The stat collectors released many data points over the past week. This note walks through a few charts we found interesting.
The graphic below breaks up the five components of the U.S. Gross Domestic Product (blue line) to show the contribution made by each sector. Fourth quarter GDP came in at 2.6%, slightly below expectations and down from 4.1% in the third quarter. Personal consumption was solid while the inventory build in the third quarter predictably had companies pulling back in the fourth. Economic growth remains on track, though lackluster.
Since the sectoral financial balances simply account for whether each sector ran a surplus or deficit, by definition, it must sum to zero. The government deficit declined dramatically (see the increase in the blue line) over the past three years. The rest of the world runs a much lower surplus today, especially compared to the early to mid-2000s. Because not every country can be a net exporter, the lack of surplus is a byproduct of slowing growth in many emerging markets. The household sector continues to run a high surplus, especially compared to the previous decade.
Residential housing detracted from growth for the first time since 2010 during the fourth quarter. Higher mortgage rates relative to a year ago held back mortgage applications and investment in the sector. This occurred with the average 30-year conventional mortgage rate at 4.5%. It is hard to believe 14 years ago, mortgage rates were double at nearly 9% yet so was the mortgage application index level. Today the index is at its lowest levels since 1996 with the peak in 2006 during the housing bubble.
Finally, initial jobless claims improved again this week, hopefully foreshadowing a solid monthly jobs report for March (which comes out . One of our managers noted the increasing importance of the weekly claims data now that the Federal Reserve removed the Unemployment rate as a key metric at last week's Fed meeting. The inverse of the series is plotted below, which neatly tends to follow the S&P 500 price index over long periods.
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