Economic Week in Review: March 26-30, 2001
For investors who are trying to get a clear indication of where the
U.S. economy is headed, the reports issued during the final week of
March aren't much help. The week's releases provided a mixed bag of
data: Economic growth slowed, consumer confidence rebounded, orders for
big-ticket items continued to decline, and home sales dipped but
remained fairly strong. In the financial markets, the S&P 500 Index
rose 1.8% during the week to 1,160. The yield of the 10-year U.S.
Treasury note rose 11 basis points to 4.92% (as of 4:30 p.m. Friday).
The U.S. economy expanded at an inflation-adjusted annual rate of 1.0%
during the final three months of 2000. Growth in the nation's real
gross domestic product was a bit below earlier estimates but far below
the 2.2% rate registered in the third quarter and the 5.6% rate
recorded in the second quarter. For all of 2000, GDP growth was 5.0%,
the healthiest pace in 16 years. The slowdown in the fourth-quarter GDP
was attributed to a decline in consumer and business spending and, in
part, to the worsening trade deficit. However, despite the growth
slowdown and the continuing turmoil in the stock market, consumer
confidence rose in March, according to the Conference Board. The
surprising jump came almost exclusively from consumers' expectations
about the future. (The other component of the index--the "present
situation" index--barely moved.) The report represents a significant
turnaround from the past several months, when consumers seemed to feel
more angst about the future than the present.
Orders for durable goods fell again in February, providing further
evidence that many businesses are sharply cutting back their spending.
The decline of 0.2% follows a revised 7.3% decline in January. The
drop-off in orders for software and other types of new equipment was
particularly steep, though not unexpected.
The nation's housing market has cooled off a bit, but low mortgage
rates have kept activity relatively brisk. Sales of both new and
existing homes fell in February from January's levels. New-home sales
fell 2.4% in February to an annual rate of 911,000, while existing
homes registered a much smaller drop (0.4%) to an annual rate of 5.2
million. However, the pace of new-home sales was a bit higher than for
the same period a year ago, and sales of existing homes were not far
off the record high reached in mid-1998. The average rate for a 30-year
fixed-rate mortgage was 6.89% last week--almost two full percentage
points lower than it was last spring, according to the Federal Home
Loan Mortgage Corporation.
Personal income rose 0.4% in February, slightly outpacing the 0.3% rise
in personal spending, the Commerce Department said on Friday. The
growth in personal income--the amount households receive from wages,
dividends, interest, and Social Security--is a key indicator of
consumer demand. Comparing income growth and outlays can provide
insight into consumers' willingness and ability to spend in the future.
Among the reports due during the first week of April are releases on
manufacturing activity (Monday), factory orders (Tuesday), and consumer
credit and the unemployment rate (both on Friday).
Summary of Major Economic Reports: March 26-30, 2001
-----------------------------------------------------------------------
|Date Report Actual Expected 10-Year S&P 500 |
| Value Value Note Yield Index |
|---------------------------------------------------------------------|
|March 26 Existing-Home 5.2 5.0 |
| Sales million million |
| (February, |
| annualized) |
|---------------------------------------------------------------------|
| New-Home 911,000 915,000 +5 bp +1.1% |
| Sales |
| (February, |
| annualized) |
|---------------------------------------------------------------------|
|March 27 Consumer 117.0 104.9 |
| Confidence |
| (March) |
|---------------------------------------------------------------------|
| Durable-Goods -0.2% -0.3% +15 bp +2.6% |
| Orders (February) |
|---------------------------------------------------------------------|
|March 28 -3 bp -2.4% |
|---------------------------------------------------------------------|
|March 29 Real Gross +1.0% +1.1% |
| Domestic |
| Product (4Q |
| annual rate) |
|---------------------------------------------------------------------|
| Initial Jobless 362,000 375,000 +1 bp -0.5% |
| Claims (3/24) |
|---------------------------------------------------------------------|
|March 30 Personal +0.4% +0.3% |
| Income (February) |
|---------------------------------------------------------------------|
| Personal +0.3% +0.3% -7 bp +1.1% |
| Spending |
| (February) |
|---------------------------------------------------------------------|
| Weekly +11 bp +1.8% |
| Change |
-----------------------------------------------------------------------
bp = basis points.
Note: The economic statistics presented in this report are subject to
revision by the agencies that issue them. |
