Construction spending fell 1.1% in December, twice as much as the consensus forecast. In addition, November's previously reported gain of 0.1% was revised to a decrease of 0.4%.
These weak figures are important, as they are lower than what was assumed in Wednesday's report on fourth-quarter GDP. This means that the 0.6% gain reported for GDP during the quarter will be revised down, probably by two- or three-tenths of a percentage point.
Additional data that will figure prominently in the revision for GDP (due out on Feb. 28) include December data on U.S. trade and business inventories. Any revisions to the already-released report on December retail sales also have the potential for impact.
With today's data in hand, the risk is for GDP to be revised to show a contraction in U.S. growth during the quarter.
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Tony Crescenzi Blog Rate-Cut Odds Up 1/31/2008 12:05 PM EST The market is predicting the Fed will continue to cut rates, but be finished by mid-year.
Tony Crescenzi Blog Poor Jobs Report 2/1/2008 9:59 AM EST There is one silver lining here, though.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market,
first published in 1978 by Marcia Stigum, and The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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