Annual Economic Perspective

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Posted on January 4th, 2012

  • Unemployment: Starting at 9.4% in December 2010, the unemployment rate remained stuck within a point or two of 9% until November, when the biggest monthly decline in more than 13 years cut it to 8.6% (a level last seen in March 2009). Cuts in state, local, and federal government employment partly offset gains in private-sector jobs.
  • GDP: After a slow start–0.4% during Q1–the economy gradually began to improve. Though Q3’s 1.8% annualized gross domestic product was much lower than 2010’s 2.5%, it kept hope alive for continued recovery in 2012. The manufacturing and services sectors both avoided contraction, and by Q3, corporate after-tax profits were up more than 11% from a year earlier.
  • Inflation: Ominously high inflation at the wholesale level in Q1 failed to flow through to consumers as retail spending remained tentative for much of the year, at least until the weekend after Thanksgiving. By November, consumer inflation was running at an annualized 3.4%–not far above its historical average–but wholesale prices were up 5.7% year over year.
  • Housing: Housing starts and home sales showed signs of life by year’s end. Housing starts were up 24% from last November, and new home sales were almost 10% higher. Though home prices seemed to stabilize a bit, by October they were back to mid-2003 levels and 3.4% lower than a year earlier.
Source: Broadridge