First Snapshot of US Economy for New President Due Out this Week

by Timothy S. O’Neil, SVP, Trust Investment Officer CFP®, CTFA

Friday morning will see the announcement of the initial estimate of the growth in Gross Domestic Product (GDP) for the first quarter of 2017.

economy, Trump, Q1 GDP, Wealth Management, Financial news., GDP

Our first look at the Trump Economy comes out this week, with the preliminary Q1 GDP. Expect any number above 2% to be considered a victory and in keeping with Historical growth.

While this number will be dissected for meaning by the stock and bond markets, it is an unfortunate fact that the initial estimate and the third and final estimate of GDP are often very different, so much of the early analysis may have to be revised over the next couple of months.  Still, it is an important indicator.  If the economy ever grows faster on a consistent basis than the 1-2% it has been able to manage for most of the time since the recession ended in 2009, so much would be possible: tax cuts or other government fiscal actions which could lead to higher corporate profits making possible higher wages and therefore higher consumer spending—all paid for by increased tax revenue from the higher level of activity, a virtuous circle.  During the 1980’s under the Reagan and Clinton administrations, in fact, for much of American post-World War II history, 3% GDP growth was the norm and not the exception.  Friday we will get the first reading on 2017—and with a consensus estimate of only +1.1%, the economy, it seems, is still a long way from peak performance.

FOCUS ON…leading indicators. 

Calculated by the Conference Board, this is a financial index of ten different data series which historically have moved up or down ahead of the broad economy as a whole.  It is comprised of such things as building permits, new factory orders, and unemployment claims.  While no individual reading will ring a bell, as it were, at the top or the bottom, the broad trend has been helpful to investors by providing a reading on the state of the economy and overall financial health.

ECONOMIC INDICATORS DUE THIS WEEK

MONDAY

None Expected

TUESDAY

  • Federal Housing Finance Agency (FHFA) House Price Index (HPI)
    • Previous (January):                                                           unchanged
    • Expected (February):                                                              +0.4%
  • Case-Shiller Home Price Index
    • Previous (February):                                                               +0.9%
    • Expected (March):                                                                   +0.6%

 

  • New Home Sales (seasonally adj. annualized rate, in thousands)
    • Previous (February):                                                             592
    • Expected (March):                                                                 584
  • Conference Board Consumer Confidence Index
    • Previous (March ):                                                                 125.6
    • Expected (April):                                                                    123.6

WEDNESDAY

  • Mortgage Bankers’ Association Mortgage Applications
    • Purchases, previous:                                                                 -3.0%
    • Refinances, previous:                                                              +0.2%
  • EIA Petroleum Status Report (in millions of barrels)
    • Crude oil inventories (change week ended 4/14):               -1.0
    • Gasoline (change week ended 4/14):                                     +1.5
    • Distillates (change week ended 4/14):                                   -2.0

THURSDAY

  • Initial Unemployment Claims
    • Previous (week ended 3/25):                                          244,000
    • Expected (week ended 4/8):                                           243,000
  • Durable Goods Orders (all items)
    • Previous (February):                                                                  +1.7%
    • Expected (March):                                                                      +1.1%

Thursday (cont.)

  • Durable Goods Orders (excluding transportation)
    • Previous (February):                                           +0.4%
    • Expected (March):                                               +0.4%
  • International Trade in Goods ($billions)
    •  Previous (February):                                       -$64.8
    • Expected (March):                                            -$65.3
  • National Association of Realtors Pending Home Sales Index
    • Previous (February):                                            +5.5%
    • Expected (March):                                                -0.4%
  • Energy Information Administration (EIA) Natural Gas Report (in billions of cubic feet)
    • Previous (change for week ended 4/14):           +54

 

FRIDAY

  • Q1 2017 Gross Domestic Product (initial estimate; there will be two more)
    • Previous (Q4 2016):                                              +2.1%
    • Expected:                                                                 +1.1%
  • Real Consumer Spending (annualized rate)
    • Previous (Q4 2016):                                              +3.5%
    • Expected (Q1 2017):                                              +0.7%
  • Employment Cost Index
    • Previous (Q4 2016):                                              +0.5%
    • Expected (Q1 2017):                                              +0.6%
  • University of Michigan Consumer Sentiment Index
    • Previous (April “flash” or preliminary reading):        98.0
    • Expected (April final):                                                      98.0
  • Baker-Hughes Rig Count
    • N.A. rig count (previous, week ended 4/21):          956
    • U.S. rig count (previous, week ended 4/21):          857
    • GoM rig count (previous, week ended 4/21):           20
    • Canada rig count (previous, week ended 4/21):      99

Source: Wall Street Journal Market Data Center       Not FDIC Insured—May Lose Value—No Bank Guarantee

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