Several economic reports released on Thursday showed an economy that was growing and expanding even as some data hint at possible future weaknesses.
Real gross domestic product increased at an annual rate of 3.1% in the first quarter, according to the final estimate released by the Commerce Department’s Bureau of Economic Analysis.
In the preliminary first quarter estimate, the GDP increase was also reported at 3.1%. In the fourth quarter of 2018, GDP was reported gaining 2.2%.
Upward revisions to nonresidential fixed investment, exports, state and local government spending and residential fixed investment were offset by downward revisions to personal consumption expenditures (PCE) and inventory investment and an upward revision to imports.
The PCE price index increased 0.5%, compared with an increase of 1.5% in the fourth quarter. Excluding food and energy prices, the PCE price index increased 1.2%, compared with an increase of 1.8%.
“The third and final reading on first quarter U.S. GDP growth was an annualized 3.1%, unchanged from the second estimate,” said Scott Anderson, Chief Economist at Bank of the West Economics. “However, the composition of growth shifted with upward revisions to business investment spending, exports and government spending offsetting a downward revision to consumer spending. The 0.9% annualized advance in consumer spending in Q1 was the weakest since the 0.5% increase in the first quarter of 2018.”
Jobless claims rose 10,000 to 227,000 in the week ended June 22, according to the Labor Department.
The four-week average rose to 221,250, its highest in more than a month. Continuing claims, which are reported with a one-week lag, rose by 22,000 to 1.69 million in the week ended June 15.
In the housing sector, pending home sales increased 1.1% to 105.4 in May from 104.3 in April, according to the National Association of Realtors.
Lower-than-usual mortgage rates led to the increase, said Lawrence Yun, NAR’s chief economist. “Rates of 4% and, in some cases even lower, create extremely attractive conditions for consumers,” he said. “Buyers, for good reason, are anxious to purchase and lock in at these rates.”
Three of the four major regions in the U.S. saw growth in contract activity, with the West experiencing a slight sales decline, according to the NAR.
Yun said that while contract signings and mortgage applications were up, there was still a great need for more inventory.
“Home builders have not ramped up construction to the extent that is needed,” he said. “Homes are selling swiftly, and more construction will help keep home prices manageable and thereby allow more middle-class families to attain ownership opportunities.”
Meanwhile, the weekly Bloomberg Consumer Comfort Index rose 1.8 points to 63.6 in the week ended June 23.
Bloomberg News said the weekly measure of Americans’ sentiment hit its second-highest level since 2000, “adding to indications consumers remain generally upbeat even as respondents said in a monthly poll that they were somewhat less upbeat about their expectations for the economy.”
