Key Economic Indicators – June 1, 2020

RealGDPdecreased at an annual rate of 5.0% in the first quarter of 2020, according to the “second” estimate by the Bureau of Economic Analysis. In the fourth quarter of 2019, real GDP increased 2.1%. In the advance estimate, released a month ago, the increase in real GDP was 4.8% for the first quarter. Real final sales of domestic product (GDP less change in private inventories) decreased 3.7% in the first quarter, in contrast to an increase of 3.1% in the final quarter of 2019.
Real gross domestic income (GDI) decreased 4.2% in the first quarter of 2020, compared with an increase of 3.1% in the final quarter of 2019. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, decreased 4.6% in the first quarter, compared with an increase of 2.6% in the fourth quarter of 2019.
The price index for gross domestic purchases increased 1.7% in the first quarter of 2020, compared with an increase of 1.4% in the previous quarter. The personal consumption expenditures (PCE) price index increased 1.3%, compared with an increase of 1.4%. Excluding food and energy prices, the PCE price index increased 1.6%, compared with an increase of 1.3%.
Corporate profits from current production decreased $295.4 billion in the first quarter of 2020, after an increase of $53.0 billion in the fourth quarter of 2019. Profits of domestic financial corporations increased $67.4 billion in the first quarter, in contrast to an increase of $0.7 billion in the previous quarter. Profits of domestic nonfinancial corporations decreased $169.5 billion, compared with an increase of $53.7 billion in the previous quarter. The rest-of-the-world component of profits decreased $58.6 billion in the first quarter, following a decrease of $1.4 billion.
Personal income increased 10.5% in April, following a 2.2% decrease in the previous month. Personal consumption expenditures decreased 13.6%, after a 6.9% decrease in the previous month, according to the U.S. Bureau of Economic Analysis (BEA) . Real disposable personal income increased 13.4% in April, while real personal consumption expenditures decreased 13.2%. The savings rate, personal saving as a percentage of disposable income, was 33.0% in April, up from 12.7% in March. The price index for personal consumption expenditures decreased 0.5% in April, after a decrease of 0.2% in March. The core index decreased 0.4%, after holding steady in the previous month. The price index for personal consumption expenditures was up 0.5% from April 2019, while the core index was up 1.0%. BEA stated: “The April estimate for personal income and outlays was impacted by the response to the spread of COVID-19, as federal economic recovery payments were distributed, and governments continued with “stay-at-home” orders. The full economic effects of the COVID-19 pandemic cannot be quantified in the personal income and outlays estimate for April because the impacts are generally embedded in source data and cannot be separately identified.”
New orders for manufactured durable goods in April decreased 17.2%, according to the U.S. Census Bureau, following a 16.6% March decrease. Excluding transportation, new orders decreased 7.4%. Excluding defense, new orders decreased 16.2%. New orders for transportation equipment decreased 47.3%. Shipments of manufactured durable goods in April, decreased 17.7%, following a 5.5% decrease in March. Transportation equipment led the decrease by $31.4 billion or 42.7%. Unfilled orders for manufactured durable goods in April, down two consecutive months, decreased $17.5 billion or 1.6% to $1,107.8 billion. Inventories of manufactured durable goods in April increased 0.2%, following a 0.6% March increase.
Retail inventories for April, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $644.9 billion, down 3.6% from March 2020, and were down 3.1% from April 2019.
Wholesale inventories for April, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $651.5 billion, up 0.4% from March 2020, but were down 2.6% from April 2019.
The international trade deficit was $69.7 billion in April, up $4.7 billion from $65.0 billion in March. Exports of goods for April were $95.4 billion, $32.2 billion less than March exports. Imports of goods for April were $165.0 billion, $27.5 billion less than March imports.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 4.4% annual gain in March, up from 4.2% in the previous month. The 10-City Composite annual increase came in at 3.4%, up from 3.0% in the previous month. The 20-City Composite posted a 3.9% year-over-year gain, up from 3.5% in the previous month. Phoenix, Seattle and Charlotte reported the highest year-over-year gains among the 19 cities (excluding Detroit for the month). In March, Phoenix led the way with an 8.2% year-over-year price increase, followed by Seattle with a 6.9% increase and Charlotte with a 5.8% increase. Seventeen of the 19 cities reported higher price increases in the year ending March 2020 versus the year ending February 2020. It was stated that “Housing prices have not yet registered any adverse effects from the governmental suppression of economic activity in response to the COVID-19 pandemic. As much of the U.S. economy remained shuttered in April, next month’s data may show a more noticeable impact.”
U.S. house prices rose in the first quarter of 2020, up 1.7% according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). House prices rose 5.7% from the first quarter of 2019 to the first quarter of 2020. FHFA’s seasonally adjusted monthly index for March was up 0.1% from February. Of the nine census divisions, the Mountain division experienced the strongest four-quarter appreciation, posting an 8.0% gain between the first quarters of 2019 and 2020 and a 2.5% increase in the first quarter of 2020. Annual house price appreciation was weakest in the West South Central division, where prices rose by 4.3% between the first quarters of 2019 and 2020. It was stated: “Because of the lag between contract signing and sale closing when our data are recorded, we judge the first quarter’s housing statistics were relatively unaffected by the COVID-19 outbreak. However, we are unable to account for any modifications or cancellations of sales later in March.”
Sales of new single-family houses in April were at a seasonally adjusted annual rate of 623 thousand, according to the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.6% above the figure for March but is 6.2% above the April 2019 level. The seasonally adjusted estimate of new houses for sale at the end of April was 325,000. This represents a supply of 6.3 months at the current sales rate, compared with 6.1 months in April 2019. The median sales price of new houses sold in April 2020 was $309.9 thousand, down 8.6% from April 2019. The average sales price was $364.5 thousand, down 5.4% from a year ago.
The results of Freddie Mac’s Primary Mortgage Market Survey showed that mortgage rates hit the lowest levels in survey’s nearly 50-year history, breaking the record for the third time in just the last few months. 30-year fixed-rate mortgage averaged 3.15% for the week ending May 28, down from last week when it averaged 3.24%. A year-ago, the 30-year rate was 3.99%. 15-year fixed-rate mortgage averaged 2.62%, down from last week when it averaged 2.70%. A year-ago at this time, the 15-year rate averaged 3.46%.
Mortgage applications increased 2.7% from a week earlier, according to data from Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending May 22,2020.
The advance figure for initial claims for unemployment insurance decreased 323 thousand to 2,123 thousand in the week ending May 23. The 4-week moving average was 2,608 thousand, a decrease of 436 thousand from the previous week’s revised average. The advance number for seasonally adjusted insured unemployment (ongoing) during the week ending May 16 was 21,052 thousand, a decrease of 3,860 thousand from the previous week’s revised level. The 4-week moving average was 22,722.25 thousand, an increase of 760.25 thousand from the previous week’s revised average. The advance seasonally adjusted insured unemployment rate was 14.5% for the week ending May 16, a decrease of 2.6 percentage points from the previous week’s revised rate. It was stated that: “The COVID-19 virus continues to impact the number of initial claims and insured unemployment. This report now includes information on claimants filing Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation claims.”
Labor productivity rose in 14 of 29 selected service-providing industries in 2019, according to the U.S. Bureau of Labor Statistics. This was one-third fewer industries compared to 2018 when labor productivity increased in 21 of 29 industries. Output increased in 17 industries in 2019 while hours worked increased in 18 industries. Hours worked grew in 18 of the 29 industries.
Interaction with the general public was required for 75.3% of civilian workers in 2019, according to the Bureau of Labor Statistics. For workers in office and administrative support occupations, 86.5% were required to interact with the general public. Within this occupational group, 61.3% of payroll and timekeeping clerks and 100% of bill and account collectors had this requirement.
The FED’s “Beige Book” indicated that overall economic activity declined in all Districts as a result of the COVID-19 pandemic. Declines were especially severe in the leisure and hospitality sector, with very little activity at travel and tourism businesses. Most Districts reported sharp drops in manufacturing activity, and production was notably weak in auto, aerospace, and energy-related plants. Residential home sales plunged due in part to fewer new listings and to restrictions on home showings in many areas. Construction activity also fell as new projects failed to materialize in many Districts. Employment continued to decrease in all Districts, including steep losses in most Districts, as social distancing and business closures affected employment at many firms. Securing PPP loans helped many businesses to limit or avoid layoffs, although employment continued to fall sharply in retail and in leisure and hospitality sectors. Pricing pressures varied but were steady to down modestly on balance. Weak demand weighed on selling prices, with some contacts noting discounting for apparel, hotel rooms, and airfare. Several Districts also reported low commodity prices, including oil, steel, and several agricultural commodities. Supply chain disruptions and strong demand led to higher prices for some grocery items including meat and fresh fruit.
The Chicago Fed National Activity Index (CFNAI) fell to negative 16.74 in April from negative 4.97 in March. All four broad categories of indicators used to construct the index made negative contributions in April, and all four categories decreased from March. The index’s three-month moving average, CFNAI-MA3, decreased to negative 7.22 in April from negative 1.69 in March. Following a period of economic expansion, an increasing likelihood of a recession has historically been associated with a CFNAI-MA3 value below negative 0.70.
The Chicago Fed’s National Financial Conditions Index (NFCI) was negative 0.51 in the week ending May 22, down from negative 0.45. Risk indicators contributed negative 0.22, credit indicators contributed negative 0.20, and leverage indicators contributed negative 0.09 to the index in the latest week. The adjusted index (ANFCI), which isolates a component of financial conditions uncorrelated with economic conditions to provide an update on financial conditions relative to current economic conditions, edged down in the latest week to 0.10 from a revised 0.13. Risk indicators contributed negative 0.33, credit indicators contributed negative 0.33, leverage indicators contributed negative 0.04, and the adjustments for prevailing macroeconomic conditions contributed 0.80 to the index in the latest week.
The Federal Reserve Bank of Philadelphia Nonmanufacturing Business Outlook Survey for May indicate continued weakness in nonmanufacturing activity in the region. Despite remaining well below zero, the survey’s current indicators for general activity at the firm level, new orders, sales/revenues, and full-time employment all increased this month after reaching all-time low readings in April. The firms continued to report overall decreases in prices of both their inputs and their own goods and services for the second consecutive month. The survey’s index for firm-level future activity returned to positive territory and suggests optimism about growth over the next six months.
The Philadelphia FEDlaunched a weekly business outlook survey on COVID-19. The survey (151 firms) for the week ending on May 24^th indicated that nearly 60% of all responding firms reported decreases of more than 5% in new orders or sales (down from 64% last week), while 8% reported increases of more than 5% (up slightly from the previous week). Nearly 58% of the firms reported shifting to telecommuting/work from home in response to COVID-19 impacts (down slightly from last week), and 39% reported ceasing all hiring (down slightly). Nearly 46% of the firms noted fear of infection (up from 34% when asked two weeks ago), 39% of the firms noted lack of childcare, and 23% noted expanded unemployment benefits as impediments to bringing back workers.
The Federal Reserve Bank of Philadelphia coincident indexes showed decreases in all 50 states in April 2020. Over the past three months, the indexes decreased in all 50 states, for a three-month diffusion index of negative 100. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index fell 13.7% over the past three months and 12.0% in April.
The Conference Board index of leading economic indicators decreased 4.4% in April, following a decrease of 7.4% in the previous month. Over the six-month span through April, the leading index decreased 11.3% (about a 21.3% annual rate). The Conference Board coincident economic index decreased 8.9% in April, following a 1.5% decrease in the previous month. Over the six-month span through March, the coincident index decreased 9.6% (about an 18.2% annual rate).
The Conference Board Consumer Confidence Index, which declined sharply in April, held steady in May. The Index now stands at 86.6 (1985=100), up slightly from 85.7 in April. The Present Situation Index decreased from 73.0 to 71.1, and the Expectations Index improved from 94.3 to 96.9.
The University of Michigan Index of Consumer Sentiment for May was 72.3, slightly up from 71.8 in April. The index was 100.0 in May of 2019. The current economic conditions component was 82.3 in May, compared with 74.3 in April. The index of consumer expectations decreased to 65.9 in May, from 70.1 in April.
The Federal Reserve Bank continues to take measures to alleviate the negative effects of the virus.
As of May 29^th, there are 5,838,541 COVID-19 confirmed cases in the world, 360,919 deaths, and 2,437,965 recovered, according to Johns Hopkins University, Coronavirus Resource Center (access date and time: 5/29/2020, 9:00 EST). In the United States, there are 1,721,926 confirmed cases, 101,621 deaths, and 399.991 recovered cases. The world is struggling to control the spread of the virus.

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