Rover's Weekly Market Brief - 01/27/2023

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Economy

The Commerce Department’s first estimate on fourth-quarter gross domestic product (GDP) growth reported the economy expanded at an annual rate of 2.9%. The first estimate is slightly down from the 3.2% growth reported in the third quarter. Increases in private inventory investment, consumer spending, federal government spending, state and local government spending, and nonresidential fixed investment all contributed to the increase. Business inventories added a significant 1.46 percentage points to the growth. Consumer spending which makes up nearly two-thirds of the economic activity grew 2.1%, a deceleration from 2.3% in the third quarter. Government spending rose 3.7% for the second straight month. Federal spending jumped 6.2% and state and local purchases increased by 2.3%. Partly offsetting the increases were declines in residential fixed investment (-26.7%) and exports (-1.3%). Imports, which are a subtraction in the calculation of GDP decreased (-4.6%). Housing construction and renovation plummeted (-26.7%), and follows a (-27.1%) drop in the previous quarter, marking the seventh straight quarterly decline. The GDP increased by 2.1% for all 2022 as compared to 5.7% across 2021, which was the fastest pace since 1984.

The U.S Census Bureau reported that new orders for durable goods jumped 5.6% to $286.9B in December, this follows a (-1.7%) drop in November. When transportation is excluded, “core” durable goods orders fell (-0.1%). Orders for transportation equipment, climbed sharply (+16.7%) to $108.1B in December after dropping (-5.0%) in November. Orders for non-defense/civilian aircraft climbed (+115.5%) in December after plummeting (-30.7%) the previous month. Increases in orders for electrical equipment, appliances and components (+1.9%) were more than offset by a drop in orders for machinery (-0.9%) and computers and electronic products (-0.6%). Orders for non-defense capital goods excluding aircraft, a proxy for business spending plans, decreased (-0.2%) in December. Orders for non-defense capital goods excluding aircraft are up (+8.3%) year over year. Shipments of core capital goods dropped (-0.4%) after declining (-0.2%) in November.

The Bureau of Economic Analysis reported that core PCE (personal consumption expenditures) fell for the third straight month, and its lowest level since October 2021. The December core PCE, which excluded food and energy prices increased (+4.4%) from a year ago, down from (+4.7%) in November. On a monthly basis, core PCE rose (+0.3%). The headline PCE, which includes food and energy prices, increased (+5.0%) from a year ago, down from a (+5.5%) reading in November. On a monthly basis, PCE rose (+0.1%). On an annual basis, goods inflation increased by (+4.6%), a significant drop from the (+6.1%) reading in November, while services inflation held at (+5.2%). While personal income increased (+0.2%) in December, consumer spending which accounts for more than two-thirds of U.S. economic activity, declined (-0.2%). November was revised to show spending decreasing (-0.1%) rather than gaining (+0.1%). Adjusted for inflation, spending fell (-0.3%) in December.

Upcoming Economic Reports:

Wednesday February 1 – Fed Interest Rate Decision

Friday February 3 – Unemployment Rate (January)

Earnings Calendar:

 

Monday	Tuesday	Wednesday	Thursday	Friday
GE Healthcare Techs (GEHC)	General Motors (GM)	Meta Platforms (META)	Apple (AAPL)	Regeneron Pharmaceuticals (REGN)
Whirlpool (WHR)	McDonalds (MCD)	T-Mobile US (TMUS)	Amazon (AMZN)	Cigna (CI)