Canadian Economy Grows While U.S. GDP Plunges

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Meanwhile, here are the major headlines from the last week:

• The U.S. economy shrank by 1.4 percent on an annualized basis in the first quarter of 2022, the first decline in growth since early in the pandemic. The quarterly growth reading was down from a seven percent annualized gain in the final quarter of 2021. Spikes in imports—and a corresponding decline in exports—inflation, supply chain challenges, the impact of the COVID-19, and the war in Ukraine all contributed to the decline in growth during the first three months of the year. Had it not been for the volatility of trade flows, inventories, and government spending, the economy would have grown at close to a three percent rate. Read the full report here. In related news: the Federal Reserve Bank of Chicago’s National Activity Index, a key gauge of future growth, fell to +0.44 in March, down from +0.54 in February.
• According to Statistics Canada, the country’s gross domestic product advanced 1.1 percent in February for the largest monthly gain since March 2021 and is now growing at a 5.6 percent annualized rate. Services-producing industries rose 0.9 percent and goods-producing industries increased 1.5 percent. Read the full report here.
• Regional U.S. manufacturing readings for April that were released last week showed moderate to strong growth. The Federal Reserve Bank of Dallas said Texas factory activity expanded at a moderate pace. The production index was down two points to +10.8, but the new orders index rose to +12.1 and the shipments index jumped five points to +11.8. The Federal Reserve Bank of Richmond said the manufacturing sector in the central Atlantic region continued its expansion in April. The composite index increased to +14 in April from +13 in March. Shipments were up, but the volume of new orders fell slightly. The Federal Reserve Bank of Kansas City’s index fell to +25 from +37 in March, meanwhile, but there was Increased activity in computer and electronic products, primary metals, and furniture manufacturing. Read that full report here.
• During the week that ended April 23, 180,000 individuals filed for federal unemployment benefits for the first time, a decrease of 5,000 from the previous week’s level. The four-week moving average of first-time claims was 179,750, an increase of 2,250 from the previous week’s average. The number of people who continued to receive benefits fell slightly.
• In other economic news: sales of new homes fell 8.6 percent between February 2022 and March 2022 and 12.6 percent between March 2021 and March 2022; U.S. personal incomes increased 0.5 percent while personal consumption expenditures rose 1.1 percent; the Conference Board Consumer Confidence Index decreased slightly in April to 107.3 from 107.6 in March and the University of Michigan’s consumer sentiment index rose to 65.2 this month from 59.2 in March.