On Friday, the government reported that the nation's economy, as measured in its real gross domestic product, grew at an annual rate of 2.6 percent during last year's final quarter, sharply trailing analysts' consensus predictions ranging from 3.0 percent to 3.6 percent.
As is the case after the first version of every GDP report, economy watchers have been trying to estimate the effect other subsequently released fourth quarter-related government and other data might have on GDP revisions to be reported in late February and late March. Predictably, the Associated Press, aka the Administration's Press, seems to have decided that it will tell its readers about the ones which seem to point to upward revisions, and that it will ignore those which go in the opposite direction.
Yesterday, the Census Bureau's Construction Spending report came in with a seasonally adjusted December increase of 0.4 percent. Though that trailed expectations of 0.7 percent, it was occasion for the AP's Josh Boak to speculate that it could lead to an upward GDP revision (bolds are mine throughout this post):
US CONSTRUCTION SPENDING ROSE 0.4 PERCENT IN DECEMBER
U.S. construction spending accelerated in December as building activity increased for new houses and government-backed highways.
The Commerce Department said Monday that construction spending rose 0.4 percent in December. Total construction spending in 2014 increased 5.6 percent to $961 billion, with the gains slightly below the pace of 5.7 percent in 2013.
... The gains were strong enough that Michael Gapen, an analyst at the bank Barclays, said that the economy likely expanded at an annual pace of 2.8 percent in the final three months of last year, compared to the 2.6 percent estimate reported by the government last week.
Annualized construction spending is a roughly $1 trillion current-dollar element of the nation's $17 trillion-plus GDP.
Today, the Commerce Department released a very disappointing report on factory orders and manufacturers' shipments, a GDP element which is almost six times larger ($450 billion to $500 billion or so per month, or almost $6 trillion per year). December orders tumbled by a far larger than expected 3.4 percent (vs. 2.2 predictions), and November was revised downward.
As to shipments, the component of Commerce's report which ties more directly into GDP, the news has been even worse:
As seen above, this far more important GDP-related metric has declined in four out of the past five months, fell by almost 3 percent in the fourth quarter, and has come in below last year's same month for two straight months. Orders have fallen for five straight months by a cumulative double-digit percentage. All of this is even before considering inflation.
Naturally, the AP Martin Crutsinger had nothing to say about the potential impact of today's news on GDP, even though he reminded us what the fourth quarter's growth was:
US FACTORY ORDERS DROPPED 3.4 PERCENT IN DECEMBER
Orders to U.S. factories dropped for a fifth consecutive month in December, while a key category that signals business investment plans fell for a fourth straight month.
Factory orders declined 3.4 percent in December after a 1.7 percent drop in November, the Commerce Department reported Tuesday. It was the biggest drop since a 10 percent plunge in August and marked the fifth straight month that orders have fallen.
... The government reported that the overall economy, as measured by the gross domestic product, grew by at a moderate 2.6 percent annual rate in the October-December quarter, a sharp slowdown from 5 percent growth in the third quarter.
Economists believe that the slowdown will be temporary, and growth will accelerate this year as consumer spending remains strong, reflecting solid hiring and a big drop in gas prices which is giving households more money to spend on other items.
So Marty, does the "slowdown" in the fourth quarter mean that GDP will be adjusted downward? No comment, eh?
It was out there if Crutsinger wanted to look for it and report it.
Fewer goods shipped with fewer orders coming in seems to have been joined with a smaller than expected build-up in stockpiles, and Lucia Mutikani at Reuters reported the estimated impact on GDP:
The first decline in factory stocks in 18 months suggested the contribution to growth in the fourth quarter from inventory accumulation could be lowered by as much as three-tenths of a percentage point, economists said.
The double standard at AP could hardly be more obvious. Heads they report, tails they ignore.
Cross-posted at BizzyBlog.com.
