The Atlanta Journal-Constitution
GDP revised up slightly to 4.1%
The economy grew at a 4.1% pace in the final three months of 2020, a tenth of a point faster than first estimated, the Commerce Department reported Thursday. The influx of new government stimulus efforts and accelerated vaccine distribution could lift growth in the current quarter, ending in March, to 5% or even higher, economists believe.
The situation
The revision does alter the nation’s annual GDP, which shrank 3.5%, the largest decline since 1946, when the U.S. demobilized after World War II. Still, economists believe the rebound will be very strong. Many project a growth rate of 5% or more in the current quarter or more, with 9% growth the headline in some forecasts. For all of 2021, economists are forecasting the GDP could grow by 6%.
Fueling optimism about an economic comeback is a sharp decline in new COVID-19 infections, low interest rates and recent surging sales in the beleaguered retail sector.
The upward revision to the nation’s quarterly GDP reflected stronger housing construction, a bigger increase in business inventories and a smaller decline in state and government spending than first estimated a month ago.
Durable goods
Separately, the Commerce Department reported Thursday that orders to U.S. factories for big-ticket goods shot up 3.4% in January, pulled up by
surge in orders for civilian aircraft. A category that tracks business investment posted a more modest gain, the Commerce Department reported Thursday.
Orders for goods meant to last at least three years have now risen nine straight months, another sign that manufacturing has proven resilient in the face of the coronavirus pandemic. The January gain was triple what economists had expected.
Housing contracts
Also Thursday, the National Association of Realtors reported that the number of Americans who signed contracts to buy homes declined again, with the number of properties for sale not matching the surging demand in the U.S.
Despite the recent declines, contract signings are still 13% ahead of where they were last year at this point, a sign that the housing market remains strong despite the pandemic.
Texas’s largest power producers are blaming last week’s blackouts on widespread failures of the state’s energy system.
Calpine Corp., Vistra Corp. and NRG Energy Inc. told Texas lawmakers Thursday that grid issues, natural gas-supply shortages and regulatory missteps all contributed to the power-plant outages that left more than 4 million homes and business without heat, light and water during a deep winter freeze.
“The entire energy sector failed Texas,” NRG President Mauricio Gutierrez said.
The historic outage caused as much as $129 billion in economic losses. Some electricity providers racked up huge losses, fueling a possible credit crisis. Oil and gas producers saw their output halted. Dozens of people died.
Texas lawmakers holding simultaneous hearings on the disaster appeared frustrated over the clashing explanations as they grilled the executives and the grid operator about what went wrong.
“Who turned my power off ?” yelled Rep. Todd Hunter, of Corpus Christi. “You guys are getting the heat because you’re the front burner!
Calpine, Vistra and NRG all said they had plants forced offline after the flow of electricity on the grid — called frequency
— plunged during the early morning of Feb. 15, when blackouts were first ordered. Their comments contradict the version of events presented by the Electric Reliability Council of Texas, which manages most of the state’s grid.
The grid operator, known as ERCOT, has maintained that the dip in frequency was not significant enough to cause plants to trip. CEO Bill Magness said in testimony before the state Senate said that if plants did go offline in tandem with the dip, it would only have been around 10 units, a number dwarfed by the total that was offline due to weather and gas-supply issues.
Gutierrez said the frequency dip “threatened the majority
of the fleet” but ultimately only caused one plant to go offline. Calpine CEO Thad Hill said in written testimony that two of the company’s natural gas-fired power plants tripped offline for the same reason.
Vistra was within three minutes of losing Comanche Peak nuclear plant because of low frequency, Vistra CEO Curt Morgan said. “We came dangerously close to losing the system,” he said.
Vistra and Calpine also said gas supply shortages affected their ability to operate. The blackouts ordered by ERCOT compounded the issue as power was cut from pipeline compressors necessary to transport the fuel to power plants.