The US economy expanded at a 4.1 percent annual rate last quarter, faster than the government first estimated, as companies rebuilt inventories. An index of Chicago-area business activity this month held close to a decade high, suggesting the momentum carried into this year.
The increase in GDP, the value of all goods and services produced, followed an 8.2 percent rise in the third quarter that was the fastest in almost 20 years. The National Association of Purchasing Management-Chicago's gauge fell to 63.6 this month from 65.9, the highest since July 1994.
"The economy is expanding nicely, but not at a gangbusters' pace," said Alan Blinder, former vice chairman of the Federal Reserve and now an economics professor at Princeton University. "The hazard is the lack of job creation."
Concerns about jobs have dampened how Americans feel about the economy. The University of Michigan's Sentiment Index fell to 94.4 this month from last month's 103.8, the biggest decline since the September 2001 terror attacks. US President George W. Bush, who is seeking re-election this year, has seen his popularity decline following the loss of 2.3 million jobs since he took office.
Economists had predicted the government would revise GDP to a 3.8 percent annual increase from the 4 percent estimate reported last month, based on the median of 70 estimates in a Bloomberg News survey. The consumer sentiment was higher than the preliminary reading of 94 released earlier this month.
The US Treasury's 4 percent note maturing in February 2014 rose 15/32 point, pushing down the yield 6 basis points to 3.98 percent at 5:31pm in New York after the report showed growth with little sign of inflation. The GDP price deflator rose last quarter at a 1.2 percent annual rate, less than the 1.6 percent the previous three months.
The Chicago report's employment index rose to 54.8, the highest since April 1998, suggesting US job gains may strengthen. Readings above 50 signal expansion. The Labor Department is forecast to report next week a 125,000 increase in this month's payrolls after 112,000 a month earlier, according to the median estimate in a Bloomberg News survey.
"Several surveys have suggested stronger hiring is developing without the expected impact on payrolls," said Sherry Cooper, chief economist at BMO Nesbitt Burns in Toronto. "Our view is that the surveys have only been early, not wrong."
The Federal Reserve Bank of Chicago says its district produces 40 percent of the nation's motor vehicles, 35 percent of its steel and almost half of its farm equipment. The Chicago purchasers' survey includes some responses from service businesses such as banks and telecommunications companies.
"It's not yet wild-eyed optimism among businesses, but there's definitely more optimism out there," said William Zadrozny, chief executive officer of Siemens Financial Services Inc, a US unit of the German manufacturer Siemens AG, in an interview. "Everyone sees demand picking up and they're getting a little more confident about adding bodies right now."
Today's GDP report shows companies boosted inventories at a US$14.9 billion annual rate in the fourth quarter, compared with US$6.1 billion estimated last month and a US$9.1 billion reduction in the third quarter. Inventories added 0.92 percentage point to GDP after the revisions.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
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Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day