U.S. Economy Expands Significantly, But Supply Chain Challenges Remain

Connecting the Dots monitors all major economic announcements in the United States and Canada, but MSCI also offers industrial metals industry-specific data products that provide much deeper analysis and insight. Visit MSCI’s website and click on Industry Data to learn more about our Metals Activity Report (MAR), Momentum Monitors, and Economic Opportunity and Risk Tracker.

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

• The U.S. economy expanded at an annual rate of seven percent in the fourth quarter of 2021 after rising 2.3 percent in the third quarter. The significant fourth quarter expansion primarily reflected increases in private inventory investment, exports, personal consumption expenditures, and nonresidential fixed investment. The data also show negative impacts from ongoing supply chain disruptions and the spread of the omicron virus, however, with weaker-than-desired spending on consumer goods and business investment. In related news, the Federal Reserve Bank of Chicago said its National Activity Index, a key gauge of future growth, was +0.69 in January, up from +0.07 in December.
• The Federal Reserve Bank of Richmond said its index of manufacturing activity for the central Atlantic region fell from +8 in January to +1 in February due to declines in the indexes for shipments and new orders. Employment increased to +20 from +4 in January, however. Firms reported declines in order backlogs, but vendor lead times increased for many employers. Read the full report here. In the Midwest, the Federal Reserve Bank of Kansas City’s manufacturing index was +29 in February, up from 24 in January. The increased activity was driven by growth in machinery manufacturing, plastics, fabricated metal products, and transportation equipment. Indexes for production, shipments, new orders, employment, and new orders for exports increased at a faster rate last month. Read the full report here.
• The Logistics Managers Index, a measure of inventory costs developed by Arizona State University, shows that costs have increased sharply, reaching a high in June 2021. In December 2021, the index was at 84, more than 20 points higher than it was in December 2019. The Wall Street Journal has more for subscribers.
• According to the U.S. Department of Labor, 232,000 individuals filed for federal unemployment benefits during the week that ended February 19, a decrease of 17,000 from the previous week’s level. The four-week moving average was 236,250, a decrease of 7,250 from the previous week’s average. The number of people who continued to receive benefits also fell.
• In other economic news: the personal consumption expenditures price index, the Federal Reserve’s preferred gauge of inflation, increased 0.6 percent between December 2021 and January 2022 and 6.1 percent between January 2021 and January 2022; new home sales in the United States fell 4.5 percent between December 2021 and January 2022 and 19.3 percent between January 2021 and January 2022; and the Conference Board Consumer Confidence Index fell slightly in February to 110.5 from 111.1 in January.