Key US economic growth index rises strongly in December: Report

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Key US economic growth index rises strongly in December: Report

 Key US economic growth index rises strongly in December: Report
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Highlights

  • The GDP will grow at an annualized rate of 2.2% in the first quarter, while the full-year growth rate is likely to be 3.5% year, the report noted.

  • Omicron, labor shortages, inflation, and the expected rate hikes would moderate the growth in the first quarter.

  • The rising prices of building materials, supply problems, and labor shortages have slowed down construction and remain a cause of concern for the housing industry.

A key US economic index has indicated that the American economy would continue to expand despite the Omicron-related disruptions and concerns over the likely interest rate hikes this year.

Reuters reported that the Leading Economic Index of the Conference Board rose 0.8% in December after rising 0.7% in the previous month. The increase was in line with economists' expectations.

According to its senior director Ataman Ozyildirim, cited in the report, the US economic expansion will "continue well into the spring". He added that Omicron, labor shortages, inflation, and the expected rate hikes would moderate the growth in the first quarter. Overall, the index showed a rising trajectory for the economy, the Washington-based non-profit organization said on Friday. 

The GDP will grow at an annualized rate of 2.2% in the first quarter, while the full-year growth rate is likely to be 3.5% year, it noted. The government will publish its fourth-quarter GDP stats next week.

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Key US economic growth index rises strongly in December: Report

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US Consumer Confidence Increase

Consumer confidence had improved further in December. According to a study, cited by Reuters, more people had planned to buy a house, motor vehicle or other costly assets in the month. They were also planning to buy major household appliances or go on vacation over the next few months.

The report said the consumer confidence index rose to 115.8 points in December from 111.9 points in November. Economists interviewed by Reuters had forecast a rise of 110.8 points. They said the consumers' short-term outlook for income, business, and labor market conditions was upbeat. In addition, consumers' annual inflation expectations fell to 6.9% from 7.3%.

Strong Housing Demand

The Commerce Department has also painted a positive outlook for the housing industry. It said the US homebuilding activities rose to a nine-month high in December, driven by demand for multi-family housing projects.

The construction backlog had increased to a record high in the month, it said on Wednesday.

However, the rising prices of building materials, supply problems, and labor shortages have slowed down construction and remain a cause of concern for the industry.

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