January 2015 Macro Pulse -- Breakout or Breakdown?

Is the economic “party” ramping up or about to close down? If measured by the headlines, the U.S. economy is finally firing on all cylinders and picking up momentum. The final reading on 3Q2014 GDP pegged growth at a sizzling 5.0%; 2014 saw 2.95 million jobs created while unemployment dropped to 5.6%. The stock market rose to new all-time nominal highs. Inflation remained subdued, and mortgage rates were near historic lows.

Yet, beneath the headlines, the story takes on a different hue. The economy's growth was strongly influenced by a surge in healthcare-related spending; $12.1 billion of the $18.6 billion of additional GDP from consumer spending in the final 3Q revision can be traced back to health care (mainly insurance premiums). Despite employment gains, real wages remain stagnant and record numbers of working-age persons are not in the labor force. Housing starts and sales were sputtering at year’s end amid the low mortgage rates. And while the stock market indexes posted records, trading volume has been relatively light. So, the party continues, but is it really heating up or starting to close down? Perhaps the following will help readers make up their own minds:

Click here to read the rest of the January 2015 Macro Pulse recap.

The Macro Pulse blog is a commentary about recent economic developments affecting the forest products industry. The monthly Macro Pulse newsletter summarizes the previous 30 days of commentary available on this website.