May 5, 2010
Economic Activity
Contributions to Real GDP Growth 1
Real Estate
Construction Spending 2
Office, Retail, and Warehouse Construction Activity 3
Pending Home Sales Index 4
Manufacturing
ISM Manufacturing Purchasing Manager’s Index 5
Consumer Spending
Real Personal Consumption Expenditures 6
Real Personal Income 7
Light Vehicle Sales 8
Reuter’s/University of Michigan Consumer Sentiment Index 9
Inflation
PCE Price Index 10
Auto Production
Vehicle Production and Production Shares 11
Economic Highlights
Economic Highlights May 5, 2010 1
Economic Activity
Summary
The first reading of GDP for the
first quarter showed a 3.2%
increase, in line with
expectations.
Growth of final sales to
domestic purchasers was a
moderate 2.2 percent in the
first quarter, slightly stronger
than the average of the past two
quarters.
Consumer spending (PCE) and business investment in equipment and software posted solid
gains for the second consecutive quarter, growing at 3.6 percent and 13.4 percent,
respectively.
Private inventories increased for the first time since early 2008 by $31 billion, contributing
almost 2 percentage points to GDP growth.
Residential investment and nonresidential investment in structures continued to decline in the
first quarter by and 11 percent and 14 percent, respectively.
Private forecasters currently expect that Q2 GDP growth is expected to be around 4%,
reflecting continued gains in private spending and growth in residential investment.
-10
-8
-6
-4
-2
0
2
4
6
8
2008 2009 2010
Contributions to Real GDP Growth quarterly, annualized % change
Government Net Exports Change in Inventories Res. Investment
Nonres. Equip. & Soft. Nonres. Structures PCE Real GDP
Source: U.S. Bureau of Economic Analysis
Q1 2010
3.2%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Q1.2008 Q3.2008 Q1.2009 Q3.2009 Q1.2010
Real GDP and Final Salesquarterly, annualized % change
Real GDP Final Sales to Domestic Purchasers Final Sales
Source: Bureau of Economic Analysis, through Q1 10
Economic Highlights May 5, 2010 2
Real Estate
Summary
According to the U.S. Census
Bureau, total construction
spending was little changed in
March, up 0.2%. The increase in
public construction spending was
largely offset by private
construction spending that
continued to weaken.
Both private nonresidential and
residential construction
spending softened in March,
down nearly 1%.
March 2010 Construction Spending Put in Place
millions, SAAR yr/yr change mo/mo change
Total: $ 847,318 -12.3% 0.2%
Total Nonresidential: $ 586,820 -17.4% 0.8%
Private Nonresidential: $ 298,998 -25.5% -0.7%
Public Nonresidential: $ 287,821 -6.8% 2.3%
Total Residential: $ 260,498 1.6% -1.0%
Private Residential: $ 251,807 1.2% -1.1%
Note: Assumes recession ended in June 2009
Source: U.S. Census Bureau
Note: Assumes recession ended in June 2009
Source: U.S. Census Bureau
Economic Highlights May 5, 2010 3
Real Estate
Summary
TWR/Dodge Pipeline data for
March indicated that
commercial construction
activity under way held steady
from March, as did the amount
of space being deferred.
Following improvements in
recent months, total space in
the final planning or bid phase
decreased 3% in March. The
office sector dropped sharply in
March while warehouse and
retail continued to improve.
Note: TWR/Dodge Pipeline tracks commercial real estate projects through development phases.
Final planning—projects moving toward final approvals with a high probability that construction
contract will be awarded within the next six months
Bid—projects that have been finalized, are put out to bid by general contractors, are very close
to being awarded, and have a very high probability of coming to market
Under way—projects that are under construction
Deferred—projects delayed at any point in the planning cycle for reasons including problems
with financing or design approvals or deterioration in market conditions
Economic Highlights May 5, 2010 4
Real Estate
Summary
According to the National
Association of Realtors, pending
home sales rose 5.3% in March
as buyers moved to take
advantage of the latest housing
stimulus that required homes to
be under contract by April 30.
Economic Highlights May 5, 2010 5
Manufacturing
Summary
The Institute for Supply
Management’s Purchasing
Managers Index (PMI) gained 0.8
index points in April, marking its
ninth consecutive month in
expansion territory.
The Institute for Supply Management’s Purchasing Managers Index continued its gains into
April, rising 0.8 index points to reach 60.4. This is the index’s highest reading since June
2004. The gain in the aggregate index was broad-based but most heavily driven by gains in
indices of new orders, production, and employment.
New orders for manufacturers grew at a faster pace in April. The ISM new orders index, a
leading indicator, added 4.2 index points to reach 65.7. Of survey respondents, 52% said
new orders had increased since March, while only 8% said new orders had decreased.
The production index added 5.8 index to reach 66.9, as 49% of respondents reported higher
production levels in April than in March and 44% said levels of production were about the same
as the previous month’s. No industries reported decreases in production in April.
Manufacturing employment added 3.4 index points for its fifth consecutive month in
expansion territory at 58.5. To put this figure into perspective, only 26% of respondents said
employment had increased over the previous month, while 68% said employment levels
remained the same as in March.
Economic Highlights May 5, 2010 6
Consumer Spending
Summary
Real Personal Consumption
Expenditures (PCE) rose from
February to March and is back
to prerecession levels on a
yearly percentage change basis.
In March, real PCE rose 0.5 percent from February. All three categories of spending increased
over the month, especially durable goods. Spending on durable goods increased 3.4 percent
over the month from a surge in motor vehicle sales.
On a year-over year basis, real PCE increased 2.4 percent, the highest level since before the
recession.
Personal savings as a percentage of disposable income decelerated for the third consecutive
month to 2.7 percent; the lowest level since September 2008.
-15%
-10%
-5%
0%
5%
10%
15%
20%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Real Personal Consumption ExpendituresYear over Year % Change
Real PCE, Mar 2010= 2.4% Real Durable Goods, Mar 2010 = 10.2%
Real Nondurable Goods, Mar 2010 = 2.4% Real Services, Mar 2010 = 1.3%Source: BEA Assumes recession ended June 2009
0
2
4
6
8
10
12
14
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Personal Saving Rate(as percentage of disposable income)
Savings Rate, Mar 10 = 2.7%Source: BEA Assumes recession ended July 2009
The savings rate continued to
decline for the third
consecutive month in March.
Economic Highlights May 5, 2010 7
Consumer Spending
Summary
On a year-over-year basis,
personal income accelerated in
March but remains weak.
On an annual basis, real personal income increased 1 percent, and real personal disposable
income increased 1.4 percent from March 2009. Real personal income less transfers remained
negative at –0.6 percent over the year.
Government transfer payments boosted the overall income gain for the month, reflecting the
extension of the emergency unemployment program.
The major contributor to
income growth during the past
several months has been
transfer payments.
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Real Personal IncomeYear over Year % Change
Real Personal Income Less Transfers, Mar 10 = -0.6% Real Personal Income, Mar 10 = 1.0%
Real Disposable Personal Income, Mar 10 = 1.4%
Source: BEA, Haver Assumes recession ended June 2009
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10
Real Personal IncomeMonth to Month % Change
Transfer Receipts Mar 2010 = 1.0% Real Personal Income Less Transfers Mar 2010 = 0.0%
Source: BEA
Economic Highlights May 5, 2010 8
Consumer Spending
Summary
Light vehicle sales fell to an
annual rate of 11.2 million
units in April but remain above
the first quarter and 2009
averages.
Total light vehicle sales declined slightly in April by 5 percent to an annualized rate of 11.2
million units. This is above the average pace for the first quarter (10.8 million) and above the
average for 2009 (10.4 million).
Domestic vehicle sales fell 3.2 percent from March to an annualized rate of 8.5 million units in
April while imported vehicle sales fell 9.5 percent to an annualized rate of 2.7 million units.
0
5
10
15
20
25
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Light Vehicle SalesMillions of Units, SAAR
Total, April 10 = 11.2 Domestic, April 10 = 8.5 Imported, April 10 = 2.7
Source: BEA Assumes recession ended June 2009
Economic Highlights May 5, 2010 9
Consumer Spending
Summary
The University of Michigan’s
Consumer Sentiment Index
declined less than what was
previously reported for April.
In April, the University of Michigan’s index of consumer sentiment decreased to 72.2 (slightly
higher than the preliminary report of 69.5).
The expectations component of the index led the upward revision, decreasing to 66.5 instead
of 62.3 from the preliminary report for April. The Present Situation component was largely
unchanged.
0
20
40
60
80
100
120
140
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Reuters/University of Michigan Consumer Sentiment Index1966Q1= 100
Consumer Sentiment, Apr 10 = 72.2 Current Economic Conditions, Apr 10 = 81 Consumer Expectations, Apr 10 = 66.5
Source: Reuters/University of Michigan Assumes recession ended June 2009
Economic Highlights May 5, 2010 10
Inflation
Summary
The March PCE price index
continued to show downward
pressure on retail prices as the
headline and core indices were
little changed.
During the twelve months ending in March, the core index rose 1.3%, virtually unchanged from
February. The overall index was also unchanged in March at 2.0%.
-1%
0%
1%
2%
3%
4%
5%
1996 1998 2000 2002 2004 2006 2008 2010
PCE Price Indexyear-over-year % change
Core
Headline
Source: U.S. Bureau of Economic Analysis
March monthly % change at annual rate
Headline: 2.0
Core: 1.3
`
Economic Highlights May 5, 2010 11
Auto Production
Summary
U.S. vehicle production in April
declined 12 percent from March
but surged 46 percent ahead of
depressed levels in April 2009.
Compared to last year’s
production levels, most
carmakers posted double-digit
growth, with Toyota, Nissan,
Hyundai, and Ford reporting the
largest gains.
U.S. vehicle production in April declined 12 percent from March 2010 but continued to
advanced strongly (up 46 percent) from depressed levels a year earlier. Compared with April
2009, most auto companies posted double-digit gains, with Toyota recovering strongly after its
recalls with a 146% gain. Nissan, Hyundai, and Ford also posted substantial gains from last
year’s low production levels.