Bill Losey’s Weekly Economic Update for December 3, 2012
SPENDING DOWN, CONFIDENCE & GDP UP
Personal spending decreased 0.2% in October, the first monthly retreat since June, possibly attributable to Superstorm Sandy. (Consumer spending dipped 0.3% when adjusted for inflation.) Personal income was flat in October for the first time since April. Even so, November’s Conference Board index of consumer confidence measured 73.7, a 57-month high. The Bureau of Economic Analysis revised Q3 GDP up to 2.7%, although federal spending and restocking of goods were the major factors in the quarter’s improved output.
ANOTHER ROUND OF POSITIVE HOUSING NEWS
New home sales have increased 17.2% in the last 12 months, even with a 0.3% retreat in October. In addition to that news from the Census Bureau, the latest edition of the S&P/Case-Shiller Home Price Index showed home values in the third quarter rising 3.6% from Q3 2011. The National Association of Realtors reported a 5.2% jump in its pending home sales index in October, which at 104.8 reached its highest point since March 2007.
Durable goods orders were flat in October, but they rose 1.5% minus transportation orders. Increasing orders for electrical components (+4.1%), computers (+0.9%) and machinery (+2.9%) showed confidence on the part of companies.
NEGOTIATIONS STALL, BUT STOCKS ADVANCE
Even with very little progress in the fiscal cliff talks in Washington, the S&P 500 managed a 0.50% gain last week to reach 1,416.25 at the closing bell on Friday. The NASDAQ (+1.46% to 3,010.24) and Dow (+0.12% to 13,025.04) also advanced last week. The NASDAQ and S&P respectively gained 1.11% and 0.29% in November; the DJIA, on the other hand, slipped 0.55% on the month. Gold closed Friday at $1,710.90; oil settled Friday at $88.91.