Economic Week in Review: February 5-9, 2001
During a light week for economic releases, reports showed that consumer
borrowing dropped, layoffs increased, and the pace of productivity
gains declined. These latest indicators of a slowing economy were cited
by President Bush as a reason to act quickly on the tax-cut proposal he
submitted to Congress on Thursday. In the financial markets, the S&P 500
Index closed at 1,315, down 2.5% for the week, and the yield of the
10-year U.S. Treasury note fell 11 basis points to 5.03% (as of
4:30 p.m. Friday).
Productivity growth slowed to a 2.4% annualized rate in the fourth
quarter of 2000, according to the Labor Department. Although the growth
rate was below those reported for the two previous quarters, it was a
bit better than expected. And for all of 2000, productivity rose 4.3%,
the biggest annual gain since 1983. Productivity is a gauge of the
amount of goods and services that workers produce per hour of effort.
Gains in productivity are crucial to raising living standards over time.
Unit labor costs--which tie wage and benefit costs to productivity
levels and are an important indicator of inflationary trends--rose at
an annualized rate of 4.1% in the fourth quarter, compared with a
revised 3.2% increase in the third quarter. Analysts opined that the
increase was not enough to deter the Federal Reserve Board from
considering further efforts to stimulate the economy by lowering short-
term interest rates.
Americans were more wary of borrowing during December. Consumer credit
rose by $3 billion in December for an annualized rate of 2.4%, which
was considerably less than expected and a fraction of previous months'
increases. The growth rates for both revolving debt (mainly credit
cards) and nonrevolving debt (loans for autos, education, and home
improvements) declined sharply.
For the week ended February 3, some 361,000 Americans filed initial
claims for unemployment insurance, a higher-than-expected increase of
15,000 over the previous week. The four-week moving average, a more
accurate indicator of trends in the labor market, rose by 4,250 to
331,250.
The monthly Producer Price Index report, a gauge of wholesale
inflation, is due for release on Friday, February 16. Other reports
scheduled for the week of February 12 include retail sales (Tuesday),
business inventories (Wednesday), and housing starts and industrial
production (both on Friday).
Summary of Major Economic Reports: February 5-9, 2001
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|Date Report Actual Expected 10-Year S&P 500|
| Value Value Note Yield Index |
|---------------------------------------------------------------------|
|February 5 +1 bp +0.4% |
|---------------------------------------------------------------------|
|February 6 +4 bp -0.2% |
|---------------------------------------------------------------------|
|February 7 Consumer +$3.0 +$7.5 |
| Credit (December) billion billion |
|---------------------------------------------------------------------|
| Nonfarm +2.4% +2.2% |
| Productivity |
| (4Q) |
|---------------------------------------------------------------------|
| Unit Labor +4.1% +2.8% -1 bp -0.8% |
| Costs (4Q) |
|---------------------------------------------------------------------|
|February 8 Initial Jobless 361,000 349,000 -9 bp -0.6% |
| Claims (2/3) |
|---------------------------------------------------------------------|
|February 9 -6 bp -1.3% |
|---------------------------------------------------------------------|
| Weekly -11 bp -2.5% |
| Change |
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bp = basis points.
Note: The economic statistics presented in this report are subject to
revision by the agencies that issue them.
"Standard & Poor's(r)," "S&P(r)," "S&P 500(r)," "Standard & Poor's
500," and "500" are trademarks of The McGraw-Hill Companies, Inc.
(c) 2001 Vanguard Marketing Corporation, Distributor |
