Economy Healthier Than Expected

There are a number of economic reports due out this week that should point to the health of the U.S. economy.

U.S. economic growth slowed in the fourth quarter, but not as sharply as previously estimated, with the gross domestic product showing an increase of 1.4% annual rate instead of the previously reported 1% pace, the Commerce Department said on Friday in its third GDP estimate.

GDP Better than Expected

GDP growth was initially estimated to have risen just 0.7%. The economy grew at a rate of 2% in the third quarter and expanded 2.4% overall in 2015.

The GDP report did show, however, that corporate profits were falling for a second straight quarter as a strong dollar and cheap oil undercut multinational company earnings.

Manufacturing profits declined $139.2bn during the last quarter after decreasing by $4.1bn in the July-September period. Profits in the petroleum and coal products sector tumbled $124.3bn after rising $7bn in the third quarter. A plunge in crude oil prices of more than 60% from highs above $100 a barrel in June 2014 also had a negative impact on the profits of oilfield service firms.

Manufacturers and retailers are concerned with companies cutting back on investments and showing reduced profits, and some analysts fear that the economy is likely to show disappointing growth again in the first three months of 2016.

Jobs Indicate Growth

Others are more optimistic. The job market is a key factor in the country’s growth and as long as the U.S. keeps adding 200,000-plus new jobs a month, they say the danger of a recession is remote.

This month’s employment report, scheduled to be posted on Friday, will probably show that the U.S. added 210,000 jobs in March and that the country has averaged 213,000 new jobs a month in the past four years, including a searing 282,000 average since December.

The numbers will also point to the unemployment rate remaining at an eight-year low of 4.9% in March.

Income and Spending