Despite rebounding on Friday, stocks were lower for the week and Thursday’s close was barely positive for the month of April. On Wednesday and Thursday stocks received a one-two punch. Wednesday’s bad Q1 GDP number raised concerns about the strength of the economy and Thursday’s great unemployment claims number raised concerns about the FED raising interest rates. While I believe the US economy will likely gain momentum over the next couple of quarters the rebound is likely to be less than it was last year due to the headwinds of falling energy production and the strong dollar. Consumer spending and particularly housing will likely fuel this rebound.
This week, China unveiled a credit easing strategy to allow banks to exchange local-government bailout bonds for loans.
In particular this week:
- The Case Shiller home price index in February was up 4.2% from a year ago. In January prices were 4.4% from a year ago.
- The National Association of Realtors reported that pending home sales rose 1.1% in March. February pending home sales was revised upwards.
- The Commerce Department reported
- US 1st Quarter Gross Domestic Product came in at only 0.2% annual growth much less than the 1% expected. Business investment and exports both fell while consumer spending rose at a 1.9% pace. Inventories rose at a 0.74% rate. Severe winter weather in the Northeast and declining energy drilling activity were blamed for much of the slowness. Still from a year ago economic activity was
- US Consumer Spending rose 0.4% in March after increasing 0.2% in February. Net of inflation consumer spending rose 0.3% in March.
- The personal savings rate fell from 5.7% in February to 5.3% in March.
- The Labor Department reported
- First time claims for unemployment in the prior week fell to 262,000 down from a revised 296,000 in the prior week. This was the lowest weekly first time claims for unemployment since April 2000. The four week moving average of claims dropped 1,250 to 283,750.
- The employment cost index rose a seasonally adjusted 0.7% in the first quarter up from a reported 0.5% in the fourth quarter. Year over year labor costs rose 2.6%.