Q4 GDP Comes in Much Higher Than Expected

If there’s one thing even bigger than the sheer amount of economic reports released an hour ahead of the bell today, it’s the results of these prints this morning. There is lots of eye-opening data, and pre-market futures are up on the news: the Dow is +90 points at this hour, the S&P 500 is +20 and the Nasdaq is up +94 points so far today. The S&P 500 seeks its fifth-straight record high in as many trading sessions.

The preliminary read on Q4 Gross Domestic Product (GDP) reached +3.3%, much higher than the +2.0% consensus among economists. Though this comes down considerably from the final +4.9% in Q3 of last year, it speaks to a continued robust economy far removed from the perils of recession. Consumption came in at +2.8%, 30 basis points (bps) lower than the previous read of +3.1%, but 30 bps higher than anticipated.

So that’s higher growth for the economy. What about pricing? The Price Index reached +1.5% for the quarter — the lowest print since the negative headline reported in June 2020, as the Covid pandemic raged on. This is down -0.7% from expectations, and +3.3% reported in Q3. Core quarter-over-quarter prices came in at +2.0% — exactly as expected and reported in the previous quarter. In short, more very good news for the economy.

Initial Jobless Claims came in at their highest level in the past month, but still only to 214K — still consistent with a robust job market. Expectations were for roughly 200K, but that was off the previous week’s exceptionally low (and slightly upwardly revised) 189K. Six months ago, we were looking at trends heading to the high-200Ks, but new jobless claims have since simmered down notably.

Continuing Claims also notched higher week over week, posting 1.833 million two weeks ago (longer-term claims report a week in arrears from new claims), though higher than the 1.806 million from the previous week. That low figure, however, is the lowest of the 12-week cycle. Recall that the week before Thanksgiving, we were looking at longer-term jobless claims jumping north of 1.9 million, appearing we were headed directly for 2 million longer-term jobless claims. Clearly, we’ve pulled back from this, as well.

Durable Goods Orders for December were unchanged, notably lower than the +1.5% expected, and down from the upwardly revised +5.5% the previous month, which was the loftiest perch since July 2020. Ex-Transportation, this number hops to +0.6%, 10 bps higher than the previous month’s read. Capital goods, non-defense, ex-aircraft — a proxy for “normal” business spending — comes way down to +0.3% from an upwardly revised +1.0% for November. More lower inflation metrics as grist for the economic mill.

Advance Retail Inventories ratcheted up to +0.8% in December, from -0.1% reported in the previous month. Wholesale Inventories came in at +0.4% from -0.2% reported the previous month. This sort of economic growth — inventories — are among the least valuable to the overall picture of the economy; after all, if you load up on inventories and don’t move it all, you’ll need to bring prices down. Then again, this might aid the lower-inflation picture the Fed and other market participants are looking for, big picture.

For Q4 earnings this morning, Blackstone BX reported beats on both top and bottom lines this morning: earnings of $1.11 per share outpaced the 95 cents in the Zacks consensus, with $2.54 billion in quarterly revenues swooping past the $2.48 billion analysts were projecting. Shares of the investment bank, which had carried a Zacks Rank #5 (Strong Sell) into the earnings report, are up +2.5% in pre-market trading. The stock is still down more than -5% year to date.

After today’s opening bell, we’ll check out New Home Sales for December — which are expected to reach nearly 650K seasonally adjusted, annualized units, up from 590K reported for November. Then, once the closing bell rings today, we’ll see earnings results from tech stalwart Intel INTC, which is currently expected to post year-over-year earnings growth of +340%. Intel is currently riding a positive earnings surprise streak of three consecutive quarters.

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