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National and Arizona Economic Update

It was a busy week for data. Most of it was positive and indicates continued modest growth. Real gross domestic product–the output of goods and services produced by labor and property located in the U. S.–increased at an annual rate of 3.0% in the forth quarter of 2011 (that is from the third quarter to the forth quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 1.8%. Consumer confidence was also higher. The Conference Board Consumer Confidence Index, which had decreased in January, increased in February. The index now stands at 70.8 (1985=100), up from 61.5 in January. While the index is slightly down from a year ago, it is considerably higher than readings in the summer and fall of 2011.

Personal income increased by 0.3%, which is at 3.6% annual growth, in January. Disposable personal income increased by 0.1% and personal consumption expenditures (PCE) increased by 0.2% in January as well. While these rates of growth are slower than in December, they are still moving in the right direction. Vehicle sales continue to expand a good clip. Sales of autos and light trucks were up by 12.2% in January, 2012 over January, 2011. They were also up on a seasonally adjusted basis over December, 2011.

The Institute of Supply Management Index was 52.4 in February. This was a decrease of 1.7 points from January’s reading of 54.1. The index indicates continued expansion in the manufacturing sector. Indeed, February was the 31st consecutive month of manufacturing expansion. New orders for manufactured durable goods in January declined by 4.0%. The decrease followed three consecutive monthly increases. National jobless claims were modestly lower, continuing what has been a modestly positive trend. Construction spending during January 2012 was 0.1% below the December 2011 level but stood 7.1% above year earlier levels. For the month, private sector levels of spending on construction were virtually flat from December while public spending was modestly down.

Finally, the Case-Shiller home price indices (for both the 10 and 20 city index) fell in December. Both the 10 and 20 city composites fell by 1.1% in December over November and now stand about 4.0% below year earlier levels. The most interesting news, though, is that Phoenix was one of only two cities in the index that showed an increase in housing prices. Miami was the other. The index for Phoenix was up 0.8 in December over November. Phoenix also experienced an increase (0.6%) in November over October. Thus, it appears that the dynamics in terms of the balance of supply and demand in Greater Phoenix are becoming more positive.

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