Market Review, February 2012

Publication Date: 

February 2012

Summary: 

The U.S. fourth quarter real GDP grew by 3%, slightly above the initial estimate of 2.8%. Nonresidential fixed investment and personal consumption expenditure were higher than initially estimated.

The headline and core Consumer Price Index (CPI) rose 0.2% in January. Year over year, the headline CPI increased 2.9% while the core CPI increased 2.3%. The headline Producer Price Index rose 0.1%, while core Producer Prices Index increased 0.4%.

The employment situation continued to improve during February. The four week moving average of initial jobless claims fell to 354,000, the lowest level since March 2008, while the number of people on unemployment benefits also dropped to the lowest level since August 2008. In January, the unemployment rate fell to 8.3%, the lowest level in three years. The February unemployment rate will be released on March 9th. The consensus is that it would hold steady at 8.3%. Despite the recent improvements in the labor market, Federal Reserve Chairman Ben Bernanke said that the job market remains far from normal. He also stated that the elevated unemployment rate and subdued inflation expectation warrants a highly accommodative monetary policy. Meanwhile, Congress agreed to extend the payroll tax cut and long term unemployment benefits through the end of 2012.