Reducing Speed: April 22 – 26

Economic growth slowed in early 2024.Here are the five things we learned from U.S. economic data released during the week ending April 26.

GDP decelerated in Q1. The Bureau of Economic Analysis (BEA) estimates real Gross Domestic Product (GDP) grew at a seasonally adjusted annualized rate (SAAR) of 1.6 percent. This represented a sharp decline from the two previous quarterly gains of 4.9 percent and 3.4 percent. The slower economic expansion resulted from decelerating growth in consumer spending, exports, and state/local government spending, along with a drop in federal government expenditures. Contributing to Q1 GDP growth were (in descending order) consumer spending, fixed residential and nonresidential investment, exports, and state/local government. Dragging GDP were the change in private inventory accumulation and federal government spending. The BEA will revise its Q1 GDP estimate twice over the past two months.

Economic growth in March held close to its historical average. The Chicago Fed National Activity Index (CFNAI) added six basis points to +0.15. A reading above zero indicates the U.S. economy expanded faster than its historical average. Fifty of the CFNAI’s 85 components positively contributed to the index, with the other 35 weighing on the measure. Among the four major component categories, those associated with production and employment made positive contributions, those linked with sales/orders/inventories made a neutral contribution, and those for personal consumption/housing had a slight negative impact. The CFNAI’s three-month moving average improved by nine basis points to -0.19 (signaling below-average economic growth).

Gains in personal spending and prices in March matched those from the prior month. Real Personal Consumption Expenditures (PCE) jumped a seasonally adjusted 0.5 percent, mirroring its February increase. The Bureau of Economic Analysis indicates that goods expenditures jumped 1.1 percent, with sizable advances for both durables (+0.9 percent) and nondurables (+1.3 percent). Spending on services increased 0.2 percent. Without inflation adjustments, nominal PCE rose 0.8 percent, above the 0.5 percent increase for both nominal personal income and disposable income. Adjusted for price variation, real disposable income grew 0.2 percent. The savings rate fell by 4/10^ths of a percentage point to +3.2 percent. Real PCE has grown 3.3 percent, well ahead of the 1.4 percent advance in real disposable income. The Federal Reserve’s preferred inflation measures, the PCE price and the core PCE price index, both came in at +0.3 percent (matching their February readings). Over the past year, the PCE price index has grown 2.7 percent, while the core PCE price index was up +2.8 percent. Both were above the Fed’s two-percent inflation target.

A slight slip in consumer sentiment in April. The University of Michigan’s Index of Consumer Sentiment lost 2.2 points to a seasonally adjusted 77.2 (1966Q1=100). The index remained 21.2 percent above year-ago levels. The current conditions index shed 3.5 points to 79.0 (+15.3 percent versus April 2023), while the expectations measure added 1.6 points to 76.0 (+25.4 percent versus April 2023). One-year inflation expectations grew by 3/10^ths of a percentage point to +3.2 percent, while longer-term expected inflation increased by 2/10^ths of a percentage point to +3.0 percent.

Beyond transportation goods, durable goods orders grew modestly in March. The Census Bureau estimates new orders for manufactured durable goods jumped 2.6 percent to a seasonally adjusted $283.4 billion. Transportation orders surged 7.7 percent, boosted by gains for civilian (+30.6 percent) and defense aircraft (+2.6 percent), and motor vehicles (++2.1 percent). Net of transportation orders, core durable goods orders edged up 0.2 percent. Rising were orders for computers/electronics goods, fabricated metal products, and machinery. Shipments held steady at $282.4 billion, unfilled orders swelled 0.4 percent to $1.397 trillion, and inventories held steady at $527.9 billion.

Other U.S. economic data released over the past week:

• Jobless Claims (Week ending April 20, 2024, First-Time Claims, seasonally adjusted): 207,000, -5,000 vs. the previous week, -2,000 vs. the same week a year earlier). 4-week moving average: 213,250 (-1.8% vs. the same week a year earlier).
• New Home Sales (March 2024, Sales of New Single-Family Homes, seasonally adjusted annualized rate): 693,000 (+8.8% vs. February 2024; +8.3% vs. March 2023).
• Pending Home Sales (March 2024, Index (2001=100), seasonally adjusted): 78.2 (February 2024: 75.6; March 2023:
• Bankruptcy Filings (12-Month Period Ending March 31, 2024, Bankruptcy Filings): 467,774 (+16.0% vs. 12-Month Period Ending March 31, 2023).

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