Category: Market Insights

From the US Department of Commerce Bureau of Economic Analysis.

Real gross domestic product (GDP) increased at an annual rate of 1.6 percent in the first quarter of 2024 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2023, real GDP increased 3.4 percent.

The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency (refer to “Source Data for the Advance Estimate” on page 3). The “second” estimate for the first quarter, based on more complete source data, will be released on May 30, 2024.

The increase in real GDP primarily reflected increases in consumer spending, residential fixed investment, nonresidential fixed investment, and state and local government spending that were partly offset by a decrease in private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The increase in consumer spending reflected an increase in services that was partly offset by a decrease in goods. Within services, the increase primarily reflected increases in health care as well as financial services and insurance. Within goods, the decrease primarily reflected decreases in motor vehicles and parts as well as gasoline and other energy goods. Within residential fixed investment, the increase was led by brokers’ commissions and other ownership transfer costs as well as new single-family housing construction. The increase in nonresidential fixed investment mainly reflected an increase in intellectual property products. The increase in state and local government spending reflected an increase in compensation of state and local government employees. The decrease in inventory investment primarily reflected decreases in wholesale trade and manufacturing. Within imports, the increase reflected increases in both goods and services.

Compared to the fourth quarter, the deceleration in real GDP in the first quarter primarily reflected decelerations in consumer spending, exports, and state and local government spending and a downturn in federal government spending. These movements were partly offset by an acceleration in residential fixed investment. Imports accelerated.

Current‑dollar GDP increased 4.8 percent at an annual rate, or $327.5 billion, in the first quarter to a level of $28.28 trillion. In the fourth quarter, GDP increased 5.1 percent, or $346.9 billion (tables 1 and 3).

The price index for gross domestic purchases increased 3.1 percent in the first quarter, compared with an increase of 1.9 percent in the fourth quarter (table 4). The personal consumption expenditures (PCE) price index increased 3.4 percent, compared with an increase of 1.8 percent. Excluding food and energy prices, the PCE price index increased 3.7 percent, compared with an increase of 2.0 percent.

Personal Income

Current-dollar personal income increased $407.1 billion in the first quarter, compared with an increase of $230.2 billion in the fourth quarter. The increase primarily reflected increases in compensation and personal current transfer receipts (table 8).

Disposable personal income increased $226.2 billion, or 4.5 percent, in the first quarter, compared with an increase of $190.4 billion, or 3.8 percent, in the fourth quarter. Increases in compensation and personal current transfer receipts were partly offset by an increase in personal current taxes, which are a subtraction in the calculation of DPI. Real disposable personal income increased 1.1 percent, compared with an increase of 2.0 percent.

Personal saving was $755.7 billion in the first quarter, compared with $815.5 billion in the fourth quarter. The personal saving rate—personal saving as a percentage of disposable personal income—was 3.6 percent in the first quarter, compared with 4.0 percent in the fourth quarter.

Source Data for the Advance Estimate

The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency. Information on the source data and key assumptions used in the advance estimate is provided in a Technical Note and a detailed “Key Source Data and Assumptions” file posted with the release. The second estimate for the first quarter, based on more complete data, will be released on May 30, 2024. For information on updates to GDP, refer to the “Additional Information” section that follows.

*          *          *

Next release, May 30, 2024, at 8:30 a.m. EDT
Gross Domestic Product (Second Estimate)
Corporate Profits (Preliminary Estimate)
First Quarter 2024

From NYC.gov:

NEW YORK – New York City Mayor Eric Adams today released the City of New York’s balanced $111.6 billion Fiscal Year (FY) 2025 Executive Budget. Mayor Adams’ budget builds on the administration’s actions, since last fall, to stabilize the city’s fiscal outlook, and has positioned the city to backfill long-term programs that had only been funded with temporary stimulus funds while making the investments that double down on the city’s efforts to strengthen public safety, rebuild the economy, and make the city more livable. These investments will specifically add more police officers to city streets and subways, protect educational programs with city and recurring state funds and increase access to early childhood education, provide support for thousands of cultural institutions, and boost programs that improve the quality of life for working-class New Yorkers. By virtue of Mayor Adams’ strong fiscal management and better-than-expected revenue, the Adams administration balanced the budget, stabilized the city’s fiscal position and outlook, and prevented major service cuts, tax hikes, or layoffs.

FY24 and FY25 remain balanced, with outyear gaps of $5.5 billion, $5.5 billion, and $5.7 billion in Fiscal Years 2026 through 2028, respectively. Growth of $2.2 billion in FY25 over the Preliminary Budget is driven by stronger than expected economic activity in FY24 and an improved outlook in FY25.

“When we came into office two years ago, during the height of another wave of the COVID-19 pandemic, we were determined to protect public safety, rebuild our economy, and make our city more livable for working-class New Yorkers,” said Mayor Adams. “We have made great strides in these commitments, and today, crime is down, jobs are up, our streets are cleaners, we’re taking on major quality of life issues, and we have financed the most newly constructed affordable housing in a single year in our city’s history. Thanks to our strong fiscal management, we are able to invest in the things that matter to New Yorkers in this Fiscal Year 2025 Executive Budget, including public safety, early childhood education, and the needs of working-class people. As New York City moves toward the future, our core values will continue to guide us as we continue to build a safer, more equitable, and more prosperous city for all New Yorkers.”

Proactive Fiscal Management

On the heels of the pandemic, New York City had to confront substantial challenges, filling holes left where long-term programs were funded with temporary stimulus dollars, and the costs of funding fair labor deals that went years unresolved with city employees. While there are still reasons to remain cautious — like slowing revenue growth in coming fiscal years — by making smart decisions in the November and January plans — like monitoring spending and trimming agency and asylum seeker budgets — as well as better-than-expected revenue, the administration has balanced the budget and steadied the city’s fiscal position.

Strong and decisive action led to achieving a record level of gap-closing savings, and due to better-than-expected economic growth, the administration was able to cancel the previously announced Executive Budget Program to Eliminate the Gap (PEG). As good stewards of taxpayer dollars, the administration still achieved $41 million in agency expense savings, over FY24 and FY25, driven by underspending, where agencies spent less than expected to fund a program or service. This has no impact on service delivery.

Additionally, because continuing to fund the needs of the asylum seeker humanitarian crisis without any limits was not sustainable, Mayor Adams committed to PEG the city’s asylum seeker spending over FY24 and FY25 by a total of approximately 30 percent between the Preliminary and Executive Budgets. As a result of the administration’s policies — including providing 30 to 60 days of housing, legal support, intensified case management, and reducing per diem household costs — more than 65 percent of the asylum seekers who have come through the city’s intake centers have left the city’s care and taken the next steps in their journeys. The administration has successfully cut migrant costs in the Executive Budget by $586 million over FY24 and FY25. Along with $1.7 billion in migrant costs previously cut in the FY25 Preliminary Budget, this brings the two-year total migrant PEG savings achieved to nearly $2.3 billion.

Total savings — including the asylum seeker PEGs — achieved in FY24 and FY25 over the November, January, and April Financial Plans is now $7.2 billion.

Additionally, tax revenue has been revised up by $619 million in FY24 and $1.7 billion in FY25 compared with the Preliminary Budget due to better than anticipated economic performance in 2023 and an improved economic outlook in 2024. These additional revenues were used to help remain balanced in FY24 and FY25. However, tax revenue growth is expected to cool in upcoming fiscal years as the local economy slows, bolstering the fact that the city cannot rely exclusively on revenue growth to resolve fiscal challenges.

Maintaining budget reserves as a hedge against the unexpected is a critical part of the administration’s strong financial management strategy. The FY25 Executive Budget maintains a near-record level $8.2 billion in reserves, including $1.2 billion in the General Reserve, $4.8 billion in the Retiree Health Benefits Trust Fund, $250 million in the Capital Stabilization Reserve, and $1.96 billion in the Rainy-Day Fund.

FY25 Priorities

The FY25 Executive Budget enhances safety and doubles down on the Adams administration’s efforts to continue to bring down crime by adding two more police classes this year and putting 1,200 additional police officers on the streets by adding July and October New York City Police Department (NYPD) classes. Now, all police academy classes will be fully funded in 2024. This adds 2,400 new police officers to city streets in the coming year and puts New York City on the path to having a total of 35,000 uniformed officers protecting New Yorkers in the coming years.

The Adams administration’s strong fiscal management, combined with a stronger than anticipated economic performance in 2023, helped put the city in a position to fund a number of stimulus-funded long-term programs that could be backfilled with city and state dollars. In the FY25 Executive Budget, Mayor Adams uses $514 million in city and recurring state funds to support key education programs that had been funded with expiring stimulus dollars, including mental health care, career readiness, and literacy programs for New York City public school students.

Additionally, the administration is making multiple investments in New York City’s cultural sector by allocating more than $22 million over the next three fiscal years to the New York City Department of Cultural Affairs. These investments will support over 1,000 cultural organizations, which make up the heart and soul of New York City and are the cornerstone of its economic rebound. 

More specifically, some highlighted investments of the FY25 Executive Budget include:

Keeping New Yorkers Safe

•  Doubling down on decreases in homicides and shootings by adding 1,200 more police recruits between the July and October NYPD classes, putting New York City on a path to have 35,000 uniformed officers in the coming years ($62.4 million, FY25).
• Funding for the Job Connections initiative, which will connect 500 young New Yorkers at risk of gun violence with career readiness and green job placement programs ($16.9 million, FY25).
• Expanding the Crisis Management System to support additional Cure Violence coverage areas and additional mental health services in gun violence safety precincts ($8.6 million, FY25).
• Supporting the Neighborhood Safety Alliance, which fosters collaboration between communities, actors, law enforcement agencies, and city services to reduce gun violence in six additional precincts ($2.5 million, FY25).

Securing a Better Future for New York City Children

• Supporting citywide 3-K expansion as it transitions from its original stimulus funding source ($92 million, FY25).
• Supporting nearly 500 social workers and psychologists who provide mental health supports in schools ($74 million, FY25) *.
• Maintaining funding for special education Pre-K providers to increase service hours, and resources for DOE-related services and evaluation teams ($56 million, FY25)*.
• Investing in pathways programs that facilitate career pathways programs in high schools — offering apprenticeships, career-readiness, and access to college credits ($53 million, FY25)*.
• Arts funding programming ($41 million, FY25).
• Literacy and dyslexia programs and academic assessments for both English language arts, and math ($17 million, FY25)*.
• Funding for coordinators for students in temporary housing in schools and shelters ($17 million, FY25)*.
• Bilingual education funding for curriculum and assessment, teacher preparation and staffing, professional learning, and multilingual family and community engagement for 100 bilingual programs ($10 million, FY25)*.
• Increasing the availability of in-school early childhood education classes and services for students with special needs ($25 million, FY25).
• Maximizing enrollment in early childhood education programming and helping parents connect with Pre-K and 3-K seats with an extensive media outreach and marketing campaign ($3.5 million, FY25).

 * Indicates funded with recurring state resources.

 Investing in Cherished Cultural Institutions

• Allocating funding for the Cultural Institutions Group, 34 cultural nonprofits operated on city-owned property ($5.4 million, FY25).
• Investing in the Cultural Development Fund, which supports over 1,000 cultural nonprofits across the city ($2.2 million, FY25).

 Putting More Money in the Pockets of Working-Class New Yorkers

•  Investing in stable housing for the most vulnerable New Yorkers by funding the City Family Homelessness and Eviction Prevention Supplement programs in the baseline ($615 million, FY25).
• Wiping out $2 billion in medical debt for qualified low-income and severely debt-burdened New Yorkers through RIP Medical Debt, which buys debt at a steep discount and forgives repayment. This is the largest municipal medical debt program of its kind in the country ($6 million, FY25).
• Ensuring eligible New Yorkers learn about supportive city programs that are available to them and make accessing the resources easy and efficient via the NYC Benefits Access Initiative ($4.6 million, FY25).
• Helping unemployed New Yorkers connect with job opportunities and career support across the city’s public workforce through the Jobs NYC Employment Sprint system with a talent portal and by bringing hiring halls to communities experiencing high unemployment ($1 million, FY25).
• Accelerating Minority and Women-Owned Business Enterprises (M/WBE) and community hiring by implementing tools to track the implementation of community hiring legislation and the new city-wide M/WBE program ($5.5 million, FY25).
• Helping low-to moderate-income communities by funding grants to create and support new Small Business Improvement Districts and merchant associations ($5.3 million, FY25).  
• Establishing the NYC Future Fund that will make loans to Black, indigenous, and people of color-owned businesses with a focus on early-stage businesses ($2 million, FY25).

Climate Budgeting

Mayor Adams is taking a critical step towards making the city cleaner and greener over generations to come in his FY25 Executive Budget. New York City is the first big city in America, and among a small elite group of cities internationally, to implement climate budgeting, a system that integrates climate targets and considerations into the budget process to help achieve the city’s goals of net-zero greenhouse gas emissions and resiliency to climate threats. Critically, climate impact will now be one of the many factors that will be balanced when allocating the city’s limited resources to ensure resources are aligned with sustainability and resiliency needs. And — for the first time and moving forward — the Executive Budget will also include a Climate Budgeting publication that will include an analysis of the city’s new and ongoing climate investments and progress toward emissions goals.

United States Department of Labor

U.S. BUREAU OF LABOR STATISTICS

Economic News Release

PressOffice@bls.gov

CONSUMER PRICE INDEX – MARCH 2024

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in March on a seasonally adjusted basis, the same increase as in February, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.5 percent before seasonal adjustment. The index for shelter rose in March, as did the index for gasoline. Combined, these two indexes contributed over half of the monthly increase in the index for all items. The energy index rose 1.1 percent over the month. The food index rose 0.1 percent in March. The food at home index was unchanged, while the food away from home index rose 0.3 percent over the month. The index for all items less food and energy rose 0.4 percent in March, as it did in each of the 2 preceding months. Indexes which increased in March include shelter, motor vehicle insurance, medical care, apparel, and personal care.

The indexes for used cars and trucks, recreation, and new vehicles were among those that decreased over the month. The all items index rose 3.5 percent for the 12 months ending March, a larger increase than the 3.2-percent increase for the 12 months ending February. The all items less food and energy index rose 3.8 percent over the last 12 months. The energy index increased 2.1 percent for the 12 months ending March, the first 12-month increase in that index since the period ending February 2023. The food index increased 2.2 percent over the last year.

Story by Justin Lahart, Wall Street Journal

U.S. Economy Added 303,000 Jobs in March© Provided by The Wall Street Journal

U.S. job growth was strong last month, and the unemployment rate fell slightly. But wage growth remained contained, underscoring the growing belief among economists and policymakers that the country can keep adding jobs without fanning inflation.

U.S. employers added a seasonally adjusted 303,000 jobs in March, the Labor Department reported on Friday, significantly more than the 200,000 economists expected. The unemployment rate slipped to 3.8%, versus February’s 3.9%, in line with expectations.

Average hourly earnings in March rose 0.3% from the previous month. That put them up 4.1% from a year earlier, marking the smallest on-the-year gain since June 2021.

Stocks edged up following the report, and Treasury yields moved higher.

Investors have been on edge recently over economic data suggesting that Federal Reserve interest-rate cuts might not be imminent. A stronger-than-expected labor market could feed into those concerns—first because increased spending power for consumers could fuel inflation, and second because a strong labor market gives the central bank more leeway to wait before cutting rates.

The Fed is mandated to keep employment as strong as possible while keeping inflation under control. Balancing those objectives has put the central bank in a difficult position as it mulls cutting interest rates this year: Cut too soon, or by too much, and inflation could heat back up all over again. Wait too long, and the strain of high rates could damage the job market, pushing the economy into a recession.

The labor market has continued to add jobs over the past year despite high interest rates. At the same time, the unemployment rate has drifted up and wage gains have cooled. In March of last year, the unemployment rate was 3.5%.

Those dynamics have defied the conventional wisdom that, for inflation to cool, job creation would need to dramatically slow down.

Lately many economists and even Fed officials have come to believe that, in part as a result of immigration, the supply of available workers has increased. If that is right, the number of jobs can grow faster.

Supply alone isn’t enough to generate job gains, however; there has to be demand. At the moment, it still looks as if there is plenty of that. Layoff activity remains low, and the number of unfilled jobs is high, with the Labor Department reporting earlier this week that there were 8.8 million job openings as of the end of February. The job-opening rate, or openings as a share of filled and unfilled positions, was 5.3%. That has fallen over the past year, but in prepandemic 2019—a period of strength for the job market—that ratio averaged 4.5%.

But the share of people quitting their jobs each month has fallen to prepandemic levels, which indicates that the intensity with which businesses were hiring away workers from each other has subsided. Moreover, the private-sector job market has been drawing most of its strength from just two broad sectors—private education and healthcare, and leisure and hospitality.

Private education and healthcare added 88,000 jobs last month, while leisure and hospitality added 49,000. Combined, the two have accounted for 1.5 million of the 2.9 million jobs the U.S. has gained in the past year.

Economists at Bank of America call those sectors “high touch.” Much of the work must be done in person, and a lot of it—such as waiting tables or working in a hospice—entails face-to-face interactions.

High-touch employment fell sharply when the pandemic hit, and even now, four years later, appears low. Relative to the trend during the five years before the pandemic, there are some two million fewer jobs in those sectors than might have been expected.

This raises a question, points out Bank of America economist Michael Gapen. “Should we expect employment in those sectors to return to their prior trend line? Or are there structural reasons to think maybe the employment gap will not close and therefore this catch-up effect could finish sooner?” he said.

He thinks the answer might be mixed. Lately, employment growth in leisure and hospitality has moderated. One reason why is that for some of those employers, business is still down—think restaurants near offices where many people are still working from home a few days a week. Another is that some businesses adopted practices when labor became short that probably won’t get undone. Lots of restaurants, for example, introduced QR codes in place of paper menus, allowing customers to place orders with their phones rather than waitstaff.

But for private education and healthcare, the story could be different. The loss of jobs these areas experienced when the pandemic hit was truly exceptional: Other than in 2020, employment in the sector has experienced near constant growth over the 85 years of available data. Moreover, the healthcare needs of an aging U.S. population will probably only grow. The sector is still about a million jobs short of its old trend. If that gap continues to narrow, as Gapen expects it will, it could help bolster job growth into next year.

From the WSJ.com

From the Bureau of Economic Analysis, US Department of Commerce

Real gross domestic product (GDP) increased at an annual rate of 3.3 percent in the fourth quarter of 2023 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.9 percent.

The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency (refer to “Source Data for the Advance Estimate” on page 3). The “second” estimate for the fourth quarter, based on more complete data, will be released on February 28, 2024.

The increase in real GDP reflected increases in consumer spending, exports, state and local government spending, nonresidential fixed investment, federal government spending, private inventory investment, and residential fixed investment (table 2). Imports, which are a subtraction in the calculation of GDP, increased.

The increase in consumer spending reflected increases in both services and goods. Within services, the leading contributors were food services and accommodations as well as health care. Within goods, the leading contributors to the increase were other nondurable goods (led by pharmaceutical products) and recreational goods and vehicles (led by computer software). Within exports, both goods (led by petroleum) and services (led by financial services) increased. The increase in state and local government spending primarily reflected increases in compensation of state and local government employees and investment in structures. The increase in nonresidential fixed investment reflected increases in intellectual property products, structures, and equipment. Within federal government spending, the increase was led by nondefense spending. The increase in inventory investment was led by wholesale trade industries. Within residential fixed investment, the increase reflected an increase in new residential structures that was partly offset by a decrease in brokers’ commissions. Within imports, the increase primarily reflected an increase in services (led by travel).

Compared to the third quarter of 2023, the deceleration in real GDP in the fourth quarter primarily reflected slowdowns in private inventory investment, federal government spending, residential fixed investment, and consumer spending. Imports decelerated.

Current‑dollar GDP increased 4.8 percent at an annual rate, or $328.7 billion, in the fourth quarter to a level of $27.94 trillion. In the third quarter, GDP increased 8.3 percent, or $547.1 billion (tables 1 and 3).

The price index for gross domestic purchases increased 1.9 percent in the fourth quarter, compared with an increase of 2.9 percent in the third quarter (table 4). The personal consumption expenditures (PCE) price index increased 1.7 percent, compared with an increase of 2.6 percent. Excluding food and energy prices, the PCE price index increased 2.0 percent, the same change as the third quarter.

Personal Income

Current-dollar personal income increased $224.8 billion in the fourth quarter, compared with an increase of $196.2 billion in the third quarter. The increase primarily reflected increases in compensation, personal income receipts on assets, and proprietors’ income that were partly offset by a decrease in personal current transfer receipts (table 8).

Disposable personal income increased $211.7 billion, or 4.2 percent, in the fourth quarter, compared with an increase of $143.5 billion, or 2.9 percent, in the third quarter. Real disposable personal income increased 2.5 percent, compared with an increase of 0.3 percent.

Personal saving was $818.9 billion in the fourth quarter, compared with $851.2 billion in the third quarter. The personal saving rate—personal saving as a percentage of disposable personal income—was 4.0 percent in the fourth quarter, compared with 4.2 percent in the third quarter.

GDP for 2023

Real GDP increased 2.5 percent in 2023 (from the 2022 annual level to the 2023 annual level), compared with an increase of 1.9 percent in 2022 (table 1). The increase in real GDP in 2023 primarily reflected increases in consumer spending, nonresidential fixed investment, state and local government spending, exports, and federal government spending that were partly offset by decreases in residential fixed investment and inventory investment. Imports decreased (table 2).

The increase in consumer spending reflected increases in services (led by health care) and goods (led by recreational goods and vehicles). The increase in nonresidential fixed investment reflected increases in structures and intellectual property products. The increase in state and local government spending reflected increases in gross investment in structures and in compensation of state and local government employees. The increase in exports reflected increases in both goods and services. The increase in federal government spending reflected increases in both nondefense and defense spending.

The decrease in residential fixed investment mainly reflected a decrease in new single-family construction as well as brokers’ commissions. The decrease in private inventory investment primarily reflected a decrease in wholesale trade industries. Within imports, the decrease primarily reflected a decrease in goods.

Current-dollar GDP increased 6.3 percent, or $1.61 trillion, in 2023 to a level of $27.36 trillion, compared with an increase of 9.1 percent, or $2.15 trillion, in 2022 (tables 1 and 3).

The price index for gross domestic purchases increased 3.4 percent in 2023, compared with an increase of 6.8 percent in 2022 (table 4). The PCE price index increased 3.7 percent, compared with an increase of 6.5 percent. Excluding food and energy prices, the PCE price index increased 4.1 percent, compared with an increase of 5.2 percent.

Measured from the fourth quarter of 2022 to the fourth quarter of 2023, real GDP increased 3.1 percent during the period (table 6), compared with an increase of 0.7 percent from the fourth quarter of 2021 to the fourth quarter of 2022.

The price index for gross domestic purchases, as measured from the fourth quarter of 2022 to the fourth quarter of 2023, increased 2.4 percent, compared with an increase of 6.2 percent from the fourth quarter of 2021 to the fourth quarter of 2022. The PCE price index increased 2.7 percent, compared with an increase of 5.9 percent. Excluding food and energy, the PCE price index increased 3.2 percent, compared with 5.1 percent. 

Source Data for the Advance Estimate

The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency. Information on the source data and key assumptions used in the advance estimate is provided in a Technical Note and a detailed “Key Source Data and Assumptions” file posted with the release. The “second” estimate for the fourth quarter, based on more complete data, will be released on February 28, 2024. For information on updates to GDP, refer to the “Additional Information” section that follows.

*          *          *

Next release, February 28, 2024, at 8:30 a.m. EST
Gross Domestic Product (Second Estimate)