Weekly Commentary - U.S. fell into recession in the last quarter of year 2012 and its implications
Surprisingly, U.S. GDP in Q4 declined by 0.1 percent, which was well below estimates, and slipped from 3.1 percent growth in Q3.
Even the data is disappointed, there may only has limited implications to U.S. economy in year 2013.
Superstorm Sandy, which lashed U.S. at the end of October in year 2012, and the uncertainty over the “fiscal cliff” at the end of last year, is two one-off events that dragged the economic growth in U.S. last quarter.
Lower inventories and a plunge in military spending are two main categories that reduced U.S. GDP growth last quarter. Both of them experienced unexpected shot in quarter 3 and economists already expected these two items would be reversed in the coming quarter.
If we ignored the above negative factors, investors can still find the reason of optimistic in the components of U.S. GDP in quarter 4. Consumer spending, home building and business investment in equipment and software continued to provide supportive figures. U.S. consumer spending, a main engine of U.S. economy, recorded the third biggest increase number over last two years. And you also understand businessmen would not invest on equipments unless they felt positive to the future economy. Finally, housing sector contributed the first positive annual growth to U.S. GDP over last six years.
However, even the contraction in U.S. economy last quarter can be proved short-life in the first quarter of year 2013, investors should aware U.S. S&P 500 index outperformed global equity indices in January and the index already entered over-brought level. It is likely to see the index to go consolidation or mile correction in February with positive news from U.S.
Copyright ©2015. Alroy Financial Services Limited. All rights reserved. Member of Hong Kong Professional Insurance Brokers Association. Membership No. M-437. |
Follow Us: Show: Full Site | Mobile site |
|
The information of this page is for reference only; it does not constitute any selling purpose, solicitation of buying and recommendation for you to participate and complete any transaction. |