GDP & Jobless Claims Show No Signs Of A Recession
What recession? Fourth-quarter GDP and jobless claims are not showing any indication of a recession anytime soon. The economy slowed slightly but was still almost 3.0% as we closed out 2022, according to the Bureau of Labor Statistics.
- The economy was growing at a 2.9% clip in the fourth quarter of 2022, down slightly from the 3.2% reading in Q3 but it was well above Q1 (-1.6%) and Q2 (-0.6%).
- Consumer spending fell slightly to an annual rate of 2.1%, this is down from last quarter’s revised rate of 2.3% but was higher than Q1(+2.0%) or Q2 +1.3%).
Housing Is A Drag. Spending on household consumption added 1.01% to the topline number but that was more than offset by a 1.29% subtraction in residential investment.
- Consumer spending was responsible for almost half of the 2.9% growth this month by adding 1.42% to the top line number. Most of that was service spending which was 1.16% vs 0.26% for goods.
- Inventory restocking played an outsized role in Q4 adding 1.46% to the topline number, much higher than last quarter’s 1.19% subtraction and the biggest addition since Q4 of 2021.
While GDP was a surprise, jobless claims for the week were a much bigger surprise with jobless claims falling to the lowest since April 2022, according to the weekly survey from the Department of Labor.
- The advance figure for seasonally adjusted initial jobless claims was 186,000, this is a drop of 6,000 from last week and the lowest level since April 2022 when claims fell to 168,000.
- This beat economists’ projections of an increase to 205,000 claims.
Continuing Claims. Unfortunately, continuing claims jumped for the week to 1.675M for the week ending January 14th, this is 20k higher than last week and is up over 300k from the lows we saw in the fall of 2022.
BOTTOM LINE: While layoffs have picked up, especially in the tech and housing sector, the labor market is showing no signs of a significant cooldown and a 2.9% annualized growth rate means the economy is showing no signs of a recession.
