Q4 GDP Upwardly Revised From 0.7% To 1%
According to the latest Commerce Department data, January consumer spending rose 0.5%, or $63 billion, from December’s increase of 0.1%. Additionally, personal income in January rose 0.5%, or $79.6 billion, and disposable personal income rose 0.5%, or $63.5 billion. Bloomberg News pointed out that economists had expected January consumer spending to rise 0.3%. Personal incomes rose by an amount that also beat economists’ forecasts. The index of personal-consumption spending, the Federal Reserve’s preferred measure of inflation, was up 0.1% for January and 1.3% for the 12 months through Jan. 31. Also Friday, the Commerce Department revised upward its calculation of GDP growth in last year’s fourth quarter to 1% from its previously stated reading of 0.7%. Economists had expected the estimate would be revised downward, to 0.4%. The AP said the official data on consumer spending and GDP provided the US economy “a double dose of good news.” The Wall Street Journal called the figures an indicator that the economy’s fundamentals are stronger so far this year than at the end of 2015. In a separate story, the Wall Street Journal predicted the Fed will welcome the inflation report as a harbinger of economic strength.
What This Means For Small Businesses
Despite the optimistic tone struck by analysts regarding the latest consumer spending and GDP data, small businesses haven’t seen the growth they’d like to in order to feel confident about overall economic conditions. The latest Small Business Economic Trends report from NFIB indicated that in January, small business owners across the US felt less optimistic regarding overall sales and business conditions for the next six months. Explaining this decline in optimism, NFIB Chief Economist William Dunkelberg said that “overall, it is unlikely that anything will occur that will raise the spirits of small business owners.” Small businesses need stronger signals of economic improvement before they can regain confidence.
US News & World Report also covered the story.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.