Daily Economic Update: GDP, Jobless Claims

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights the GDP, Pending Home Sales, and jobless claims.

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  The initial estimate of GDP growth in the 1^st quarter was released this morning and revealed an annualized increase of 1.8% from the 4^th quarter, well below the 3.1% growth rate between the 3^rd and the 4^th quarters.  Personal consumption and exports were both positive, but eased from the 4^th quarter.  Non-residential fixed investment eased from 7.7% to 1.8% between the 4^th and 1^st quarters, while residential fixed investment fell 4.1% after rising 3.3% in the 4^th quarter.
• Pending home sales rose 5.1% in March.  The index is 11.4% below the same period in 2010 when the Federal tax credit was in place. This increase is the 6^th in the last 9 months and reflects the change in the number of homes that went under contract in March and are likely to close in April or May.  Pending home sales have been choppy over the last 9 months, but they are pointed in a decadently positive direction.
• Jobless claims for the week ending April 23^rd revealed a 25,000 increase to 429,000.  The 4-week average of 408,500 was 15,000 higher than a month earlier.  Florida reported an increase of 2,753 claims, but there was also a nationwide increase of 8,308 newly discharged veterans claiming benefits this week versus the prior week.  Claims are above the critical 400,000 mark, the level at which more jobs are being created than cut, placing upward pressure on the unemployment rate.
• GDP growth fell sharply in the 1^st quarter of 2011 after a strong finish to 2010.  The decline in construction and exports will likely impact employment, which is already reflected in the upward trend in unemployment insurance claims.  Rising fuel and food prices as well as concerns about supply-chains that run from the tsunami and nuclear impacted areas of Japan to the United States likely took a toll on both consumer and business spending in the 1^st quarter.  However, demand for housing has been on the rise as investors snap up bargain priced properties.  Investor purchases are important during this economic soft patch as they will help to reduce the supply of housing, which will move the market to move a price floor.