GDP Projections Gain on Small Businesses, Housing Market
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The Federal Reserve has boosted one estimate of second quarter GDP as housing and small business data improves. The Atlanta Fed’s GDPNow indicator rose 50 basis points to 2.2% as Fed economists cited expectations for higher consumer spending and fixed investment.
The upgrade comes amidst a report from CoreLogic, a real estate research firm, which showed a tremendous decline in foreclosures. Total foreclosures in America fell 14.9% on a year-over-year basis in March, with just 427,000 foreclosures on the market. That represents 1.1% of homes.
The Federal Reserve has boosted one estimate of second quarter GDP as housing and small business data improves. The Atlanta Fed’s GDPNow indicator rose 50 basis points to 2.2% as Fed economists cited expectations for higher consumer spending and fixed investment.
The upgrade comes amidst a report from CoreLogic, a real estate research firm, which showed a tremendous decline in foreclosures. Total foreclosures in America fell 14.9% on a year-over-year basis in March, with just 427,000 foreclosures on the market. That represents 1.1% of homes.
CoreLogic Chief Economist Frank Nothaft echoed the Fed in citing improved conditions for American consumers. “Job and earnings growth have helped bring serious delinquency rates down in nearly every state,” he said, adding that regional unevenness remains. “Serious delinquency rates increased in North Dakota and West Virginia, two states affected by the drop in demand for the fuel each produces.”
The report noted that states throughout the country are still seeing unusually high foreclosures. “The five states with the highest number of completed foreclosures for the 12 months ending in March 2016 were Florida (69,000), Michigan (48,000), Texas (28,000), Georgia (23,000) and California (23,000). These five states accounted for about 41 percent of all completed foreclosures nationally,” the report noted.
CoreLogic CEO Anand Nallathambi noted that the rate of foreclosures have fallen to the rate before the housing market crisis of 2007-2009. “Delinquencies and foreclosure rates are now at pre-crash levels as the benefits of higher home prices, improving economic fundamentals and years of cautious underwriting are being felt across the country,” he said.
Small Business Rebound
Meanwhile, small businesses are feeling more optimistic. The National Federation of Independent Business’s index of small business optimism rose 1 point to 93.6 in April, with increases to business plans for higher employment, inventories, and earnings driving the trend.
National Federation of Independent Business (NFIB) Chief Economist William C. Dunkelberg was dismissive of the results, noting persistent worries about the economy. “Despite a gain in NFIB’s optimism reading, small business owners remain extremely pessimistic about the economy, and rightfully so,” he said. “It was a relief to see the Index turn up, ending a long string of declines. However, it’s still down from December 2014 when the Index hit an expansion high of 100,” he added.
Despite improvements in the survey, the NFIB also noted political headwinds and an inability to find qualified workers, which may be a result of low wage growth. “Owners still cannot find qualified workers to fill open positions and cite a poor economy and the political climate as their two main reasons for not expanding,” the NFIB said in a statement.
