e-EDGE is now available as an RSS feed. [Click here to subscribe to it.]The U.S. economy edged down by -0.3% last quarter according to “advance” estimates of the Bureau of Economic Analysis. This pace was a bit below the -0.2% recorded during the fourth quarter 2007, and both were the first down quarters since the -1.4% recorded in 3q2001. Both were also below the 2.8% pace of the second quarter. [All percentage changes in this article are seasonally adjusted annual rates and adjusted for changes in inflation.]
Plunging consumer spending for goods and some services was the main reason the economy fell last quarter, slicing -2.2 percentage points from quarterly growth. This was the first quarterly decline in consumer spending since 4q1991. Also on the downside, residential investment spending reduced growth by –0.7 percentage points, the tenth quarter of negative performance. And a decline in business spending for plant, equipment and software pulled down the economy’s growth rate by another -0.1 percentage points.
On the upside, surging government spending (especially at the federal level) was the biggest positive contributor to last quarter’s performance, adding +1.2 percentage points to the economy’s overall growth rate. Also, net exports (gross exports minus gross imports) added +0.5 percentage points to growth in the third quarter. Lastly, business firms reduced inventories last quarter, but by less than in the second quarter, which contributed +0.5 percentage points.
The BEA called its release an “advance” report because all of the figures are still preliminary. When preparing its estimates, the BEA did not know for sure what happened to foreign trade, inventories, or construction in September and had to make some assumptions, which may or may not prove correct. Also, the information on consumer spending during September is still incomplete. We’ll get a clearer picture of the third quarter economy next month. However, the main outline—of an economy tipping down because of lower spending by consumers and businesses and the ongoing decline in housing, but still propped up by the growth in government spending and improvements in foreign trade—seems unlikely to change. (Nancy D. Sidhu)
PR: http://bea.gov/newsreleases/national/gdp/2008/pdf/gdp308a.pdf
The Bureau of Labor Statistics released the Employment Cost Index (ECI) for third quarter 2008, which showed some moderation. The index measures total compensation costs, including wages, salaries and benefit costs in private industries and government. The easing shown in the third quarter report is expected to continue due to weakening labor market conditions.
Total compensation costs for all civilian workers (public and private) rose by 0.7% (quarter-over-quarter, SA) in 3Q 2008, the same pace as the previous two quarters and down from the 0.8% increase during the same period a year ago. Wages and salaries also increased by 0.7%, the same pace as the previous quarter and down from the 0.8% increase in 3Q 2007. Benefit costs rose by 0.6% during the third quarter, the same pace as the previous two quarters, and below the 0.8% increase of the same period in 2007.
Private industry compensation costs rose by 0.6% (quarter-over-quarter) during 3Q 2008, the same increase as the previous quarter. Wages and salaries grew more slowly, up by 0.6%, following a 0.7% increases in 2Q 2008 and from the 0.8% increase during the comparative period in 2007. Benefit costs for private industry rose a bit, up by 0.6% last quarter, following a 0.5% increase in 2Q 2008.
State and local government compensation costs went up by 0.9% (quarter-over-quarter) during 3Q 2008, the same pace as the previous quarter. Wages and salaries rose by 1.0%, following a 0.9% increase during the previous quarter. However, benefit costs grew more slowly, up by 0.7%, following a 1.1% increase during 2Q 2008. (Candice Flor Hynek)
PR: http://www.bls.gov/news.release/pdf/eci.pdf
Friday, November 14: San Gabriel Valley Economic Partnership: Economic Outlook Breakfast
Join us for breakfast and a forecast update on the state, regional and local economies. Followed by a real estate forecast: Where are we? What lies ahead? Speakers: Jack Kyser, Senior Vice President & Chief Economist and Nancy D. Sidhu, Vice President and Senior Economist, Los Angeles County Economic Development Corporation, and Steve Johnson, Director, Metrostudy's Southern California Region.
Tickets Now Available! Monday, November 17: The LAEDC 13th Annual Eddy Awards®
The Eddy Awards® is a cocktail, dinner, and awards gala to support fulfillment of the LAEDC mission to attract, retain, and grow businesses and jobs for the regions of Los Angeles County. The Awards were introduced by the LAEDC in 1996 to celebrate individuals, organizations, and now cities that demonstrate exceptional contributions to positive economic development in the region. Honorees: The Walt Disney Company, and Rick Caruso, developer of The Grove and the Americana.
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