Economic Watch: Factory Orders and Shipments, Falling Deficit, New Fed Chair
February 04, 2014
Shipments and new orders for factory goods both declined in December, according to new figures released by the U.S. Commerce Department.
Shipments fell in December, following five consecutive monthly hikes, by 0.2%, following a 0.8% November increase, while new orders decreased 1.5%, the biggest drop since July. Excluding transportation, new orders increased 0.2%
Shipments of manufactured durable goods during the same time fell 1.7% from November, following four consecutive monthly gains.
New orders for manufactured durable goods fell 4.2% following drops two out of the last three months. A 9.7% drop in transportation equipment led the December decline.
For all of 2013 shipments of factory orders increased 1.8% from the year before while new orders increased 2.5%.
The report follows one from Monday from the trade group the Institute for Supply Management showing U.S. manufacturing activity in January slowed from December.
Shrinking Budget Deficit
New figures released by the Congressional Budget Office on Tuesday project the federal budget deficit this year will be 27% lower this year than in 2013 and will hit its lowest level since 2007.
Despite the decline it is expected to total $514 billion, 3% of the gross domestic product.
CBO also projected that the 2015 deficit would reach a low for the coming decade, at $478 billion, or 2.6% of GDP, and then stay below 3% for a couple of years after that, but then the downward trend ends.
Yellen Sworn in as Federal Reserve Chair
Janet Yellen was sworn in Monday as the first female to lead the U.S. Federal Reserve.
She replaces Ben Bernanke who served in the post since Feb. 1 2006. Yellen’s term runs through Feb. 3 2018.
“Although there are similarities between Bernanke and Yellen, most notably support for the unprecedented policies of the past six years, Yellen is more likely to base policy changes going forward on economic fruition rather than on expectations which could extend the [Federal Reserve’s] taper timeline if the economic data takes a misstep,” said Lindsey Piegza, chief economist at the investment firm Sterne Agee.
Yellen previously served as vice-chair of the Fed starting 2010.