright side, consumer spending, grew at an impressive rate. Commodity and Equity markets were largely flat during the short week (U.S. exchanges were closed on Good Friday). The dollar strengthened against most major currencies.
Real GDP grew at a 1.4 percent annualized and seasonally adjusted rate in 2015 Q4. The previous estimate was one percent. As a percentage of GDP, after tax corporate profits fell to 7.6 percent in Q4, from 8.3 in Q3. Tighter labor markets have increased upward pressure on wages, reducing net income for businesses. As mentioned in previous posts, labor share of output showed signs of improvement during 2015.
Personal consumption expenditures were revised upward from an already encouraging level, as households are bolstered by lower gas and energy prices, low inflation, and the tighter labor market. The current account deficit improved in Q4, shrinking to 2.6 percent of GDP. The federal deficit improved as well, falling to 3.8 percent of GDP, it’s lowest level since the financial crisis.
Oil was basically flat on the week. Equity markets were down, with the S&P 500 down 0.7 percent, and the Nasdaq composite index down half a percentage point. The average sales price for new houses fell in February. The U.S. Dollar strengthened against most major currencies, notably appreciating nearly two and a half percent against the Pound Sterling.
BD Economics 