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NAFCU's Long provides insights into new GDP, home sale data
According to the Commerce Department's initial estimate of 2020 fourth quarter economic growth, the U.S. economy grew 4 percent, but real GDP declined 3.5 percent over the year due largely to the coronavirus pandemic. NAFCU Chief Economist and Vice President of Research Curt Long noted that "this is the first annual decline since the Great Recession and the largest since 1946."
"While most measures declined versus last year, residential investment was a notable exception, rising 5.9 percent," said Long in a new NAFCU Macro Data Flash report. "Spending on goods was also strong, but services consumption collapsed. It is likely that growth slowed over the course of the fourth quarter, as rising COVID cases led to stricter social distancing, culminating in the loss of 140,000 jobs in December.
According to the new estimate, contributions to growth of real GDP came from personal consumption (+1.7 percent) – with the entire gain coming from the services sector – and investment (+4.1 percent). Growth was reduced by net exports (-1.5 percent) and government consumption (-0.2 percent).
PCE inflation, the Fed's preferred inflation metric, rose 1.5 percent. Core PCE inflation (excluding food and energy) also increased, rising 1.4 percent.
In another data flash released Thursday, new-home sales rose 1.6 percent from November's downwardly revised rate of 829,000 annualized units to 842,000 units in December. Sales were also up 15.2 percent versus December 2019.
"The modest rise in December ended a string of three consecutive monthly declines," said Long. "It is clear in hindsight that the sales surge in late-summer/early-fall was unsustainable and probably included the release of substantial pent-up demand from sales that were delayed during the early part of the pandemic. But the current pace is still quite strong and consistent with the upward trend in new home sales from 2019 and early-2020."
The median new-home price, non-seasonally adjusted, increased from $343,900 in November to $355,900 in December. The month's prices were up 8 percent from a year ago.
Sales rose in the Midwest region (+30.6 percent) and in the West (+8.8 percent); however, they fell in the Northeast (-6.1 percent) and the South (-5.1 percent). Compared to a year ago, sales rose in the South (+21.7 percent), the Midwest (+13.3 percent), and the West (+10.4 percent), but fell in the Northeast (-20.5 percent).