by Calculated Risk on 1/30/2013 08:45:00 PM

In general the media covered the GDP report correctly. Even though the headline number was slightly negative, the underlying details were in line with expectations (except the sharp drop in Federal government spending for defense). As an example, from the NY Times: Economy Contracted Unexpectedly in Fourth Quarter

The drop in gross domestic product was driven by a plunge in military spending, as well as fewer exports and a steep slowdown in the buildup of inventories by businesses. ...

Despite the overall contraction, there was underlying data in the report suggesting the economy is not on the brink of a recession or an extended slump. Residential investment jumped 15.3 percent, a sign that the housing sector continues to recover, for one. Similarly, investment in equipment and software by businesses rose 12.4 percent, an indicator that companies are still spending.
...
The 22.2 percent drop in military spending – the sharpest quarterly drop in more than four decades – along with the drop in inventories and exports overwhelmed more positive indicators in the private sector, [Michael Feroli, chief United States economist at JPMorgan] said.

That is similar to my post this morning: Comments on Q4 GDP and Investment

Thursday economic releases:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 350 thousand from 330 thousand last week.

• Also at 8:30 AM, Personal Income and Outlays for December. The consensus is for a 0.7% increase in personal income in December, and for 0.3% increase in personal spending. And for the Core PCE price index to increase 0.1%. Personal income was boosted by some high income earners accelerating income to avoid higher taxes in 2013.

• At 9:45 AM, the Chicago Purchasing Managers Index for January will be released. The consensus is for a decrease to 50.5, down from 51.6 in December.