4th quarter GDP revision; February's consumer prices and existing home sales; January’s income and outlays, trade deficit, job openings, durable goods, and new housing starts

The key economic reports released last week were the 2nd estimate of 4th quarter GDP and the January report on Personal Income and Spending, both from the Bureau of Economic Analysis, and the Consumer Price Index Summary for February from the Bureau of Labor Statistics…other widely watched releases included the Commerce Dept’s report on our International Trade for January, the Job Openings and Labor Turnover Survey (JOLTS) report for January from the Bureau of Labor Statistics (BLS), the Advance Report on Durable Goods Manufacturers’ Shipments Inventories and Orders for January and the January report on New Residential Construction, both from the Census Bureau, and the Existing Home Sales Report for February from the National Association of Realtors (NAR)…

4th Quarter GDP Grew at a 0.7% Rate, Revised from the 1.4% rate Shown in the Advance Estimate

The Second Estimate of our 4th Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services grew at a 0.7% rate over the quarter, revised from the 1.4% growth rate reported in the advance estimate last month, as sharp downward revisions to personal consumption expenditures for services, to exports, to non-residential fixed investment, and to state and local government more than offset modest upward revisions to personal consumption expenditures for goods, residential investment, and inventories…In current dollars, our fourth quarter GDP grew at a 4.51% annual rate, increasing from what would work out to be a $31,098.0 billion a year rate in the 3rd quarter to a $31,442.5 annual rate in the 4th quarter, with the headline 0.7% annualized rate of increase in real output arrived at after annualized inflation adjustments averaging 3.8%, known in aggregate as the GDP deflator, were computed from the price changes of the GDP components and applied to their current dollar changes….that composite GDP deflator was revised from the 3.6% rate reported in the advance estimate to 3.8% now, and hence accounted for around 0.2% of the downward revision to GDP…

Remember that the news release for the second estimate GDP reports all quarter over quarter percentage changes at an annual rate, which means that they’re expressed as a change that’s roughly 4 times of that what actually occurred over the 3 month period, and that the prefix “real” is used to indicate that each change has been adjusted for inflation using price changes chained from 2017, and then that all percentage changes in this report are calculated from those 2017 dollar figures, which would be better thought of as a quantity indexes than as any reality based dollar amounts, since the change in real GDP is not a monetary metric….for our purposes, the data that we’ll use in reporting the changes here comes directly from the full pdf for the 2nd estimate of 4th quarter GDP, which can be accessed directly on the BEA’s GDP landing page, which also provides links to the source data, the tables on Excel and other technical notes…specifically, we reference table 1, which shows the real percentage change in each of the GDP components annually and quarterly since the 1st quarter of 2022, table 2, which shows the contribution of each of the components to the GDP figures for those quarters and years; table 3, which shows both the current dollar value and inflation adjusted value of each of the GDP components over the last 5 quarters; and table 4, which shows the change in the price indexes for each of the components…the pdf for the 4th quarter’s advance estimate, which this estimate revises, is here…

Growth of real personal consumption expenditures (PCE), the largest component of GDP, was revised to 2.0% from the 2.4% growth rate reported in the advance estimate, as upward revisions to goods were more than offset by sharp downward revisions to services…that aggregate 2.0% PCE growth rate figure is the result of deflating the 4.96% growth rate in the dollar amount of consumer spending with the PCE price index, which indicated consumer inflation grew at a 2.9% annual rate in the 4th quarter, which was statistically unrevised from the 2.9% PCE inflation rate reported a month ago….real consumption of durable goods was essentially unchanged, revised from the 0.9% contraction shown in the advance report, and had no discernable impact on GDP, as real growth in consumption of recreational goods and vehicles at an 9.1% rate more than offset a 8.1% shrinkage rate in real consumption of motor vehicles and parts….meanwhile, real consumption of nondurable goods by individuals grew at a 0.6% annual rate, revised from the 0.4% growth rate reported in the 1st estimate, and added 0.08 percentage points to the 4th quarter’s economic growth rate, as increased real consumption of clothing and non-durable goods other than food and energy offset a decrease in consumption of both groceries and gasoline…at the same time, consumption of services grew at a 2.7% annual rate, revised from the 3.4% growth rate reported last month, and added 1.25 percentage points to the final GDP tally, as a 2.9% growth rate in real health care services accounted for almost a third of the 4th quarter’s broad based services growth…

Meanwhile, seasonally adjusted real gross private domestic investment grew at a 3.3% annual rate in the 4th quarter, revised down from the 3.8% growth estimate reported last month, as real private fixed investment grew at a 1.6% rate, revised down from the 2.6% growth rate reported in the advance estimate, while the decrease in inventory growth was not as great as in the first estimate…real investment in non-residential structures now indicates contraction at a 7.1% rate, revised down from the 2.1% contraction rate previously reported, while real investment in equipment grew at 3.9% rate, revised up from the 3.2% growth rate shown a month ago….meanwhile the quarter’s investment in intellectual property products was revised to indicate growth at a 5.7% rate, down from the 7.4% growth rate previously reported, while at the same time real residential investment was shown to be shrinking at a 0.5% annual rate, up from the 1.5% contraction rate shown in the previous report….after those revisions, the decrease in investment in non-residential structures subtracted 0.21 percentage points from the 4th quarter’s growth rate, but the increase in investment in equipment added 0.21 percentage points to the quarter’s growth rate, and investment in intellectual property added 0.31 percentage points to the growth rate of 4th quarter GDP, while the decrease in residential investment subtracted 0.02 percentage points from the growth of GDP…..for an easy to read table as to what’s included in each of those GDP investment categories, see the NIPA Handbook, Chapter 6, page 3…..

At the same time, the real change in real private inventories was revised from the originally reported $13.6 billion contraction in inflation adjusted growth to show that inventories had contracted at an inflation adjusted $7.5 billion rate…that came after inventories shrunk at an inflation adjusted $23.9 billion rate in the 3rd quarter, and hence the change in real inventories from the 3rd to the 4th quarter was revised from a rounded $10.3 billion positive change, which had added 0.21 percentage points to the 4th quarter’s growth rate, to an $14.4 billion positive change, which added 0.28 percentage points to the 4th quarter’s growth rate….however, since positive growth of inventories indicates that more of the goods produced during the quarter were left in a warehouse or sitting on the shelf, their increase at a $14.4 billion rate meant that real final sales of GDP were actually smaller by that amount, and hence real final sales of GDP only grew at a 0.4% rate in the 4th quarter, revised from the real final sales 1.2% growth rate shown in the advance estimate, and down from the real final sales growth rate of 4.5% in the 3rd quarter, when decreased inventory growth meant that more of the quarter’s goods were being sold...

The previously reported decrease in real exports was revised to a much larger decrease with this estimate, while the real decrease in real imports was a bit smaller than previously reported, and as a result our net trade was a subtraction from GDP growth, rather than the small addition previously reported…our real exports shrunk at a 3.3% rate, revised from the 0.9% contraction rate reported in the first estimate, and since exports are added to GDP because they are part of our production that was not consumed or added to investment in our country, their contraction subtracted 0.36 percentage points from the 4th quarter’s growth rate, revised from the 0.10 percentage point subtraction shown in the previous report….meanwhile, our real imports decreased at a 1.1% rate, revised from the advance estimate’s 1.3% negative figure, and since imports are subtracted from GDP because they represent either consumption or investment that was added to another GDP component that shouldn’t have been because it was not produced here, their decrease conversely added 0.15 percentage points to 4th quarter GDP, revised from the 0.18 percentage point addition from falling imports shown last month….thus, our deteriorating trade imbalance subtracted a rounded net 0.22 percentage points from 4th quarter GDP, revised from the 0.08 percentage point addition that had been indicated by the advance estimate..

Finally, there was also a downward revision to real government consumption and investment in this 2nd estimate, as the contraction rate for the entire government sector was revised from a 5.1% contraction rate to a 5.8% contraction rate…real federal government consumption and investment was seen to have shrunk at a 16.7% rate from the 3rd quarter in this estimate, revised down from the 16.6% contraction rate reported in the advance estimate, as real federal outlays for ‘defense’ shrunk at a 10.8% rate, revised from the 10.7% contraction rate shown previously, and subtracted 0.42 percentage points from 4th quarter GDP, while all other federal consumption and investment shrunk at a 24.4% rate, revised from the 24.1% contraction rate shown previously, and subtracted 0.74 more percentage points from the 4th quarter’s GDP growth…note that government outlays for social insurance are not included in this GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, indicating an increase in the output of those goods or services…. meanwhile, real state and local consumption and investment grew at a 1.2% rate in the quarter, which was revised down from the 2.4% growth rate reported in the 1st estimate, and added 0.13 percentage points to the growth of 4th quarter GDP, as a real increase in state and local investment at a 0.7% annual rate accounted for just 0.01 percentage points of that addition to GDP….

Personal Income and Personal Spending Both Rose 0.4% in January, PCE Price Index Rose 0.3%; Highest Savings Rate Since July

The January report on Personal Income and Outlays from the Bureau of Economic Analysis includes the month’s data for our personal consumption expenditures (PCE), which accounts for around 69% of the month’s GDP, and with it the PCE price index, the inflation gauge the Fed targets, and which is used to adjust that personal spending data for inflation to give us the relative change in the output of goods and services that our spending indicated…in addition, this release reports our personal income data, disposable personal income, which is income after taxes, and our monthly savings rate…however, because this report feeds in to GDP and other national accounts data, the change reported for each of those metrics is not the current monthly change; rather, they’re reporting seasonally adjusted amounts expressed at an annual rate, ie, they tell us how much income and spending would change over a year if January’s change in seasonally adjusted income and spending were extrapolated over an entire year…however, the percentage changes are computed monthly, from one month’s annualized figure to the next, and in this case of this month’s report they give us the percentage change in each annualized metric from December to January..

Hence, when the opening line of the news release for this report tells us “Personal income increased $113.8 billion (0.4 percent at a monthly rate) in January,..“, they mean that the annualized figure for seasonally adjusted personal income in January, $26,698.9 billion, was $113.8 billion higher, or more than 0.4% greater than the annualized personal income figure of $26,585.1 billion extrapolated for December; the actual, unadjusted monthly change in personal income from December to January is not even given…at the same time, annualized disposable personal income, which is income after taxes, rose by less than 0.9%, from an annual rate of $23,255.0 billion in December to an annual rate of $23,474.9 billion in January…the monthly contributors to the change in personal income, which can be viewed in detail in the Full Release & Tables (PDF) for this release, are also annualized…in January, the primary contributors to the seasonally adjusted $113.8 billion annual rate of  increase in personal income were an annualized $71.2 billion increase in wages and salaries, an annualized $49.2 billion increase in interest and dividend income, and an annualized $18.1 billion increase in government social benefits to persons…

For the January personal consumption expenditures (PCE) that will be used to figure 1st quarter GDP, the BEA reports that they increased at an annual rate of $81.1 billion, or by less than 0.4%, from a $21,455.5 billion annual rate in December to a $21,536.6 billion annual rate in January; at the same time, the December PCE figure was revised  down from the originally reported $21,474.9 billion annual rate, while November PCE was revised down from $21,383.9 billion to $21,361.0 billion, revisions that were already incorporated into this week’s 4th quarter GDP estimate (this report, although usually released a business day later than the GDP release, is computed concurrently)….total personal outlays, which includes interest payments and personal transfer payments in addition to PCE, rose by an annualized $85.8 billion to a $22,420.2 billion annual rate in January, which left total personal savings, which is disposable personal income less total outlays, at a $1,054.7 billion annual rate in January, up from the revised $920.5 billion in annualized personal savings in December… as a result, the personal saving rate, which is personal savings as a percentage of disposable personal income, rose to 4.5% in January, up from the December savings rate of 4.0%, and the highest personal savings rate since July..

As you know, before January’s personal consumption expenditures can be used in the 1st quarter GDP computation, they must first be adjusted for inflation to give us the real change in consumption, and hence the real change in goods and services that were produced for that consumption….that’s done with the price index for personal consumption expenditures, which is shown in Table 5 in the pdf for this report, which is a chained price index based on 2017 prices = 100….that PCE price index rose from 128.615 in December to 128.969 in January, giving us a month over month PCE inflation rate of 0.27524%, which BEA rounds up to a 0.3% increase in reporting it in the text and tables here….then, applying that 0.27524% inflation adjustment to the increase in January PCE shows that real PCE rose at a 0.10247% rate in January, which the BEA reports as a 0.1%  increase….note that when those PCE price indexes are applied to a given month’s annualized PCE in current dollars, it gives us that month’s annualized real PCE in those same chained 2017 dollars, which are the means that the BEA uses to compare one month’s or one quarter’s real goods and services produced to that of another….that result is shown in table 4 of the PDF, where we see that January’s chained dollar consumption total works out to $16,700.2 billion annually, 0.10190% more than December’s $16,683.2 billion, statistically the equivalent of the real PCE increase we just computed…

However, to estimate the impact of the change in January PCE on the change in GDP, the change from December doesn’t help us much, since GDP is reported on a quarterly basis…hence, we have to compare January’s real PCE to the the real PCE of the 3 months of the fourth quarter….while this report shows PCE for all those amounts monthly, the BEA provides the quarterly annualized chained dollar PCE for those three months in table 3 of the pdf for the 4th quarter GDP report, where we find that the annualized real PCE for the 4th quarter was represented by 16,667.0 billion in chained 2017 dollars)….when we compare January’s real PCE representation of 16,700.2 billion to the 4th quarter real PCE figure of 16,667.0 billion, we find that real PCE is growing at a 0.799% annual rate so far in the 1st quarter….that’s a rate that suggests that even if January’s real PCE does not improve during February and March, growth in PCE would still add 0.55 percentage points to the growth rate of 1st quarter GDP…

Consumer Prices Rose 0.3% in February on Higher Prices for Food, Shelter, Clothing and Fuel

The consumer price index was 0.3% higher in February, as higher prices for groceries, clothing, fuel, gas utility service, airline fares, lodging, car and truck rental, vehicle maintenance and repairs, medical services,  appliances, sports equipment, internet service, and admissions to sporting events were partly offset by lower prices for electricity, used vehicles, health and vehicle insurance, funeral expenses, tax preparation, video and audio services, and smartphones….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the weighted average of seasonally adjusted prices for consumer goods and services was 0.3% higher in February, after being 0.2% higher in January, 0.3% higher in December, after being 0.2% higher the two months ending in November, 0.3% higher in September, 0.3% higher in August, 0.2% higher in July, 0.3% higher in June, 0.1% higher in May, 0.2% higher in April, unchanged in March, and 0.2% higher in February of last year…. The unadjusted CPI-U index, which was originally set to have prices of the 1982 to 1984 period equal to 100, rose from 325.252 in January to 326.785 in February, which left it 2.414113% higher than the index reading of 319.082 from February of last year, which is reported as a 2.4% year over year increase, same as the 2.4% year over year increase that was reported for January’s , with that widely cited year over year change reflecting the effect of last February's 0.3% increase dropping out of the comparison and being replaced by the current month’s +0.3%, and not telling us anything more about inflation beyond that….with higher prices for both food and energy recorded this month, seasonally adjusted core prices, which exclude both food and energy, were up by 0.2% for the month, as the unadjusted core price index rose from 331.950 in January to 333.242 in February, which left the core index 2.45656% ahead of its year ago reading of 323.842, which is reported as a 2.5% year over year increase, same as the 2.5% year over year core price increase that was reported for January, and well below the 6.6% annual increase reported for September 2022, which had been the largest annual increase in core prices in forty years…

The volatile seasonally adjusted energy price index was 0.6% higher in February, after being 1.5% lower in January, 0.3% higher in December, 1.1% higher in November, 1.5% higher in September, 0.7% higher in August, 1.1% lower in July, 0.9% higher in June, 1.0% lower in May, 0.7% higher in April, 2.4% lower last March, and 0.2% higher last February, and is now 0.5% higher than in February of a year ago….the price index for energy commodities was 1.1% higher in February, on an 0.8% increase in the price index for gasoline and an 11.1% increase in the price index for fuel oil, while the price index for “other energy commodities”, including propane, kerosene, and firewood, averaged out to 2.2% higher ….meanwhile, the price index for energy services was 0.2% higher, after rising 0.2% in January, as the price index for utility gas service was 3.1% higher in February, and is now 10.9% higher than it was a year ago, while the electricity price index was 0.7% lower, after falling 0.1% in January…. energy commodities are now averaging 7.3% below their year ago levels, with gasoline prices averaging 7.5% lower than they were a year ago, while the energy services price index is still up 7.2% from last February, as electricity prices are still averaging 4.8% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was 0.4% higher in February, after being 0.2% higher in January, 0.7% higher in December, 0.1% higher over the two months ending November, and after being 0.2% higher in September, 0.4% higher in August, unchanged in July, 0.3% higher in June, 0.3% higher in May, unchanged in April, 0.4% higher last March, and 0.2% higher last February, and is now 3.1% higher than a year ago….the price index for food purchased for use at home was 0.4% higher in February, while the price index for food bought to eat away from home was 0.3% higher, as average prices at fast food outlets and average prices at full service restaurants both rose 0.3%, while the price index for food at employee sites and schools was 0.5% higher, and prices for other food away from home averaged 0.6% higher…

In the food at home categories, the price index for cereals and bakery products was 0.2% lower, even as average bread prices rose 0.5%, as the price index for breakfast cereal fell 0.8%, the price index for rice fell 0.6%, the price index for cookies fell 1.6%, and the price index for frozen and refrigerated bakery products, pies, tarts, turnovers was 1.3% lower.…at the same time, the price index for the meats, poultry, fish, and eggs food group was unchanged, as the price index for beef and veal rose 1.5% and the price index for uncooked poultry other than chicken was 4.5% higher, while the price index for chicken fell 0.3%, egg prices fell 3.8%, and the price index for fresh fish and seafood was 0.6% lower….meanwhile, the seasonally adjusted price index for dairy products was 0.6% lower, as average milk prices fell 0.4%, and the price index for cheese and related products was 1.2% lower….on the other hand, the fruits and vegetables price index was 1.4% higher, as the price index for fresh vegetables rose 4.1% and the price index for canned fruits rose 1.3%.…in addition, the beverages price index was 0.8% higher, as the price index for carbonated drinks rose 1.0%, and the price index for coffee was 1.8% higher….lastly, the price index for the ‘other foods at home’ category was 0.8% higher, as the price index for sugar and sweets rose 2.8%, the price index for salad dressing fell 1.6%, the price index for peanut butter rose 1.8%, the price index for frozen and freeze dried prepared foods rose 1.4%, and the price index for other miscellaneous foods was 2.3% higher…

Among the seasonally adjusted core components of the CPI, which rose by 0.2% in February, after rising by 0.3% in January, by 0.2% in December, by 0.2% over the 2 months ending in November, and by 0.3% in August, 0.3% in July, by 0.2% in June, by 0.1% in May, by 0.2% in April, by 0.1% in March, and by 0.3% last February, the composite price index of all goods less food and energy goods was 0.1% higher in January, while the more heavily weighted composite index for all services less energy services was 0.3% higher..

Among the goods components of the core price index, which will initially be used by the Bureau of Economic Analysis to adjust February's retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.2% higher, as the price index for living room, kitchen, and dining room furniture rose 0.5%, the price index for appliances rose 3.1%, the price index for floor coverings rose 0.3%, the price index dishes and flatware rose 4.9%, and the price index for tools, hardware and supplies was 0.4% higher….at the same time, the apparel price index was 1.3% higher on a 4.7% increase in the price index for men’s suits, sport coats, and outerwear, a 4.2% increase in the price index for women’s dresses, a 1.6% increase in the price index for girls’ apparel, and a 2.8% increase in the price index for boys' and girls' footwear….on the other hand, the price index for transportation commodities other than fuel was was 0.1% lower, as average prices for new cars was unchanged, while the price index for used cars and trucks fell 0.4%, and the price index for motor oil, coolant, and fluids was 0.5% lower…. meanwhile, the price index for medical care commodities was unchanged, as the price index for prescription drugs was 0.2% lower and the price index for nonprescription drugs was 0.4% lower, while the price index for medical equipment and supplies was 1.3% higher…at the same time, the recreational commodities index was 0.4% higher, as the price index for recorded music and music subscriptions rose 1.2%, the price index for video equipment other than TVs rose 4.9%, the price index for sports equipment rose 1.7%, the price index for other newspapers and magazines rose 4.3%, and the price index for photographic equipment and supplies was 3.4% higher… however, the education and communication commodities index was 3.0% lower, largely on a 5.7% decrease in the price index for telephone hardware, calculators, and other consumer information items including smartphones.…lastly, a separate price index just for alcoholic beverages was 0.1% higher, while the price index for ‘other goods’ was 0.1% higher on a 1.0% increase in the price index for cigarettes and a 1.2% increase in the price index for hair, dental, shaving, and miscellaneous personal care products…

Within core services, the price index for shelter was 0.2% higher, as rents rose 0.2%, homeowner’s equivalent rent rose 0.2%, and prices for lodging away from home at hotels and motels were 1.1% higher, while the price index for household insurance was 0.1% higher, the price index for water, sewers and trash collection services was 0.7% higher, and the price index for moving, storage, and freight expense was 14.1% higher… at the same time, the price index for medical care services was 0.6% higher, as the price index for dental services rose 1.3%, price index for hospital services rose 0.6%, the price index for home health care rose 2.1% and the price index for nursing homes and adult day services was 1.9% higher….moreover, tin addition, the transportation services price index was 0.2% higher, as the price index for airline fares rose 1.4%, the price index for car and truck rental rose 2.7%, and the price index for motor vehicle maintenance and repair was 0.9% higher….however, the recreation services price index was 0.2% lower, as the price index for subscription and rental of video and video games fell 8.7%, and the price index for cable, satellite, and live streaming television service was 2.1% lower…meanwhile, the price index for education and communication services was 0.3% higher, as the price index for internet services and electronic information providers rose 1.0%, the price index for residential telephone services rose 1.3%, and the price index for elementary and high school tuition and fees was 0.4% higher.…lastly, the index for other personal services was 0.5% lower, as the price index for funeral expenses fell 1.6% and the price index for financial services services fell 1.3% on a 2.3% decrease in tax return preparation and other accounting fees..

US Trade Deficit Fell 25.3% in January on Higher Exports of Precious Metals and Capital Goods

Our trade deficit fell 25.3% in January, after rising a revised 30.1% in December, as the value of our exports increased, while the value of our imports decreased…the Commerce Dept report on our international trade in goods and services for January indicated that our seasonally adjusted goods and services trade deficit fell by a rounded $18.4 billion to a rounded $54.5 billion in January, from a December deficit that was revised from $70.3 billion up​ to $72.9 billion…trade deficit figures for all of the months of 2025 were revised as well, the net of which was to leave the annual trade deficit at $911.7 billion in 2025, up from the $903.5 billion deficit in 2024 (annual details are here)….

The value of our exports rose by a rounded $15.8 billion to $302.1 billion in January, on a $14.6 billion increase to $195.5 billion in our exports of goods, and an increase of $1.2 billion to $106.7 billion in our exports of services, while ​the value of our imports fell by $2.6 billion to $356.6 billion on a $2.8 billion decrease to $277.3 billion in our imports of goods and a $0.2 billion increase to $79.3 billion in our imports of services…prices of our exports averaged 0.6% higher in January, which means the increase in the nominal value of our exports for the month was partly price related, and that our real exports likely rose on the order of 4.9%, while import prices averaged 0.2% higher, meaning that the decrease in imports was despite higher prices, and that real imports probably fell about 0.9%..

The press release for this month’s report gives us a brief synopsis of Exhibits 7 and 8 in the Full Release and Tables pdf for January, which details the major reasons for the increase in our exports and the decrease in our imports:

Exports of goods increased $14.6 billion to $195.5 billion in January.

• Industrial supplies and materials increased $9.4 billion.
  • Nonmonetary gold increased $4.7 billion.
  • Other precious metals increased $4.1 billion.
• Capital goods increased $5.4 billion.
  • Computers increased $2.6 billion.
  • Civilian aircraft increased $1.6 billion.
  • Computer accessories increased $1.6 billion.
• Other goods increased $2.9 billion.
• Consumer goods decreased $2.8 billion.
  • Pharmaceutical preparations decreased $2.1 billion.

Imports of goods decreased $2.8 billion to $277.3 billion in January.

• Consumer goods decreased $3.3 billion.
  • Pharmaceutical preparations decreased $3.4 billion.
• Automotive vehicles, parts, and engines decreased $2.8 billion.
  • Trucks, buses, and special purpose vehicles decreased $1.5 billion.
  • Passenger cars decreased $1.0 billion.
• Industrial supplies and materials decreased $1.4 billion.
  • Nonmonetary gold decreased $1.1 billion.
• Capital goods increased $3.4 billion.
  • Computers increased $3.9 billion.
  • Telecommunications equipment increased $1.3 billion.

That press release for this month’s report also summarizes Exhibit 19 in the pdf, which gives us surplus and deficit details on our goods trade with selected countries…

The January figures show surpluses, in billions of dollars, with United Kingdom ($7.0), Netherlands ($6.4), South and Central America ($4.5), Switzerland ($3.0), Hong Kong ($3.0), Saudi Arabia ($2.2), Brazil ($1.8), Singapore ($1.7), Australia ($1.7), and Belgium ($0.9). Deficits were recorded, in billions of dollars, with Vietnam ($19.0), Taiwan ($17.3), Mexico ($12.8), China ($12.5), European Union ($6.1), South Korea ($6.0), Japan ($5.5), Germany ($4.9), Italy ($3.3), Malaysia ($3.2), India ($2.8), Canada ($2.7), Ireland ($2.4), France ($1.5), and Israel ($0.7).

• The deficit with the European Union decreased $5.0 billion to $6.1 billion in January. Exports decreased $1.2 billion to $34.7 billion and imports decreased $6.2 billion to $40.7 billion.
• The surplus with the United Kingdom increased $3.2 billion to $7.0 billion in January. Exports increased $3.6 billion to $12.5 billion and imports increased $0.4 billion to $5.5 billion.
• The deficit with Vietnam increased $1.4 billion to $19.0 billion in January. Exports decreased $0.2 billion to $1.4 billion and imports increased $1.3 billion to $20.4 billion.

To estimate the impact of January’s trade on eventual 1st quarter GDP growth figures, we use exhibit 10 in the pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted for inflation in chained 2017 dollars, the same inflation adjustment that’s used by the BEA to compute trade figures for GDP, with the only difference being that the amounts given here are not annualized…from that table, we can figure that the 4th quarter’s real exports of goods averaged 150,364..7 million monthly in chained 2017 dollars, while inflation adjusted January goods exports were at 154,973 million in that same 2017 dollar quantity index representation… figuring the annualized change between those two figures, we find that January’s real exports of goods are thus rising at a 12.8% annual rate from those of the 4th quarter, or at a pace that would add about 86 percentage points to 1st quarter GDP growth if continued at the same pace through February and March…in a similar manner, we find that our 4th quarter real imports of goods averaged 232,303.3 million monthly in chained 2017 dollars, while inflation adjusted goods imports in January were at 238,920 million in 2017 dollars….that would indicate that so far in the 1st quarter, we have seen our real imports of goods increase at an 11.9% annual rate from those of the 4th quarter…since an increase in imports would subtract from GDP because it would represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, an increase at a 11.9% rate would subtract roughly 1.34 percentage points from 1st quarter GDP….hence, if our January trade in goods deficit is maintained at the same level throughout the rest of the 1st quarter, the deterioration in our balance of trade in goods would subtract about 0.48 percentage points from the growth rate of our 1st quarter GDP….

Note that while we have not computed the impact of the change in international trade in services here, we’d note that our exports of services rose by $1.2 billion in January, while our imports of services rose by $0.2 billion, so the impact of the month’s services trade on GDP appears to be positive…however, both our exports and imports of services were about $1.5 billion higher in January than the 4th quarter averages, and since we have no appropriate price indexes we could apply to adjust those figures for inflation, we can’t say for sure…

Job Openings Rose in January, Layoffs and Job Quitting were Lower, Hiring was Little Changed

The Job Openings and Labor Turnover Survey (JOLTS) report for January from the Bureau of Labor Statistics estimated that seasonally adjusted job openings increased by 396,000, from 6,550,000 in December to 6,946,000 in January, after December’s job openings were revised 8,000 higher, from 6,542,000 to 6,550,000, with that revision incorporating an annual revision of 2025’s job openings and labor turnover data, tables for which are included in the release…January’s jobs openings were still 6.5% lower than the revised 7,431,000 job openings reported for January a year ago, as the job opening ratio expressed as a percentage of the employed rose to 4.2% in January from the 4.0% now indicated for December, but was down from the 4.5% rate of January a year ago….a 184,000 increase to 313,000 job openings in finance and insurance was the largest increase, while job openings in the professional and business services sector decreased by 160,000 to 977,000 (details on job openings by industry and region can be viewed in Table 1)…like most BLS releases, the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are linked at the end of the release…

The JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and ‘other separations’, which includes retirements and deaths….in January, seasonally adjusted new hires totaled 5,294,000, up by 22,000 from the revised 5,272,000 who were hired or rehired in December, as the hiring rate as a percentage of all employed was unchanged at 3.3% in January, and was also unchanged from the 3.3% hiring rate in January a year earlier (details of hiring by sector since September are in table 2)….meanwhile, total separations fell by 98,000, from 5,203,000 in December to 5,105,000 in January, as the separations rate as a percentage of the employed fell from 3.3% in December to 3.2% in January, and was also down from the separations rate of 3.3% in January of a year ago (see table 3)…subtracting the 5,105,000 total separations from the total hires of 5,294,000 would imply an increase of 189,000 jobs in January, more than the revised payroll job increase of 122,000 for January reported in the February establishment survey last week, but still within the expected +/-115,000 margin of error for these reports….

Breaking down the seasonally adjusted job separations, the BLS finds that 3,137,000 of us voluntarily quit our jobs in January, down by 88,000 from the revised 3.225,000 who quit their jobs in December, while the quits rate, widely watched as an indicator of worker confidence, was unchanged at 2.0% of total employment, and was the same as the 2.0% quits rate of a year earlier (see details in table 4)….in addition to those who quit, another 1,631,000 were either laid off, fired or otherwise discharged in January, down by 35,000 from the 1,666,000 who were discharged in December, as the discharges rate slipped from 1.1% to 1.0% of all those who were employed during the month, which was also down from the discharges rate of 1.1% a year earlier….meanwhile, ‘other separations’, which includes retirements and deaths, were at 337,000 in January, up by 25,000 from 312,000 in December, for an ‘other separations rate’ of 0.2%, the same as in December and as in January of last year….both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release…

January Durable Goods: New Orders Virtually Unchanged, Shipments Rose 0.6%, Inventories Rose 0.2%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for January (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods fell for the third time in four months, decreasing by $0.1 billion or 0.0 percent to $321.2 billion in January, after the value of December’s new orders was revised from the $319.6 billion reported last month to $321.3 billion, now indicated to be 0.9% less than November’s new orders, revised from the 1.4% decrease previously reported….

The volatile monthly new orders for transportation equipment led the January new orders decrease, as new transportation equipment orders fell $1.0 billion or 0.9 percent to $113.3 billion, on a 23.7% decrease to $5,354 million in the value of new orders for defense aircraft, and a 0.4% decrease to $67,806 million in the value of new orders for motor vehicles and parts…. excluding orders for transportation equipment, other new orders were 0.4% higher, while excluding just new orders for defense equipment, other new orders rose 0.5%….at the same time, new orders for nondefense capital goods less aircraft, a proxy for equipment investment, fell $3 million to $79,265 million…

Meanwhile, the seasonally adjusted value of January shipments of durable goods, which will be included as inputs into various components of 1st quarter GDP after adjusting for changes in prices, increased in value by $2.0 billion or 0.6 percent to $314.2 billion, the fourth increase in five months, after the value of December shipments was revised from from $311.5 billion to $312.26 billion, now up 1.2% from November….an increase in the value of shipments of transportation equipment led the January shipments increase, as they rose $1.0 billion or 1.0 percent to $103.5 billion, due to an 8.0% increase in shipments of commercial aircraft….excluding shipments of transportation equipment, other shipments were 0.4% higher, while the value of shipments of nondefense capital goods less aircraft fell 0.1% to $78,674 million, after the value of December’s shipments of capital goods was revised from $78,667 million to $78,772 million, now 1.0% higher than in November…

At the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the fourth consecutive month, increasing by $1.2 billion or 0.2 percent to $594.7 billion, after the value of  December’s inventories was revised from $593.2 billion to $593.46 billion, still up 0.2% from November….higher valued inventories of transportation equipment led the January increase, rising $0.4 billion or 0.2 percent to $188.1 billion, while the value of inventories other than transportation equipment was also 0.2% higher at $406,552 billion…

Finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but quite volatile monthly new orders, rose for the eighteenth of the last nineteen months, increasing by $11.9 billion or 0.8 percent to $1,540.2 billion…that increase followed a 0.9% increase to $1,528,213 million in December, which was previously reported as a 0.9% increase to $1,527.2 billion…a $9.8 billion or 1.0 percent increase to $$971.1 billion in the value of unfilled orders for transportation equipment led the January unfilled orders increase, while the value of unfilled orders other than those for transportation equipment orders was 0.4% higher at $566,855 million…the unfilled order book for durable goods is now 11.0% above the level of last January, with unfilled orders for transportation equipment 17.2% above their year ago level, led by a 21.1% increase in the backlog of orders for commercial aircraft…

NB: for those who are interested in seeing graphs relating to this release, FRED at the St Louis Fed offers graphs of 445 different durable goods data sets…to change what is displayed on any graph, (ie, dollars, percent, etc) click the edit button and then click the edit line 1 tab and make your selection from the units menu…to change the displayed line graph into a bar graph, click the edit button and then click the format tab…

January Housing Starts Reported Higher; Building Permits Unchanged

The January report on New Residential Construction (pdf) from the Census Bureau estimated that their widely watched count of new housing units started in January was at a seasonally adjusted annual rate of 1,487,000, which was 7.2 percent (±13.7 percent)* above their revised December estimated annual rate of 1,387,000, and was 9.5 percent (±16.5 percent)* above last January’s estimated rate of 1,358,000 housing starts annually….the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell from December, or even over the past year, with the figures in parenthesis the most likely range of the change indicated; in other words, January housing starts could have been down by 6.5% or up by as much as 20.9% from those of December, with revisions of a greater magnitude in either direction possible…with this report, the annual rate for December housing starts was revised from the 1,404,000 reported a month ago to 1,387,000, while November starts, which were initially reported at a 1,322,000 annual rate, were revised to a 1,324,000 annual rate with this report…

The annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 100,500 housing units were started in January, down from the revised 100,900 units that were started in December, and down from the 107,500 units that were started in November…of those housing units started in January, an estimated 63,600 were single family homes and 38,700 were units in structures with more than 5 units, down from the revised 67,900 single family starts in December but up from the 31,100 units started in structures with more than 5 units in December…

The monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data…in January, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,376,000, 5.4 percent below the revised December rate of 1,455,000 permits, and 5.8 percent below the 1,460,000 a year rate of building permit issuance in January a year earlier…the annual rate for housing permits issued in December was revised from the 1,448,000 reported last month to 1,455,000….

Again, the annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 99,500 housing units were issued in January, down from the revised estimate of 117,600 new permits issued in December….of those, 61,900 were permits for single family homes and 33,900 were permits for units in structures of more than 5 units, down from the 63.600 single family permits in December, and down from the 50,000 permits for units in structures of more than 5 units….

Existing Home Sales Rose 1.7% in February; Prices Down 8.0% Since June

The National Association of Realtors (NAR) reported that existing home sales increased by 1.7% from January to February on a seasonally adjusted basis, the largest jump in a year, projecting that 4.09 million existing homes would sell over an entire year if the February home sales pace were extrapolated over that year, a pace that was still 1.2% below the annual sales rate projected for February of last year….the January home sales pace was revised from the 3.91 million annual sales rate reported a month ago to a 4.02 million annual rate with this report….the NAR also reported that the median sales price for all existing-home types was $398,000 in February, which was 0.3% higher than in February a year earlier, and which they report is “the 32nd consecutive month of year-over-year price increases.“, even though month over month prices have fallen month over month six times since June…..the NAR press release, which is titled “NAR Existing-Home Sales Report Shows 1.7% Increase in February“, is in easy to read plain English, so if you’re interested in further details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release…since sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process…

Since this report is entirely seasonally adjusted and at a not very informative annual rate, we usually look at the raw data overview (pdf) to see what actually happened with home sales during the month…this unadjusted data indicates that roughly 257,000 homes sold in February, up 12.7% from the revised 228,000 homes that sold in January, but unchanged from the 257,000 homes that sold in February of last year….that same pdf indicates that the median home selling price for all housing types rose by 0.8%, from a revised $395,000 in January to $398,000 in February, and that it was up 0.3% from $396,800 in February of last year, while it was down 8.0% from $432,700 in June of 2025, with median prices ranging from a low of $302,100 in the Midwest to a high of $603,100 in the West…

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are chosen from the aforementioned GGO posts, contact me…)