Economic Indicators

By Clint Kennedy
June 24, 2011


This analysis uses the Bureau of Economic Data updated on June 24, 2011.  This update revised the first quarter data for 2011.

This is a brief analysis of the updated data from the BEA National Income and Product Accounts “Table 1.1.1. Percent Change From Preceding Period in Real Gross Domestic Product.”  The economic indicators are chosen from this table due to their importance and the significance of their change in value.  A more complete description of specific indicators and why they are important is given in the book Basic Economics Today. 

GDP had an annual percentage rate increase of 1.9 percent in the first quarter of 2011.  This is modest growth, but still moving in a positive direction.  Personal consumption expenditures had a 2.2 percent change.  The durable goods part of personal consumption had a 9.3 percent increase.  This is a significant economic indicator that the US has increased demand for longer lasting goods like cars and technological consumer items.  Gross private domestic investment increased 12.4 percent.  This bodes very well for future production and hiring.  In the investment category equipment and software had an 8.8 percent increase.  Nonresidential structures had a 14.8 decrease and residential housing had a decrease of 2.0 percent.  The agonizing real estate market recovery continues.  From the net exports of goods and services, export of goods increased 10.2 percent.  Government spending decreased 5.8 percent.  There was an 11.8 percent decrease in national defense spending.

Conclusions

US corporations are investing and growing.  Hiring will eventually increase which in turn will improve the real estate market in the long run.  The decreased state and federal government spending appears premature since we are growing only at a modest rate.  The Fed has represented that no aggressive action is necessary since the US has sound economic underpinnings.  The data appears to support this; however instead of lowering interest rates, the Fed needs to focus on improving the number of strong mortgage loans being made.   

Copyright © June 2011