ARLINGTON, Va. — NAFCU's Macro Flash Data Reports on the country's gross domestic product and employment figures were slightly higher than expectations and much better than anyone expected, respectively, given current struggles in the economy.
GDP came in at 0.6% and was dragged down by lower vehicle and computer sales, but thanks to persistent consumer consumption and government spending held its own despite a spike in imports. Disposable income increased 0.9% in the first quarter to 5.0%, and the personal savings mark inched up from zero to 0.02%.
While GDP is still below potential, expenditures for services and private industry investment, exports and government spending were partly offset by the tug of residential fixed investments and durable goods, according to NAFCU's Chief Economist Dr. Tun Wai. Consumers are still behaving conservatively, he found, spooked by the rising price of gas and food and uncertainty in the labor market. Still, NAFCU predicts things will improve in the latter half of the year.
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On the employment front, it was a glass half-full approach, as figures came in for April at 20,000 fewer nonfarm payroll jobs, following overall job losses of 240,000 during the first quarter. Gains on the professional and business service sector and the education, health and retail trades were tarnished by losses associated with the housing pull back(construction, manufacturing and retail trade). Construction jobs took the biggest hit (as expected) of some 61,000 losses, followed by manufacturing (46,000), and retail (27,000).
The unemployment rate actually went down, going from 5.1% to 5.0% in March. All told, the economy has been shedding jobs for four consecutive months. Weakening in business confidence is putting off new hiring decisions, further exacerbating workers' ability to ask for (and get) higher wages. That will make them warier still on stepping up on spending habits. NAFCU expects layoffs to keep coming in the near term and the annual unemployment rate to go up from 4.6% in 2007 to about 5.3% for the remainder of 2008.
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