More mixed news on the economic front this morning. First quarter final GDP was revised higher than expected to -5.5%. Analysts were expecting a 5.7% decline. Much of the revision is due to personal consumption expenditures which came in at 1.4%. All in all, the GDP data is essentially in-line with expectations and entirely backwards looking.
Weekly jobless claims posted a surprise jump. Claims were up 15,000 to 627,000. Continuing claims also jumped by 29,000 to 6.738MM in a clear sign that the balance between hiring and firing is not improving. The stock market is shrugging off this news.
Much of this morning’s stock rally appears to be on the back of the housing sector which is rallying over 4% after Lennar reported worse than expected earnings, but showed signs of balance sheet improvement and a slowdown in cancellations. Chief Executive Stuart Miller said:
“While we are sensing pent-up demand in the market, rising unemployment, increased foreclosures and tighter credit standards continue to present challenges for the industry to generate sales at a more robust pace and at stabilized pricing.”
Data is mixed to say the least. There are tepid signs of improvements in the jobs markets, tepid signs of recovery in the housing market and tepid signs of an overall economic recovery. The one thing we can be certain of is that any improvement going forward is likely to be very slow.