Economic Growth Beats Forecasts, Jobless Claims Drop

What Thursday’s Economic Reports Tell Us

People walking on a city street wearing face masks.

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Economic growth accelerated to 6.9% in the fourth quarter, and a weekly measure of unemployment improved for the first time in four weeks, reports showed Thursday.

Here’s a quick look at the most significant economic indicators of the day and what they tell us.

4th Quarter Gross Domestic Product

  • The U.S. economy gained steam in the fourth quarter, with gross domestic product growing at an annualized pace of 6.9%, up from 2.3% in the third quarter, the Bureau of Economic Analysis estimated.
  • The growth was bigger than the 5.8% economists expected, but some warned that the rebound in economic output was just a temporary reprieve between the delta and omicron waves of COVID-19. The surge in virus cases from the delta variant sapped consumer spending in the third quarter, and fallout from the omicron spike—which wasn’t in full force until late December—may keep first-quarter growth at under 2%, said CIBC Economics.

Initial Jobless Claims

  • The number of people who started claiming unemployment insurance last week fell for the first time in four weeks, dropping by 30,000 to 260,000, the Department of Labor reported.
  • Claims finally returned to pre-pandemic levels late last year, but had been rising in recent weeks as a spike in COVID-19 cases triggered more layoffs, economists said. “The Omicron variant of COVID-19 grip on the U.S. labor market is beginning to loosen,” said Ryan Sweet, senior director at Moody’s Analytics.

Orders of Durable Goods 

  • Orders for durable goods from U.S. manufacturers—things like cars, appliances, and computers—declined 0.9% to $267.6 billion in December, the first decrease in three months, the Census Bureau reported.
  • This indicator, which shows the health of the manufacturing sector, is also useful for measuring economic trends because it shows how confident consumers and businesses are making major purchases.
  • The decline was more than the 0.2% drop economists had expected, and was driven by weakness in the transportation sector, which saw a 14.4% plunge in civilian aircraft orders. That sector is prone to large swings, however–it had gained 41.9% in November.

Pending Home Sales 

  • A leading indicator of how many homes are selling fell for the second month in a row in December. The volume of pending home sales—essentially contract signings—dropped 3.8% as buyers grappled with high prices, rising mortgage rates, and a severe lack of homes on the market.
  • The decline is a sign that properties are becoming less affordable, especially among middle- and lower-income buyers.

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  1. Bureau of Economic Analysis. “Gross Domestic Product, Fourth Quarter and Year 2021 (Advance Estimate.”

  2. Moody’s Analytics. “GDP.” 

  3. Department of Labor. “Unemployment Insurance Weekly Claims.” 

  4. Moody’s Analytics. “Jobless Claims.” 

  5. Census Bureau. “Monthly Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders December 2021.”

  6. Census Bureau.  “Why New Data on Durable Goods Matter.”

  7. Moody’s Analytics. “Durable Goods.”

  8. National Association of Realtors. “ Pending Home Sales Slide 3.8% in December.”

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