The U.S. economy grew in the fourth quarter of 2012 at a faster pace than initially projected, although growth at the end of last year still remained weak. The nation’s gross domestic product (GDP) increased at an annual rate of 0.4 percent in Q4, according to the most recent estimate from the U.S. Department of Commerce.
This marked an upward revision from the earlier estimate of 0.1 percent growth. Despite the improvement, GDP performance remained comparatively weak in the final quarter of 2012, down from 3.1 percent growth in Q3 and 1.3 percent in Q2.
The upward revision in GDP estimates was primarily driven by business investment in non-residential buildings, which surged to a 16.7 percent annual rate, as well as an upswing in exports, which helped narrow the trade gap to $384.7 billion from $395.2 billion and contributed 0.33 percentage points to fourth-quarter growth. Automotive output also boosted GDP, adding 0.18 percentage points to the overall total.
“On the flip side, businesses fearing the fiscal cliff cut back in the fourth quarter, trimming inventories of goods on hand. And the government slashed spending on defense,” CNN Money reports. “Together those two factors eliminated nearly 3 percentage points of growth from GDP, and those readings didn’t change in the latest report. But the worst economic hit of the fiscal cliff was avoided. And growth appears to be fairly solid so far this year…”
Consumer Confidence Plummets in March
The Conference Board’s Consumer Confidence Index fell 8.3 percentage points to 59.7 in March, reversing much of the improvement from recent months.
The findings reflected widespread declines in consumer perceptions. The proportion of survey respondents who felt that business conditions were “good” in March decreased to 16 percent from 17.6 percent, while those who said conditions were “bad” climbed to 29.3 percent from 28.2 percent.
The decline “was driven primarily by a sharp decline in expectations, although consumers were also more pessimistic in their assessment of current conditions,” Lynn Franco, director of economic indicators at the Conference Board, noted. “The loss of confidence, particularly expectations, mirrors the losses experienced this past December and January. The recent sequester has created uncertainty regarding the economic outlook and as a result, consumers are less confident.”
The outlook for the future was largely negative, with the number of respondents expecting conditions to worsen in the next six months rising to 18.3 percent from 16.6 percent, and those expecting improved conditions dropping to 14.4 percent from 18 percent. The perspective on the labor market also worsened last month, with those expecting more jobs in the next six months ahead dropping to 12.3 percent from 16.1 percent.
MEMS Pressure Sensor Market Strengthens
The microelectromechanical systems (MEMS) pressure sensor market will grow over the next five years due to increasing consumer application demand, a new report reveals.
According to Yole Développement, the pressure sensor market is growing compared to traditional technologies as industries producing automotive, industrial, medical, and high-end technologies increasingly rely on MEMS. The overall market is projected to grow from $1.9 billion in 2012 to $3 billion by 2018.
The consumer market for MEMS, which includes tablets and handheld devices, is growing at the fastest rate; Yole expects it to surpass current market-leading automotive applications by 2018.
“MEMS pressure sensor for consumer applications, especially for smartphones and tablets, is following the model of accelerometers and gyroscopes. Adoption of this model will help the MEMS pressure sensor market to boom again! We believe this huge opportunity will result in the global volume of the MEMS pressure sensor market hitting 2.8 billion units by 2018,” Wenbin Ding, technology and market analyst at Yole Développement, said in a statement. “Consumer pressure sensor will represent 1.7 billion units and will overtake automotive as the market leader in volume.”
Durable Goods Orders Surge
New orders for manufactured durable goods increased sharply in February, climbing 5.7 percent, following a revised 3.8 percent decrease in January and marking the fifth increase in the last six months, according to the U.S. Commerce Department.
The overall value of durable goods orders rose by $12.4 billion in February to a total of $232.1 billion. Transportation equipment posted the largest increase, jumping 21.7 percent to $74.4 billion. Excluding the often volatile transportation category, new orders actually fell 0.5 percent.
“Stocks advanced on expectations that gains in auto and home purchases may keep benefiting manufacturers from 3M Co. to United Technologies Corp., leading to increases in output that are boosting growth,” Bloomberg News explains. “Households are also poised to keep spending as rising property values help repair finances tattered by the recession even as concern about government budget cuts shakes Americans’ sentiment.”
Meanwhile, orders for primary metals rose 1.7 percent to $29.2 billion, demand for electronic equipment increased 2.9 percent to $10.1 billion, and computers and electronic products rose 1.3 percent to $20.7 billion. On a more negative note, orders for core capital goods, which serve as a key gauge of business spending plans, declined 2.7 percent, the largest decrease since July.
“Many economists were expecting a decline in the core capital goods after January’s impressive gain,” the Associated Press notes. “The broader trend has been favorable, even with uncertainty surrounding tax and spending policies. Core capital goods orders dipped in December but posted strong gains in November and October.”
Jobless Claims Increase
New initial jobless claims rose sharply in the latest week reported, indicating the employment market may be struggling after several months of improvement. According to the U.S. Department of Labor, seasonally adjusted unemployment insurance claims for the week ending March 2 climbed to 357,000, an increase of 16,000 from the previous week’s total.
In addition, the four-week moving average, which smoothes out volatility to provide a more accurate long-term picture, increased by 2,250 to 343,000 for the week.
“Rising claims signal more layoffs, and initial claims have increased for two consecutive weeks. However, analysts warn over reading too much into near-term claims levels because of week-to-week volatility and holiday-related distortion,” MarketWatch notes. “Going forward, economists say large federal spending cuts making up the sequester could curb job growth.”
Despite the upswing in jobless claims, unemployment figures remain considerably improved from their recessionary low-point. At the height of the economic downturn, weekly jobless climbed to over 660,000, but today are at pre-recessionary levels.