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Weekly Update Two Arrows
by Nobel Laureate Lawrence R. Klein
and Professor Suleyman Ozmucur
 
 

Housing starts decreased 4.3% in December, following an increase of 3.8% in the previous month.
 
 

December existing home sales increased 12.3% to an annualized rate of 5,280 thousand units. The median sales price of existing houses sold was $168.8 thousand, 1.0% below December 2009.
 
 

The housing market index held steady at 16 in January.
 
 

The long term mortgage rate averaged 4.74% for the week ending January 20, up from last week when it averaged 4.71%.
 
 

Treasury International Capital reported net foreign purchases of long-term securities of $93.9 billion in November, compared to $56.0 billion in October.
 
 

The Conference Board index of leading economic indicators increased 1.0% in December, following a 1.1% increase in November.
 
 

The advance figure for initial claims for unemployment insurance decreased 37 thousand to 404 thousand in the week ending January 15.
 
 

The Philly FED business outlook survey indicated that economic activity in the region's manufacturing sector continued to improve in January.
 
 

The Empire State Manufacturing Survey indicated that conditions improved in January for New York's manufacturers.
 
 

The Current Quarter Model's average forecast for growth in fourth quarter real GDP was unchanged at 3.69%. The consumption deflator (chain-type) growth forecast was unchanged at 1.67%.
 
 
Real GDP Growth
Consumption Price Inflation
 
 
Current Quarter Forecasts
The Current Quarter Model's average forecast for growth in fourth quarter real GDP was unchanged at 3.69%. The expenditure side model forecast was revised slightly downward, while the income side model and the principal components model forecasts were unchanged.

The average forecast for growth in the fourth quarter GDP deflator was unchanged at 2.23%. The consumption deflator (chain-type) growth forecast was unchanged at 1.67%. The average forecast for nominal GDP was revised slightly downward, from $14,963.7 billion to $14,963.5 billion. This indicates an annualized 6.06% increase from the previous quarter, and an increase of 4.81% from a year before.

The expenditure side model forecast for growth in fourth quarter real GDP was revised slightly downward, from 2.74% to 2.73%. The income side model forecast was unchanged at 5.38%. The principal component model forecast was unchanged at 2.97%.

The expenditure side and income side model GDP deflator forecasts were unchanged at 2.16%. The principal component GDP deflator forecast was unchanged at 2.37%.

The average GDP growth forecast for the year 2010 is 2.89%. The GDP deflator growth forecast is 1.08%, and the consumption deflator growth forecast is 1.70%.