Plus: GDP Growth Slows, Durable Goods Demand Mixed, Jobless Claims Drop and U.S. Climbs Solar Power Rankings.
GDP Growth Slows in Second Quarter
United States gross domestic product (GDP), the value of all the nation’s goods and services, grew at a 1.5 percent annual rate in the second quarter of 2012, down from a revised 2 percent growth rate posted for the first quarter and a 4.1 percent rate in the last quarter of 2011, according to the U.S. Department of Commerce last week.
Much of the slowdown in GDP was due to a decline in consumer spending, which accounts for roughly 70 percent of U.S. economic activity. Consumer spending dropped to 1.5 percent in the second quarter, down from 2.4 percent in the first three months of the year. Spending on big-ticket items, like automobiles, also fell, as economic uncertainty led more consumers to focus on savings.
“As usual, the U.S. also imported more goods and services from foreign countries than it exported, which subtracts from economic growth. Government cuts, especially at the state and local level, also weighed on growth,” CNNMoney notes. “Spending by businesses remained a small strength. Businesses increased their purchases of equipment and software to a 7.2 percent annual rate.”
Business investment in non-housing-related goods, including manufactured goods, slowed to a 5.3 percent annual rate, down from 7.5 percent in the first three months of 2012. Meanwhile, inventories grew to an estimated $66.3 billion in Q2, up from Q1 but below the total for Q4 2011.
“A growth rate below 2 percent isn’t enough to lower the unemployment rate, which was 8.2 percent last month,” the Washington Post reports. “And few analysts expect the economy to gain momentum in the second half of the year, as concern about debt problems in Europe and the fiscal cliff — a series of tax increases and spending cuts due to take effect in January unless policy makers find an alternative — dampen confidence.”
Truck Tonnage Up, but Trucking Jobs Go Unfilled
The trucking industry is struggling to fill long-haul driver jobs, despite an uptick in truck tonnage, which increased 1.2 percent in June after a 1 percent drop in May, according to the American Trucking Association (ATA). Last month marked the largest month-to-month gain for the trucking industry in 2012.
The seasonally adjusted tonnage index was 3.2 percent higher than in June 2011, the smallest year-over-year increase since March 2012.
“June’s increase was a pleasant surprise, but the lower year-over-year gain fits with an economy that has slowed,” Bob Costello, ATA’s chief economist, said. Costello attributed strong manufacturing output in June to the higher tonnage levels.
Trucking, which is a key sector of the U.S. economy, represents 67 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods.
The U.S. Bureau of Labor Statistics indicates there has been growth for driver demand and expects that the trucking industry will add 330,100 jobs between 2010 and 2020 – a 20 percent jump – despite the current challenge to fill driver jobs. According to David Heller, director of safety and policy for the Truckload Carriers Association, there are as many as 200,000 job openings nationwide for long-haul truckers, positions that may be difficult to fill due to long hours, licensing fees and the long-haul lifestyle.
Durable Goods Orders up in June
New orders for manufactured durable goods rose 1.6 percent in June, following a 1.6 percent gain in May, according to a report from the U.S. Department of Commerce. However, excluding the often volatile transportation category, new orders actually fell 1.1 percent, the steepest decline since January.
The total value of durable goods orders last month increased by $3.4 billion to a total of $221.6 billion, the second consecutive month of growth. The largest gain was in transportation equipment, which rose 8 percent due to surging demand for aircraft and parts. Meanwhile, machinery orders fell 1.1 percent, computers and electronics decreased 4.9 percent, fabricated metal products dropped 1.2 percent and motor vehicles and parts dipped 0.6 percent.
“[T]he details of the report were not as strong as the headline suggested. Outside of the volatile aircraft and defense sectors, orders were mainly flat or lower. Despite the recent increases, the level of new orders for big-ticket items during June was still below the level hit in February,” MarketWatch notes. “Orders for nondefense, capital-equipment goods excluding aircraft fell 1.4 percent in June, for the second decline in the past three months. Such core capital-goods orders are considered the best gauge of capital spending by businesses.”
Despite the mixed results for new orders, shipments of manufactured durable goods were up in June, increasing 0.1 percent to $225.4 billion. The largest increase was in machinery shipments, which rose 3.1 percent to $32.9 billion.
“A wave of optimism swept over the industrial sector earlier in 2012, but unfortunately, in its wake are concerns about the future slow pace of U.S. economic growth, worries about Europe’s banking crisis and uncertainty about the resolution of the federal fiscal cliff,” Daniel J. Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation (MAPI), said. “Even extremely low interest rates are not enough to incentivize businesses to make long-term commitments when there is so much uncertainty and risk.”
Jobless Claims Plunge
New initial jobless claims fell in the latest week reported, marking the third straight week of severe volatility in the jobs market, according to the U.S. Department of Labor. Seasonally adjusted unemployment claims for the week ending July 21 dropped to 353,000, a decrease of 35,000 from the previous week. Meanwhile, the four-week moving average, which provides a more accurate long-term picture, fell by 8,750 to 367,250.
The latest weekly improvement is largely attributed to seasonal variations, particularly among automakers, many of whom have delayed, skipped or shortened auto plant shutdowns, which are usually required for retooling for the new model year. Continued plant operation has resulted in dramatic swings in week-to-week jobless figures.
“Statistical noise aside, slowing economies in Europe and China, which have reduced global demand for goods, may continue to curb employment,” Bloomberg News explains. “The U.S. presidential election and a looming battle over tax cuts and government spending may also be making businesses reluctant to hire.”
U.S. and Spain Take Lead in Solar Thermal Power
Spain and the U.S. top the global solar thermal power market due to favorable government policies and an increase in fossil fuel prices, renewable energy research firm GBI Research revealed in a recent report.
Spain, which only entered the concentrated solar power (CSP) market in 2007, controlled 65 percent of total installed capacity in 2011, making it the dominant force in CSP by a broad margin. In four years, Spain managed to raise its CSP capacity from zero to 1,002.2 megawatts (MW). This growth was driven by a robust renewable energy plan the Spanish government established in 2005 to meet European Union emission standards.
Spain’s CSP production is almost twice as much as the second-ranked country, the U.S., which controls 33 percent of global CSP. The U.S. has been producing solar thermal power since 1985. Although recent growth has not been as swift as in Spain, the government only recently initiated incentive plans to drive expansion, which GBI Research forecasts will rise from 508.5 MW in installed capacity in 2011 to 25,815 MW by 2020.
GBI reports that one of the major factors in the market is the feed-in-tariffs system, which provides financial incentives to CSP producers. Additionally, regulations in the U.S. require utility companies to purchase a percentage of their electricity from renewable sources, and Spanish government rebates help boost renewable energy investments.
Other countries noted for rapid CSP developments by GBI Research include China, India and the United Arab Emirates.