First quarter GDP growth revised down to 2.2 percent in second estimate

Real gross domestic product (GDP) increased at an annual rate of 2.2 percent in the first quarter of 2018 according to the "second" estimate released by the Bureau of Economic Analysis. In the advance estimate, the increase was 2.3 percent. In the fourth quarter of 2017, real GDP increased 2.9 percent.

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First quarter 2018 GDP growth of 2.3 percent in first of three estimates

Real gross domestic product (GDP) increased at an annual rate of 2.3 percent in the first quarter of 2018 according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.9 percent.  The "second" estimate for the first quarter, based on more complete data, will be released on May 30, 2018.

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Third quarter GDP rose at 3.2 percent in third and final estimate

Real gross domestic product (GDP) increased at an annual rate of 3.2 percent in the third quarter of 2017 according to the "third" estimate released by the Bureau of Economic Analysis. With this third estimate for the third quarter, personal consumption expenditures increased less than previously estimated, but the general picture of economic growth remains the same.

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Second quarter GDP growth rises to 3.0 percent in second estimate

Real gross domestic product (GDP) increased at an annual rate of 3.0 percent in the second quarter of 2017 according to the "second" estimate released by the Bureau of Economic Analysis. The second GDP estimate is based on more complete source data than were available for the "advance" estimate issued last month.  In the advance estimate, the increase in real GDP was 2.6 percent.

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First quarter GDP growth rose to 1.4 percent in final estimate

Real gross domestic product (GDP) increased at an annual rate of 1.4 percent in the first quarter of 2017 according to the "third" estimate released by the Bureau of Economic Analysis. In the second estimate, the increase in real GDP was 1.2 percent. With the third estimate for the first quarter, personal consumption expenditures (PCE) and exports increased more than previously estimated.

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Initial estimate: Corporate profits dipped sharply in 1Q 2017

Profits from current production (corporate profits with inventory valuation adjustment and capital consumption adjustment) decreased $40.3 billion in the first quarter, in contrast to an increase of $11.2 billion in the fourth quarter of 2016.

First quarter GDP growth revised up from 0.7 to 1.2 percent in second estimate

Real gross domestic product (GDP) increased at an annual rate of 1.2 percent in the first quarter of 2017 according to the "second" estimate released by the Bureau of Economic Analysis. In the advance estimate, the increase in real GDP was 0.7 percent.  In the fourth quarter, real GDP increased 2.1 percent.

The GDP estimate released today is based on more complete source data than were available for the

"advance" estimate issued last month.

With this second estimate for the first quarter, the general picture of economic growth remains the same; increases in nonresidential fixed investment and in personal consumption expenditures (PCE) were larger and the decrease in state and local government spending was smaller than previously estimated. These revisions were partly offset by a larger decrease in private inventory investment.

Second quarter 2016 GDP rose at 1.2 percent in advance estimate

Real gross domestic product increased at an annual rate of 1.2 percent in the second quarter of 2016 according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.8 percent.

The Bureau emphasized that the second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source. The "second" estimate for the second quarter, based on more complete data, will be released on August 26, 2016.

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2014 Forecast: Positive Signs Indicate Strong Economic Growth

Recently, the Bureau of Economic Analysis announced that their third estimate of GDP growth in the third quarter of 2013 – which includes more complete source data than in the first two estimates – leaped to 4.1 percent, which is great news for an economy in which 3.0 percent is considered fairly robust.  Still, much of this increase was due to private companies re-stocking inventories or investing in future production, so GDP growth in the fourth quarter will likely be more constrained.

Looking forward to 2014, however, the U.S. economy seems poised to grow at the fastest rate since the dawn of “The Great Recession,” with GDP growth averaging 3.0 percent versus the plodding 2.0 percent rate with which we’ve been saddled over the past 4.5 years.  In turn, this projected rate of growth could push up monthly job growth to 250,000 versus 190,000 over the past years.

Should that occur, then the country would actually regain all of the jobs lost by the end of 2014, thereby pushing the unemployment rate closer to 6.0 percent or even 5.5 percent.  For those with a bachelor’s degree or higher, the rate is now down below 4 percent, which has helped to improve household incomes for the first time since 2007.  Employment gains are also starting to trickle down to lesser-skilled jobs, with the unemployment rate for workers without a high school degree falling two percentage points over the last year.

Even problems outside the U.S. seem to be getting slowly fixed, with most European economies improving and positive GDP growth for the European Union.  In addition, better growth in China and Japan should help bolster U.S. exports, especially since a dollar which is 25 percent cheaper than a decade ago makes our products even more globally competitive.

Still, for the housing market there remain a host of mixed signals.  One reason for the still-subdued pace of homebuilding is due to continued regulatory uncertainty in the banking sector due to the Dodd-Frank Act being incomplete, thus leaving many lenders in limbo and less willing to lend versus previous economic recoveries.

On January 10^th, new mortgage rules set forth by the Consumer Financial Protection Bureau will certainly impact the ability of some potential homeowners to obtain the type of ‘qualified mortgages’ (no longer than 30 years, fees and points no more than 3 percent of the loan amount, no negative amortization or interest-only programs) eligible for purchase by Fannie Mae and Freddie Mac. 

While the actual impact on lending is difficult to predict, the Mortgage Bankers Association has reported that many loan programs which allow for more than a 95 loan-to-value ratio and low- to mid-range FICO scores have either been discontinued or had the requirements adjusted accordingly. The data company Corelogic has also estimated that up to 12.8 percent of new mortgages made in 2012 would not meet the new “qualified mortgage” standard.

Particularly vulnerable are young people hoping to afford their mortgages by betting on future raises, since it will soon be harder to obtain an adjustable-rate loan because the new rules require lenders to estimate how high the rate and payment may rise over the life of loan instead of simply underwriting on the teaser rate alone.

Still, if the last few years have been the domain of the housing investor, next year is likely to be the year of the repeat home buyer, fueled in large part by existing owners who have finally regained enough equity to consider moving up to larger quarters.  Nonetheless, the combination of more supply listed for sale, higher mortgage rates and fewer investors in the marketplace will likely mean a more subdued rate of price appreciation (i.e., close to five percent in 2014 versus over 10 percent in 2013).

According to NAR Economist Lawrence Yun, higher mortgage rates – which could approach 5.5 percent by the end of the year -- will cause refinancings to decline sharply in 2014, forcing banks to increase their originations to make up for the shortfall.   NAR is projecting existing home sales to closely mimic the 5.12 million estimated for 2013, while limited inventory will continue to push up prices.

For new homes, the NAHB is projecting a 30 percent rise over 2013 levels to over 840,000 single-family starts, with a lesser increase of about six percent in multi-family starts to nearly 320,000 units.  Finally, the remodeling industry will also continue to grow in 2014, albeit much more slowly than for new construction, projected at 1.7 percent versus 2.4 percent in 2013.

In other words, Happy New Year!