The Consumer Price Index rose by 0.2% in January, as falling energy prices only partially offset big increases in the cost of medical care and airline tickets, the Labor Department reported February 21. Although smaller than December's 0.4% rise, consumer prices were higher than the 0.1% increase Wall Street had forecast. Core inflation, which excludes volatile energy and food prices, also was up more than analysts had expected, rising by 0.3%. It was the largest one-month gain in seven months.
However, in minutes released on February 21 from its late-January policy meeting, the Federal Reserve said the outlook for core inflation had improved. It stated that a confluence of "better-than-expected news" on the economy and inflation suggested there were smaller risks to growth and improved prospects for inflation.
The Conference Board's Index of Leading Economic Indicators -- designed to forecast economic activity over the next three to six months -- rose by 0.1% in January. Although not the 0.2% rise analysts had anticipated, the reading suggested continued modest growth for the U.S. economy.
The number of people filing new claims for unemployment insurance fell by 27,000 for the week ended February 17, the Labor Department said February 23. Although not as large a drop as economists had expected, it was a sharp improvement over the prior week when claims jumped by 46,000.
For the week ended February 22, interest rates on 30-year and 15-year mortgages fell, Freddie Mac said. With the latest decline, mortgage rates are slightly lower than they were at this time a year ago.
This week look for updates on existing home sales on February 26.
Monday, February 26, 2007
Monday, February 19, 2007
Economic Update 2/19/2007
The Producer Price Index -- wholesale prices that suppliers charge retailers for their goods -- fell 0.6% in January, the largest drop since October, the Labor Department reported February 16. Core wholesale inflation, which strips out volatile food and energy prices, rose 0.2%. Both numbers were in line with economists' expectations.
The U.S. trade deficit widened to $61.2 billion in December, a 5.3% increase over November. Economists had expected a deficit of only $59.5 billion. For all of 2006, the trade deficit was a record $763.6 billion, a 6.5% increase from the previous high of $716.7 billion set in 2005.
Construction of new homes and apartments plunged by 14.3% in January, the Commerce Department said February 16. The bigger-than-expected drop left construction at a seasonally adjusted annual rate of 1.4 million units, the lowest level in 10 years.
Nationally, home sales fell 10.1% in the fourth quarter of 2006, compared with the same period a year ago, the National Association of Realtors said February 15. The states with the biggest declines in sales from October through December were Nevada, down 36.1%; Florida, down 30.8%; Arizona, down 26.9%; and California, down 21.3%. The national median price -- the point where half of homes sold for more and half sold for less -- fell to $219,300, down 2.7% from the fourth quarter of 2005.
Retail sales were essentially flat in January, the Commerce Department reported February 14. While sales at department stores showed strength, auto sales fell 1.3%, the biggest one-month drop since falling 2.4% last June.
This week look for updates on the Consumer Price Index on February 21.
The U.S. trade deficit widened to $61.2 billion in December, a 5.3% increase over November. Economists had expected a deficit of only $59.5 billion. For all of 2006, the trade deficit was a record $763.6 billion, a 6.5% increase from the previous high of $716.7 billion set in 2005.
Construction of new homes and apartments plunged by 14.3% in January, the Commerce Department said February 16. The bigger-than-expected drop left construction at a seasonally adjusted annual rate of 1.4 million units, the lowest level in 10 years.
Nationally, home sales fell 10.1% in the fourth quarter of 2006, compared with the same period a year ago, the National Association of Realtors said February 15. The states with the biggest declines in sales from October through December were Nevada, down 36.1%; Florida, down 30.8%; Arizona, down 26.9%; and California, down 21.3%. The national median price -- the point where half of homes sold for more and half sold for less -- fell to $219,300, down 2.7% from the fourth quarter of 2005.
Retail sales were essentially flat in January, the Commerce Department reported February 14. While sales at department stores showed strength, auto sales fell 1.3%, the biggest one-month drop since falling 2.4% last June.
This week look for updates on the Consumer Price Index on February 21.
Monday, February 12, 2007
Economic Update 2/12/2007
U.S. productivity -- the amount of output per hour of work -- grew at a healthy 3% in the final quarter of 2006, the Labor Department reported February 7. It was the fastest quarterly pace since the first three months of 2006 and nearly double the 1.7% gain economists had expected. However, for all of 2006, productivity rose by 2.1%, the slowest pace since 1997. Economists keep close tabs on productivity, because declining worker output, coupled with higher wages and benefits, can ignite inflation.
U.S. retail sales rose 3.9% in January, beating analysts' 3.1% estimate. Retailers Limited Brands, Nordstrom, Federated Department Stores and Wal-Mart Stores reported better-than-expected results. The arrival of frigid temperatures in much of the country helped spur sales of cold-weather items.
The U.S. service sector expanded in January, signaling a strong start to economic growth in 2007, the Institute for Supply Management reported February 5. The trade group's index advanced to 59 in January from 56.7 in December. A reading above 50 indicates expansion.
The Labor Department reported February 8 that claims for jobless benefits rose by 3,000 from the previous week, in line with economists' expectations. The national unemployment rate edged up from 4.5% in December to 4.6% in January. On the news of weaker job growth, mortgage rates dipped slightly for the week, Freddie Mac said February 9.
This week look for updates on housing starts and housing permits on February 16.
U.S. retail sales rose 3.9% in January, beating analysts' 3.1% estimate. Retailers Limited Brands, Nordstrom, Federated Department Stores and Wal-Mart Stores reported better-than-expected results. The arrival of frigid temperatures in much of the country helped spur sales of cold-weather items.
The U.S. service sector expanded in January, signaling a strong start to economic growth in 2007, the Institute for Supply Management reported February 5. The trade group's index advanced to 59 in January from 56.7 in December. A reading above 50 indicates expansion.
The Labor Department reported February 8 that claims for jobless benefits rose by 3,000 from the previous week, in line with economists' expectations. The national unemployment rate edged up from 4.5% in December to 4.6% in January. On the news of weaker job growth, mortgage rates dipped slightly for the week, Freddie Mac said February 9.
This week look for updates on housing starts and housing permits on February 16.
Monday, February 5, 2007
Economic Update 2/5/2007
Citing healthy economic growth and reduced inflation, the Federal Reserve on January 31 held its key federal funds rate at 5.25%. The fed funds rate is the overnight interest rate that banks charge one another to borrow money. It was the fifth straight time the Fed has held steady, a move that was widely expected by Wall Street analysts.
In the final quarter of 2006, the economy grew at a faster-than-expected 3.5% pace, despite lagging automotive and real estate markets, the Commerce Department said January 31. The performance exceeded analysts' forecasts for a 3% growth rate. For all of 2006, the gross domestic product (GDP) increased by 3.4%, an improvement over 2005's 3.2% showing.
Pending sales of existing homes in December increased at a seasonally adjusted annual rate of 4.9%, the National Association of Realtors (NAR) said February 1. The climb was the biggest since March 2004. "Some of the monthly gain may be weather-related, but it appears buyers are becoming more comfortable, sensing the timing is good and that their local market has bottomed out," said David Lereah, NAR's chief economist.
For all of 2006, income climbed 6.4%, the biggest annual gain since 8.0% in 2000, the Commerce Department reported February 1. However, the personal savings rate for 2006 was a minus 1%, meaning that people spent not only all the money they earned, but also dipped into savings or increased borrowing to finance purchases. The 2006 figure was lower than the negative 0.4% in 2005 and was the poorest showing since a minus 1.5% savings rate in 1933 during the Great Depression.
This week look for updates on worker productivity on February 7.
In the final quarter of 2006, the economy grew at a faster-than-expected 3.5% pace, despite lagging automotive and real estate markets, the Commerce Department said January 31. The performance exceeded analysts' forecasts for a 3% growth rate. For all of 2006, the gross domestic product (GDP) increased by 3.4%, an improvement over 2005's 3.2% showing.
Pending sales of existing homes in December increased at a seasonally adjusted annual rate of 4.9%, the National Association of Realtors (NAR) said February 1. The climb was the biggest since March 2004. "Some of the monthly gain may be weather-related, but it appears buyers are becoming more comfortable, sensing the timing is good and that their local market has bottomed out," said David Lereah, NAR's chief economist.
For all of 2006, income climbed 6.4%, the biggest annual gain since 8.0% in 2000, the Commerce Department reported February 1. However, the personal savings rate for 2006 was a minus 1%, meaning that people spent not only all the money they earned, but also dipped into savings or increased borrowing to finance purchases. The 2006 figure was lower than the negative 0.4% in 2005 and was the poorest showing since a minus 1.5% savings rate in 1933 during the Great Depression.
This week look for updates on worker productivity on February 7.
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