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Wells Fargo Senior Economist Mark Vitner on the economy’s outlook in the year ahead.
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-- -- -- -- joining us with more on the economy now -- Wells Fargo managing director and senior economist.
Mark -- mark thank you so much for joining us are look.
We find out that they lost -- of the third quarter the economy grew at three point one.
Percent I -- did a double take on that.
What are you looking fall -- -- last quarter this year and the first quarter of next year and we can't keep up three point 1% right.
Well.
The three point 1% was incredibly deceiving because.
A lot of that was inventories and we have a seven tenths percent and inventories we had an improvement in the trade deficit.
Which sounds good except for that we had a drop in imports which meant that consumers were buying let's stop.
And and we had to increase in exports that doesn't look sustainable the global economy slowing and -- for some -- federal government spending was growing we've got this fiscal -- -- ahead of us that's not gonna be a source of growth when you strip all that out.
That three point 1% growth turns and to one point.
3% growth now in private final demand and that's that's about what we have for 2013 we have one and a half percent growth.
Projected between thirteen but the fourth quarter.
Zero point seven.
First quarter 2013 to zero point seven.
So less than 1% growth over the next couple of quarters now and and it's it's not anything all that complicated businesses are just a little nervous about what the outcome.
Of all this talk of Washington's going to be.
Yeah no doubt we did see initial jobless claims just spike up a little bit by 171000 but.
The four week moving average actually at a two month -- so.
Just like everything else is or increase creating excruciatingly slow movement -- Until business is feel more confident that are gonna -- ironic.
Now and and -- often now.
And we have yeah that we have nor have the holidays in their so there's hardly get a clear clear view of what's gonna labour market from the claims that at this time -- year.
There is some goodness -- -- is one area that's clearly going to do better when thirteen that's housing.
In the housing numbers we've got today were spectacular we saw existing home sales rise about 5% for over five million unit annual rate.
And distress sales foreclosures and short sale -- sales.
Double -- -- share that we've seen since the recession so.
So we're we're we've seen traditional buyers come back to the market the inventory of unsold homes has dropped to lowest level.
Since way back in 2005.
Proceeds from real improvement housing.
And and that should keep us out of the ditch -- in -- that went thirteen am not in this even if the government.
Messes things awful price is still have a way to go though don't they -- from free.
Financial crisis levels and until they really get back why don't they -- to get back to those levels but until we.
Get a lot more appreciation in price consumers and -- believe that willing to spend a lot of that's true my and that's one of the things that that that QE has been trying to do is to to support home prices -- stock market guests who were spending again.
Not so sure that's -- But the right way to do things -- that's the plan.
It turns -- terms of consumers though about a quarter of households that have a mortgage.
Owed more on that mortgage -- it's worth when you -- another 56%.
That are in near negative equity.
And and there are those folks are effectively out of the market they they would many of those folks would like to sell their home and moved to another part of the country right are moved to a bigger home.
They don't have any equities have been and that equity is what.
They would have used for downplayed in the past and that's that's one of the reasons -- inventories.
Of unsold homes are so low today.
Well believe it that we need those prices to come up -- -- now with the -- body not cut Wells Fargo not think so much for being with us we appreciate it.
You do with it.
