Gross domestic product price index falls by 1.6%
According to a US Bureau of Economic Analysis report dated June 24, the price index for gross domestic purchases, measuring prices paid by US consumers, fell by 1.6% in Q1. The index recorded a 0.1% fall in Q4 2014.
The core GDP (gross domestic product) price index, which excludes volatile food and energy prices, fell by 0.1% in Q1 2015, while it rose by 0.7% in the fourth quarter last year.
Corporate profits fell in Q1 2015
The first quarter this year wasn’t any easier on corporate profits. Profits from current production, including inventory valuation and capital consumption adjustment, fell by $110.8 billion in Q1. During the fourth quarter last year, corporate profits dipped by $30.4 billion.
Corporate profitability in the first quarter this year was weighed down by the stronger dollar (UUP), which impacted export earnings. This affected the technology (XLK) and the industrials (XLI) sectors in the US most. What’s more, the winter months dominating the first quarter restricted growth in the consumer, housing, and construction sectors. At the same time, declining oil prices severely impacted the profitability of US energy companies. Nevertheless, strong earnings per share were reported by the likes of Apple (AAPL), Amazon (AMZN), and Microsoft (MSFT).
On a year-over-year basis, corporate profits in the US were up 9% in Q1 2015 over Q1 2014. Corporate profits fell by 5.2% on a quarterly basis.
June 24 was marked by the released of many key economic indicators in the US. While the GDP and corporate profit reports provide investors with a good view of overall economic performance in the first quarter of this year, the Mortgage Bankers Association’s report on the housing market gives us insight into the pace of mortgage lending in the US.