3rd estimate 4th quarter GDP; March consumer prices; February’s income and outlays, durable goods, factory inventories and wholesale trade

The key reports released last week were the March Consumer Price Index from the Bureau of Labor Statistics, and the 3rd estimate of 4th quarter GDP, and the February report on Personal Income and Spending, both from the Bureau of Economic Analysis; other regular reports included the advance report on durable goods for February, the Full Report on Manufacturers’ Shipments, Inventories and Orders for February, and the February report on Wholesale Trade, Sales and Inventories, all from the Census Bureau, and the Consumer Credit Report for February from the Fed, which indicated that overall consumer credit, a measure of non-real estate debt, rose by a seasonally adjusted $9.5 billion, or at a 2.2% annual rate, as revolving credit grew at a 0.6% annual rate to $1,327.6 billion, while non-revolving credit outstanding grew at a 2.8% rate to $3,789.2 billion…

In addition, the week also saw the long delayed Regional and State Employment and Unemployment Report for January from the Bureau of Labor Statistics, a report which breaks down the two employment surveys from the monthly national jobs report by state and region …while the text of that report provides a useful summary of the state and regional data, the serious statistical aggregation can be found in the tables linked at the end of the report, where one can find the civilian labor force data and the change in payrolls by industry for each of the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands…

The major privately issued report released this week was the March 2025 Services Report On Business from the Institute for Supply Management (ISM); they reported their Services Index rose to 56.2%, up from 53.9% in February, indicating that a larger plurality of service industry purchasing managers reported expansion in various facets of their business in March…

Consumer Prices Rose 0.9% in March on Jump in Gasoline Prices

The consumer price index was 0.9% higher in March, as higher prices for fuel, housing, clothing, electricity, airline fares, car and truck rentals, vehicle maintenance and repairs, doctor and hospital services, computers and software, video  services, pets and pet supplies, toys, and tax preparation, were only partly offset by lower prices for groceries, gas utility service, used vehicles, furniture and appliances, prescription drugs, home health care, health insurance, internet service, smartphones, and admissions to sporting events ….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 0.9% higher in March, after being 0.3% higher in February, 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 last April, and unchanged in March 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 326.785 in February to 330.213 in March, which left it 3.25642% higher than the index reading of 319.799 from March of last year, which is reported as a 3.3% year over year increase, up from the 2.4% year over year increase that was reported for February, with that widely cited year over year change simply reflecting the effect of last March’s "unchanged" report dropping out of the comparison and being replaced by the current month’s +0.9%, and not telling us anything more about inflation beyond that….with much higher prices for energy recorded this month, seasonally adjusted core prices, which exclude both food and energy, were only up by 0.2% for the month, as the unadjusted core price index rose from 333.242 in February to 334.391 March, which left the core index 2.59501% ahead of its year ago reading of 325.933, which is reported as a 2.6% year over year increase, up from the 2.5% year over year core price increase that was reported for February, but 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 10.9% higher in March, after being 0.6% higher in February, 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, and 2.4% lower last March, and is now 20.5% higher than in March of a year ago….the price index for energy commodities was 21.3% higher in March, on a 21.2% increase in the price index for gasoline and a 30.7% increase in the price index for fuel oil, while the price index for “other energy commodities”, including propane, kerosene, and firewood, averaged out to 0.3% higher ….meanwhile, the price index for energy services was 0.4% higher, after rising 0.2% in February, even as the price index for utility gas service was 0.9% lower in March, but is still 6.4% higher than it was a year ago, while the electricity price index was 0.8% higher, after falling 0.7% in February…. energy commodities are now averaging 19.4% above their year ago levels, with gasoline prices averaging 18.9% higher than they were a year ago, while the energy services price index is still up 5.0% from last March, as electricity prices are still averaging 4.6% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was unchanged in March, after being 0.4% higher in February, 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, and 0.4% higher last March, and is now 3.1% higher than a year ago….the price index for food purchased for use at home was 0.2% lower in March, while the price index for food bought to eat away from home was 0.2% higher, as average prices at fast food outlets rose 0.2% and average prices at full service restaurants rose 0.3%, while the price index for food at employee sites and schools was unchanged, and prices for other food away from home averaged 0.3% higher…

In the food at home categories, the price index for cereals and bakery products was 0.6% lower, even as average bread prices rose 0.4%, as the price index for flour and prepared flour mixes fell 1.2%, the price index for rice,  pasta, and cornmeal fell 0.9%, the price index for fresh cakes and cupcakes fell 2.6%, and the price index for crackers, bread, and cracker products was 1.5% lower.…at the same time, the price index for the meats, poultry, fish, and eggs food group was also 0.6% lower, as the price index for beef and veal fell 0.6%, the price index for pork fell 0.6%, the price index for fresh whole chicken fell 0.9%, egg prices fell 3.8%, the price index for uncooked poultry other than chicken was 0.7% lower, and the price index for shelf stable fish and seafood was 1.7% lower…. in addition, the seasonally adjusted price index for dairy products was also 0.6% lower, even as average milk prices rose 0.2%, as the price index for cheese and related products was 1.5% lower and the price index for ice cream and related products was also 1.5% lower….on the other hand, the fruits and vegetables price index was 1.0% higher, as the price index for fresh fruits rose 1.3%, the price index for fresh vegetables rose 1.4%, and the price index for frozen vegetable was 1.7% higher.…meanwhile, the beverages price index was 0.3% lower, as the price index for carbonated drinks fell 1.0%, the price index for noncarbonated juices and drinks fell 0.3%, but the price index for coffee was 1.3% higher….lastly, the price index for the ‘other foods at home’ category was unchanged, as the price index for salad dressing rose 1.0%, the price index for peanut butter rose 2.2%, and the price index for soups rose 1.3%, while the price index for sugar and sugar substitutes fell 1.9%, the price index for snacks fell 0.9%, the price index for frozen and freeze dried prepared foods fell 0.7%, and the price index for prepared salads was 1.9% lower…

Among the seasonally adjusted core components of the CPI, which rose by 0.2% in March, after rising by 0.2% in February, 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, and by 0.1% last March, 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 0.2% higher..

Among the goods components of the core price index, which will initially be used by the Bureau of Economic Analysis to adjust March’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.2% lower, as the price index for living room, kitchen, and dining room furniture fell 0.7%, the price index for appliances fell 1.6%, the price index for window coverings fell 1.1%, the price index for clocks, lamps, and decorator items fell 0.8%, and the price index for household cleaning products was 0.3% lower….on the other hand, the apparel price index was 1.0% higher, on a 2.6% increase in the price index for men’s pants and shorts, a 2.3% increase in the price index for women’s suits and separates, a 0.7% increase in the price index for girls’ apparel, and a 2.3% increase in the price index for women's footwear…. meanwhile, the price index for transportation commodities other than fuel was was 0.1% lower, as average prices for new cars were 0.3% higher, while the price index for used cars and trucks fell 0.4%, and the price index for motor oil, coolant, and fluids was 1.5% lower…. at the same time, the price index for medical care commodities was 1.0% lower, as the price index for prescription drugs was 1.5% lower,  the price index for nonprescription drugs was 0.3% lower, and the price index for medical equipment and supplies was also 0.3% lower…however, the recreational commodities index was 0.5% higher, as the price index for pets, pet supplies, and accessories rose 1.7%, the price index for toys rose 2.3%, the price index for sports vehicles including bicycles rose 0.4%, the price index for music instruments and accessories rose 1.4%, and the price index for photographic equipment and supplies was 0.4% higher… in addition, the education and communication commodities index was 0.3% higher, on a 2.2% increase in the price index for college textbooks, a 1.5% increase in the price index for computers, peripherals, and smart home assistants, and a 4.0% increase in the price index computer software and accessories.…lastly, a separate price index just for alcoholic beverages was 0.3% higher, while the price index for ‘other goods’ was 0.5% higher on a 0.5% increase in the price index for cosmetics, perfume, bath, nail preparations and implements and a 1.6% increase in the price index for miscellaneous personal goods…

Within core services, the price index for shelter was 0.3% higher, as rents rose 0.2%, homeowner’s equivalent rent rose 0.3%, and prices for lodging away from home at hotels and motels were 0.2% higher, while the price index for household insurance was 0.9% higher, the price index for water, sewers and trash collection services was 0.5% higher, and the price index for moving, storage, and freight expense was 1.9% higher… however, the price index for medical care services was unchanged, as the price index for physicians' services rose 0.7%, and the price index for outpatient hospital services rose 0.7%, but the price index for home health care fell 1.9% and the price index for health insurance was 1.4% lower…meanwhile, the transportation services price index was 0.6% higher, as the price index for airline fares rose 2.7%, the price index for other intercity transportation rose 3.5%, the price index for car and truck rental rose 1.3%, and the price index for motor vehicle maintenance and repair was also 1.3% higher….however, the recreation services price index was 0.4% lower, as the price index for admission to sporting events fell 10.1%, and the price index for cable, satellite, and live streaming television service was 0.2% lower…meanwhile, the price index for education and communication services was 0.2% higher, as the price index for day care and preschool rose 0.6%, the price index for delivery services rose 3.1%, and the price index for wireless telephone services was 0.6% higher.…lastly, the index for other personal services was 0.8% lower, as the price index for haircuts and other personal care services fell 0.3% and the price index for miscellaneous personal services was 1.2% lower..

4th Quarter GDP Grew at a 0.5% Rate, Revised from 0.7%, as Inventories and PCE Goods were Revised Lower

The Third Estimate of our 4th Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services grew at a 0.5% rate in the quarter, revised from the 0.7% growth rate reported in the second estimate last month, as downward revisions to inventories, to personal consumption expenditures for goods, and to fixed investment more than offset upward revisions to government and exports…In current dollars, our fourth quarter GDP grew at a 4.2% annual rate, increasing from what would work out to be a $31,098.0 billion a year rate in the 3rd quarter to a $31,422.5 annual rate in the 4th quarter, with the headline 0.5% annualized rate of increase in real output arrived at after weighted annualized inflation adjustments averaging 3.7%, known in aggregate as the GDP deflator, were computed from the price changes of each of the GDP components and applied to their current dollar change…

Remember that the GDP press release reports all quarter over quarter percentage changes at a compounded annual rate, which means that they’re expressed as a change a bit over 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….historically, we have reported on this report using the actual data as was found in the full release and tables, which you can view for the 2nd estimate of 4th quarter GDP here: https://www.bea.gov/sites/default/files/2026-03/gdp4q25-2nd.pdf. however with this 3rd estimate of 4th quarter GDP, the real data has been removed and has been replaced by graphics and pablum, which you can view here: https://www.bea.gov/sites/default/files/2026-04/gdp4q25-3rd.pdf . without a one-stop document to go to, this review will be the best we can cobble together from other BEA documents…

Growth of real personal consumption expenditures (PCE), the largest component of GDP, was revised from a growth rate of 2.0% to an overall 1.9% growth rate in this 3rd estimate…that growth rate figure was arrived at by deflating components of the growth rate in the dollar amount of consumer spending with components of the PCE price index, which indicated inflation of goods and services bought by individuals increased at a 2.9% annual rate in the 4th quarter, which was unrevised from the PCE inflation rate reported a month ago….

Real consumption of durable goods grew at a 0.1% annual rate, revised from the statistically unchanged growth rate shown in the second report, and added 0.01 percentage point to GDP, as increased real consumption of recreational goods and vehicles offset a  decrease in real consumption of motor vehicles and parts….at the same time, real consumption of nondurable goods by individuals grew at a 0.4% annual rate, revised from the 0.6% growth rate reported in the 2nd estimate, and added 0.05 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…meanwhile, consumption of services grew at a 2.7% annual rate, a bit lower but statistically unrevised from the 2.7% growth rate reported last month, and added 1.23 percentage points to the final GDP tally, as growth in real health care services accounted for almost a third of the 4th quarter services growth…

Meanwhile, seasonally adjusted real gross private domestic investment grew at a 2.3% annual rate in the 4th quarter, revised down from the 3.2% growth estimate reported last month, as real private fixed investment grew at a 1.5% rate, revised from the 1.6% growth rate reported in the second estimate, while inventories shrunk more than was previously estimated… Real investment in non-residential structures are now shown to have contracted at a 6.5% rate, revised up from the 7.1% contraction rate previously reported, while real investment in equipment grew at 4.3% rate, revised up from the 3.9% growth rate shown a month ago…meanwhile, the quarter’s investment in intellectual property products was revised down from a 5.7% growth rate to a 5.4% rate, while at the same time real residential investment was shown to be shrinking at a 5.4% annual rate, down  from the 0.5% contraction rate shown in the previous report….after those revisions, the decrease in investment in non-residential structures subtracted 0.32 percentage points from the 4th quarter’s growth rate, while the increase in investment in equipment added 0.05 percentage points to the quarter’s growth rate, and growth in investment in intellectual property added 0.23 percentage points to the growth rate of 4th quarter GDP, while the decrease in residential investment subtracted 0.11 percentage points from the growth rate 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 previously reported $7.5 billion contraction in inflation adjusted growth to show that inventories had contracted at an inflation adjusted $15.6 billion rate…since that came after inventories had shrunk at an inflation adjusted $23.9 billion rate in the 3rd quarter, the change in real inventory growth from the 3rd to the 4th quarter was revised from a rounded $14.4 billion positive change, which had added 0.28 percentage points to the 4th quarter’s growth rate, to an $8.3 billion positive change, which added 0.14 percentage points to the 4th quarter’s growth rate….however, since a positive change in 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 $8.3 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, essentially unrevised from the real final sales 0.4% growth rate shown in the second estimate, but 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 lower with this estimate, while the previously reported decrease in real imports was revised lower by virtually the same amount, and as a result the impact our net trade improvement was essentially unchanged from the previously report…our real exports shrunk at a 3.2% rate, revised from the 3.3% contraction rate reported in the second 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 and hence not captured by another GDP metric, that decrease in 4th quarter exports conversely subtracted 0.35 percentage points from the 4th quarter’s GDP growth rate, revised from the 0.36 percentage point subtraction to GDP due to lower exports shown in the 2nd estimate….meanwhile, the previously reported 1.1% decrease in our real imports was revised to a 1.0% decrease, 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 domestically, their decrease conversely added 0.13 percentage points to 4th quarter GDP, revised from the 0.15 percentage point addition shown last month… thus, after rounding, our deteriorating trade imbalance subtracted a net 0.22 percentage points  from 4th quarter GDP, the same subtraction that had been indicated by the second estimate..

Finally, there were upward revisions to government consumption and investment in this 3rd estimate, as the overall government sector shrunk at a 5.6% rate, revised from the 5.8% contraction rate previously reported….real federal government consumption and investment was seen to have contracted at a 16.6% rate from the 3rd quarter in this estimate, revised up from the 16.7% contraction rate reported in the second estimate, as real federal outlays for defense shrunk at a 10.7% rate, unrevised from the contraction rate shown previously, and subtracted 0.42 percentage points from 4th quarter GDP, while all other federal consumption and investment shrunk at a 24.3% rate, revised from the 24.4% contraction rate shown previously, and subtracted 0.73 more percentage points from 4th quarter GDP growth….meanwhile, real state and local consumption and investment was revised from growing at a 1.2% rate in the second estimate to growing at a 1.5% rate in this estimate, as state and local investment spending added 0.04 percentage points to 4th quarter GDP, while state and local consumption spending added 0.12 percentage points to GDP….note that government outlays for social insurance are not included in this government GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, thus indicating there had been an increase in the output of those goods or services…

Personal Income Fell 0.1% in February, Personal Spending Rose 0.5%, Savings Rate Fell to 4.0%, PCE Price Index Rose 0.4%

The February report on Personal Income and Outlays from the Bureau of Economic Analysis gives us nearly half the data that will go into 1st quarter GDP, since it gives us 2 months of data on our personal consumption expenditures (PCE), which accounts for nearly 70% of GDP, and 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….this report also provides us with the nation’s personal income data, disposable personal income, which is income after taxes, and our monthly savings rate…however, like the GDP report, the full release and tables we had previously relied on for comprehensive data has been replaced by a few pages of graphics and pablum, which you can view here: https://www.bea.gov/sites/default/files/2026-04/pi0226.pdf , so our review will be the best we can cobble together from other BEA documents that we are unfamiliar with …

The opening line of the press release for this report tell us “Personal income decreased $18.2 billion (0.1 percent at a monthly rate) in February“, which means that the annualized figure for US personal income in February, $26,661.0 billion, was a rounded $18.3 billion, or nearly 0.1% less than the annualized personal income figure of $26,679.1 for January; the actual change in personal income from January to February is not provided…similarly, annualized disposable personal income, which is income after taxes, also fell by almost 0.1%, from an annual rate of $23,448.1 billion in January to an annual rate of $23,429.8 billion in February…the components of this month’s decrease in personal income, which can be viewed in Table 2.6 of the National Income and Product Accounts, are also annualized figures…in February, the reasons for the net $18.2 billion annualized decrease in personal income were a $92.0 billion annual rate of decrease in interest and dividend income and a $34.4 billion decrease in Obamacare benefits; on the other hand, income from wages and salaries rose at a $25.9 billion annual rate…

For the personal consumption expenditures (PCE) that will be included in 1st quarter GDP, the BEA reports that they increased at a $103.3 billion annual rate, or by almost 0.5 percent, rising from an annual rate of $21,511.8 billion in January to an annual rate of $21,615.1 in February, after the January PCE rate was revised down from the originally reported $21,536.6 billion annually….total personal outlays for February, which includes interest payments and personal transfer payments in addition to PCE, rose by an annualized $106.5 billion to $22,498.2 billion annually, which left total personal savings, which is disposable personal income less total outlays, at a $931.5 billion annual rate in February, down from the revised $1,056.4 billion in annualized personal savings in January… as a result, the personal savings rate, which is personal savings as a percentage of disposable personal income, fell to 4.0% in February from January’s savings rate of 4.5%…

Before personal consumption expenditures are used in the 1st quarter GDP computation, they are first 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…the BEA does that by computing a price index for personal consumption expenditures, which is a chained price index based on 2017 prices = 100, which is included in Table 2.8.4. in the National Income and Product Accounts data….that PCE price index rose from 128.965 in January to 129.449 in February, a month over month inflation rate that’s statistically 0.375296%, which BEA reports as an increase of 0.4 percent, following the PCE price index increase of 0.3% that they reported for January…then, applying that 0.375296%inflation adjustment to the nominal increase in February PCE shows that real PCE rose by 0.104514% in February, which the BEA reports as a 0.1% increase…notice 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 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 2.8.6. in the National Income and Product Accounts data, where we see that February’s chained dollar consumption total works out to 16,698.9 billion annually, 0.103707% less than January’s 16,681.6 billion, or a change that’s statistically equivalent to the real PCE decrease we just computed from the index values…

Finally, to estimate the impact of the change in PCE on the change in GDP, we have to compare real PCE from January and February to the the real PCE of the 3 months of the fourth quarter….while this report gives us PCE for all those months on a monthly basis, the BEA also provides the annualized chained dollar PCE on a quarterly basis in Table 2.3.6U. in the National Income and Product Accounts data, where we find that the annualized real PCE for the 3 months of the 4th quarter was represented by 16,665.2 billion in chained 2017 dollars…then, by averaging the annualized chained 2017 dollar PCE figures for January and February, 16,681.6 billion 16,698.9 billion, we get an equivalent annualized PCE for the two months of the 1st quarter that we have the data for so far….when we compare that 1st quarter 2017 dollar PCE average of 15,655.15 to the 4th quarter chained dollar PCE of 15,586.7, we find that 1st quarter real PCE has grown at a 0.60% annual rate for the two months of the 1st quarter that are included in this report (note the math to get that annual rate: (((16,698.9 + 16,681.6)/2) / 16,665.2 ) ^ 4 = 1.006026.…2 months growth at that rate means that if March real PCE does not improve from the average of January and February, growth in PCE would still add 0.42 percentage points to the growth rate of the 1st quarter…

February Durable Goods: New Orders Fell 1.4%, Shipments Rose 1.3%, Inventories Rose 0.1%

The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for February (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods decreased by $4.4 billion or by 1.4 percent to $315.5 billion in February, the fourth decrease in five months, after the value of January’s new orders was revised from the $321.2 billion reported last month to $319.9 billion, now a 0.5% decrease from December’s new orders, revised from the near zero decrease reported a month ago…even with those decreases, however, year to date new orders were still 8.1% higher than those of the first two months of 2025…

A decrease in the volatile monthly new orders for transportation equipment was the reason for February’s new orders decrease, as the value of new transportation equipment orders fell $6.1 billion or 5.4 percent to $106.1 billion, on an 28.6% decrease to $19,240 million in the value of new orders for commercial aircraft, and a 3.8% decrease to $4,907 million in the value of new orders for defense aircraft…excluding orders for transportation equipment, the value of other new orders was 0.8% higher, while excluding just new orders for defense equipment, new orders fell 1.2%….meanwhile, new orders for nondefense capital goods less aircraft, a proxy for equipment investment orders, were up by $562 million or 0.6% to $79,427 million…

Over the same period, the seasonally adjusted value of February’s shipments of durable goods, which will ultimately be included as inputs into various components of 1st quarter GDP after adjusting for changes in prices, rose for the fifth time in six months, increasing by $4.2 billion or 1.3 percent to $319.2 billion, after the value of January’s shipments was revised from $314.2 billion to $315.1 billion, now up 0.9% from December, rather than the 0.6% increase reported a month ago….higher shipments of transportation equipment led the February shipments increase, rising by $1.6 billion or 1.6 percent to $105.9 billion, driven by a 3.0% increase in the value of shipments of motor vehicles and parts….at the same time, the value of shipments of nondefense capital goods less aircraft rose by 0.9% to $79,449 million, after January’s capital goods shipments were revised up from $78,674 million to $78,751 million, now virtually unchanged from December…

Meanwhile, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose by $0.7 billion or 0.1 percent to $595.7 billion, the fifth consecutive increase, after the value of January’s inventories was revised from $594.7 billion to $594.9 billion, still up 0.2% from December… a $0.2 billion or 0.3 percent increase to $67.6 billion. in inventories of computers and electronic products led the increase, while the value of inventories of transportation equipment was up just slightly at $188,477 million..

Finally, the value of unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but often very volatile new orders, rose for the nineteenth time in 20 months, increasing by $1.3 billion or 0.1 percent to $1,539.3 billion, following 0.6% January increase to $1,538.0 billion, which was revised from the previously reported 0.8% increase to $1,540.2 billion….a $0.7 billion or a 0.5 percent increase to $146.0 billion in unfilled orders for machinery led the February increase, while unfilled orders of transportation equipment were up $283 million to $969,677 billion…the unfilled order book for durable goods is still 11.0% above the level of last February, with unfilled orders for transportation equipment 17.0% above their year ago level, mostly due to a 22.4% increase in the backlog of orders for commercial aircraft…

February Factory Shipments Rose 1.4%, Factory Inventories were 0.1% Higher

The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for February from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods increased by $0.3 billion, or were virtually unchanged at $619.6 billion, the second consecutive increase, following a virtually unchanged increase to $619.4 billion in January, which was originally reported as a 0.1 percent increase to $620.1 billion month ago….however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched “factory orders report”, both the “new orders” and “unfilled orders” sections of this report are really only accurate as revised updates to the February advance report on durable goods, which was released earlier in this week…on those durable goods revisions, the Census Bureau’s own summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite clear and complete, so we’ll just quote directly from that summary here:

• Summary: New orders for manufactured goods in February, up three of the last four months, increased $0.3 billion or virtually unchanged to $619.6 billion, the U.S. Census Bureau reported today. This followed a virtually unchanged January increase. Shipments, up four of the last five months, increased $8.8 billion or 1.4 percent to $623.2 billion. This followed a 0.7 percent January increase. Unfilled orders, up nineteen of the last twenty months, increased $1.4 billion or 0.1 percent to $1,539.4 billion. This followed a 0.6 percent January increase. The unfilled orders-to-shipments ratio was 6.92, down from 6.99 in January. Inventories, up five consecutive months, increased $0.9 billion or 0.1 percent to $950.5 billion. This followed a 0.1 percent January increase. The inventories-to-shipments ratio was 1.53, down from 1.55 in January.
• New Orders for manufactured durable goods in February, down four of the last five months, decreased $4.1 billion or 1.3 percent to $315.9 billion, up from the previously published 1.4 percent decrease. This followed a 0.4 percent January decrease. Transportation equipment, also down four of the last five months, drove the decrease, $5.9 billion or 5.3 percent to $106.3 billion. New orders for manufactured nondurable goods increased $4.4 billion or 1.5 percent to $303.7 billion.
• Shipments of manufactured durable goods in February, up five of the last six months, increased $4.4 billion or 1.4 percent to $319.5 billion, up from the previously published 1.3 percent increase. This followed a 0.9 percent January increase. Transportation equipment, up four of the last five months, led the increase, $1.7 billion or 1.6 percent to $105.9 billion. Shipments of manufactured nondurable goods, up three consecutive months, increased $4.4 billion or 1.5 percent to $303.7 billion. This followed a 0.5 percent January increase. Petroleum and coal products, up two consecutive months, led the increase, $3.3 billion or 6.2 percent to $55.8 billion.
• Unfilled Orders for manufactured durable goods in February, up nineteen of the last twenty months, increased $1.4 billion or 0.1 percent to $1,539.4 billion, unchanged from the previously published increase. This followed a 0.6 percent January increase. Machinery, up seven consecutive months, led the increase, $0.7 billion or 0.5 percent to $146.0 billion.
• Inventories of manufactured durable goods in February, up five consecutive months, increased $0.8 billion or 0.1 percent to $595.7 billion, unchanged from the previously published increase. This followed a 0.2 percent January increase. Primary metals, up twelve consecutive months, led the increase, $0.2 billion or 0.4 percent to $49.4 billion. Inventories of manufactured nondurable goods, up following two consecutive monthly decreases, increased $0.1 billion or virtually unchanged to $354.7 billion. This followed a 0.3 percent January decrease. Petroleum and coal products, also up following two consecutive monthly decreases, drove the increase, $0.2 billion or 0.5 percent to $44.1 billion. By stage of fabrication, February materials and supplies increased 0.6 percent in durable goods and 0.2 percent in nondurable goods. Work in process increased 0.4 percent in durable goods and 3.8 percent in nondurable goods. Finished goods decreased 0.9 percent in durable goods and 1.6 percent in nondurable goods.

To gauge the effect of February’s dollar valued factory inventories on 1st quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index….by stage of fabrication, the value of finished goods inventories decreased 1.3% to $323,938 million; the value of work in process inventories increased 1.2% to $269,084 million, and the value of materials and supplies inventories increased by 0.5% to $357,470 million…meanwhile, the producer price index for February indicated that prices for finished goods increased 1.1%, that prices for intermediate processed goods were 1.6% higher, and that prices for unprocessed goods were on average 3.1% higher, as core raw materials averaged a 1.1% price increase….assuming similar valuations for like types of inventories, that would suggest that February’s real finished goods inventories were around 2.4% smaller than January’s, that real inventories of intermediate processed goods were about 0.4% smaller, and that real raw material inventory inventories were around 3.6% lower, with a caveat that crude oil prices, which fell 4.7%, are overweighed in the PPI when compared to their 5% of factory inventories …since this report thus indicates a decrease of around 2.5% in real factory inventories, following an 0.5% decrease in January, however, since there was a sharp decrease in real factory inventories in the 4th quarter, any smaller 1st quarter decrease in real factory inventories would still add to first quarter GDP an amount equal to the difference between the quarterly decreases…

Wholesale Sales Rose 2.7% in February; Wholesale Inventories Rose 0.8%

The February report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was “$751.9 billion, up 2.7 percent (±0.4 percent) from the revised January level and were up 8.8 percent (±1.1 percent) from the revised February 2025 level”… the December 2025 to January 2026 percent change in sales was revised from the preliminary estimate of up 0.5 percent (±0.5 percent)* to $727.5 billion to a increase of 1.1% to $731.766 billion with this report….as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods sold….

On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods in a warehouse or on a store shelf represent goods that were produced but not sold, and this February report estimated that wholesale inventories were valued at $919.6 billion at month end, an increase of 0.8 percent (+/-0.4%) from the revised January level and  1.8 percent (±1.1 percent) higher than February a year ago, with the January preliminary inventory estimate revised from the advance estimate of down 0.5 percent (±0.2 percent) to $909.3 billion to a decrease of 0.3 percent (±0.2 percent) to $911.9 billion….

For national accounts, the wholesale inventories reported here will be adjusted the February producer price indices…with notable exceptions such as inventories of farm products, chemicals and petroleum, we’ve previously estimated that wholesale inventories appear to be roughly 70% finished goods….with the February producer price index for finished goods up by 1.1% and as the producer price indexes for intermediate goods & raw goods were 1.6% higher and 3.1% higher respectively, we can figure that February’s real wholesale inventories would have probably decreased by at least 1.0%, following a 0.5% decrease in January….since real wholesale inventories were up slightly in the 4th quarter, any first quarter real wholesale inventory decease would subtract that 4th quarter increase, plus the first quarter decrease, from the growth rate of 1st quarter GDP….

(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…)