The consensus is out on the fourth quarter GDP (gross domestic product) report and numbers indicate that the economy has contracted at its slowest pace in 27 years, giving less hope for a turnaround for stocks and exchange traded funds (ETFs) any time soon.
Today, the Commerce Department said that GDP, which is a measure of total goods and services output within the United States was down at a 3.8% annual rate. This is the lowest pace since 1982, when contraction was at 6.4%, amidst a deep recession, reports Associated Press.
The report showed consumer spending, which accounts for two-thirds of U.S. economic activity, fell 3.5% in the fourth quarter, after a 3.8% decline in the third quarter 2008.
Consumer confidence is mixed as it rose to a high in January after four months of lows. However, the sentiment is weak and the mood is shifty, as economists expected a stronger reading. Associated Press reports that the Reuters/University of Michigan Surveys of Consumers said its final index reading of confidence for January rose to 61.2, up from 60.1 in December.
Earnings reports are out and they represent a mixed outlook:
- Exxon Mobil (XOM) posted fourth quarter net income of $7.82 billion, down 33% as oil prices tumble, reports Shirleen Dorman for The Wall Street Journal.
- Chevron (CVX) reported a gain in earnings of $4.9 billion, reports Associated Press. The gain comes from an asset swap to offset lower oil prices and production.
- Proctor & Gamble (PG) reported second quarter profit up 53%, however, sales are slowing amid a tough economy. Total sales are expected to drop for the rest of the year, reports Dan Sewell for Associated Press.
- Honda Motor (HMC) reported a 90% drop in third quarter profit, slashing their forecast for the full year, reports Yoshio Takahashi for The Wall Street Journal. The yen is weaker, the credit crisis is growing and consumers are cautious, which has affected foreign markets as well.
- Amazon.com (AMZ) sales and profits topped estimates, with net income up 8.7%, reports Joseph Galante for Bloomberg.
Not -so-great numbers for measures within the U.S. and news of more OPEC cuts caused oil to slip below $42 per barrel, Jake Neubacher for Associated Press reports. The GDP report has investors remaining timid.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.