March 2014 Economic Indicators

Melanie Garza - Director of Operations

Revised 4th Quarter GDP Plummets

A revised 4th Quarter Gross Domestic Product dropped significantly from earlier estimates.  The Commerce Department issued its second estimate reducing the index down to 2.4% versus the original estimate of 3.2% it reported in January.

Economists suggest the revision can be attributed to various factors including the government shutdown in October, expiring long-term unemployment benefits, climbing inventory numbers and a holiday season that fell short of expectations in personal spending.

Despite the revisions, notable gains were found in real nonresidential fixed investment which increased 7.3% compared with an increase of 4.8% in the 3rd quarter. Equipment purchases grew 10.6% over a mere 0.2% growth rate the previous quarter.  Intellectual property also rose 8% following a 5.8% increase in the 3rd quarter.

Investment in nonresidential structures dropped more than 10 points in 4th quarter down to 0.2% from a high of 13.4% in the fall.

With an exceptionally harsh winter, first quarter growth is forecast to be less than 2%.

Gross Domestic Product

Capacity Utilization Falls, Some Industries Peaking

The Federal Reserve reported that the capacity utilization rate for total industry decreased in January to 78.5%, a rate that is 1.6% below its long-run (1972–2013) average.  In a year over year average, total industrial capacity utilization grew 1.9%.

Capacity utilization rates in January, at industries grouped by stage of process were as follows: At the crude stage, utilization fell 1% to 87.3%, at the primary and semi-finished stages, utilization increased 0.2% to 77.8%, which is 3.1% lower than its long-run average and at the finished stage, and utilization fell 0.8% to 75.2% nearly 2% below its long-run average.

Notable manufacturing sectors that were above the 80% capacity level in January 2014 include: plastics material and resin at 95.4%, artificial synthetic fibers at 89.1% and fabricated metal at 86.6 percent.  Others include food at 83%, paper at 81.2%, petroleum with 83%, machinery at 80.8%, electrical equipment at 80.9%.  Overall durable manufacturing is measuring a 76% utilization rate and nondurable manufacturing is 77.4%.

The transportation sector is sitting at 73.1% capacity, with automotive at 72.1%, automotive parts at 74.3% and aerospace at 71.8%.  In crude production, crude processing, mining, oil and gas and natural gas all sit in the high 80’s to high 90’s in utilization.

The Federal Reserve anticipates that total industrial capacity will grow 2.3% in 2014.

Value of Manufacturers' New Orders

Questions? Please contact Melanie Garza at