When we checked in with the global economy last week, the numbers had raised questions about growth in developed economies. A pick up in growth in the world’s developed economies is supposed to offset a dip in growth in the developing world in 2014.
A parade of economic data this week will go a long way to confirming or refuting those worries.
In the U.S. consumer spending climbed 0.4% in December on top of a 0.6% increase in November. The November increase was the largest gain in five months. But consumer incomes didn’t show a comparable increase as salaries and wages came in close to flat for December. That brought income growth for all of 2013 to 2.8%, the weakest performance since an actual decline in 2008 of 2.8%. The anemic growth in incomes raises questions about the sustainability of the growth in consumer spending. If you’re an optimist about 2014, you believe that job growth will add to consumer income. A belief in job growth in 2014 depends, in turn, on a belief in increasing global demand for U.S. goods and services, and continued strength in housing and auto sales.
In Europe the latest data show unemployment in the EuroZone remained stuck at 12% in December and inflation actually moved slightly lower to 0.7% in January. The core rate, which excludes food and energy, moved ahead to 0.8% from 0.7% in December. That’s well below the European Central Bank’s target of just below 2% and signals that EuroZone economies are still struggling to build any momentum.
And, finally, in the world’s third big developed economy, year-end data for Japan showed a continued deterioration in the country’s trade deficit. Exports did move ahead by 9% for the year, but that was less growth than had been expected from the Japanese government’s weak yen policy. And imports grew by 15% in the year to a record as imports of liquefied natural gas increased 17.5% and imports of crude oil climbed 16.3%. Rising energy imports were the whole story, however, and looking at the data some economists have asked whether the numbers reflect a decline in the global competitiveness of Japanese companies.
This week’s calendar is crammed with enough U.S. data to confirm or debunk at least some of those fears about weaker economic growth. On Monday we’ve got construction spending and car/truck sales. Tuesday brings factory orders and Wednesday the Purchasing Managers Index for services. Thursday starts the lead in to a big Friday ending with initial claims and the U.S. trade balance. Friday concludes with the jobs and unemployment numbers for January. Economists surveyed by Briefing.com are looking for a weak performance with the unemployment rate stuck at 6.7% and net new jobs totaling just 175,000.
No related posts.