Economic Update

SUBDUED INFLATION IN APRIL Consumer and producer prices retreated last month. The federal government’s Consumer Price Index fell 0.4%, a monthly descent unseen since December 2008; the Producer Price Index declined 0.7%, its biggest monthly drop in three years. Consumer prices also fell for a second straight month; the last time that happened was in…

HOW IS THIS EARNINGS SEASON TURNING OUT? At the closing bell on May 10, 90% of S&P 500 firms had reported quarterly results. According to Reuters, 67% of them have surpassed earnings forecasts and 24% have fallen short of projections. Should the remaining 50 components report results matching estimates, earnings will be up 5.3% on…

UNEMPLOYMENT EDGES DOWN TO 7.5% April brought a rebound in hiring. Employers added 165,000 jobs, and so the unemployment rate reached a four-year low. (The Labor Department also revised March’s job gains upward to 138,000.) Payrolls have now expanded by an average of 189,000 jobs a month during the last six months. CONSUMER SPENDING, OUTLOOK…

INFLATION DECLINES Consumer prices retreated 0.2% in March as fuel costs fell, a sea change from the 0.7% rise in the Consumer Price Index seen in February. (Labor Department data did show a 0.1% rise in core CPI.) Annualized consumer inflation was at 1.5% in March, down half a percent in a month. Year-over-year inflation…

HOUSEHOLDS BOUGHT LESS LAST MONTH Retail sales were down 0.4% in March, according to the Commerce Department. This unanticipated dip was the deepest retreat in nine months. Even with volatile car and truck sales factored out, the March decline remained 0.4%. CONSUMER SENTIMENT SLIPS The University of Michigan’s overall index of consumer sentiment came in…

JUST 88,000 NEW JOBS? In the wake of the Labor Department’s disappointing March employment report, puzzled analysts tried to figure out the reasons for such poor job growth. Did businesses fear the impact of the federal budget cuts in March and scale back hiring? Were there fewer food service, retail and temporary job openings? (More…

SOLID GAINS IN HOUSEHOLD SPENDING, INCOME According to the latest Commerce Department report, household spending was up 0.7% in February (the largest gain in five months) while consumer incomes jumped 1.1%. February’s 35-cent climb in gasoline prices influenced the first number, while an 11.9% surge in dividends influenced the second. Still, consumer spending rose 0.3%…

WINTER DOESN’T DETER HOMEBUYERS   According to the National Association of Realtors, existing home sales rose 0.8% in February. The sales pace hit 4.98 million units, a 39-month high. The inventory of homes for sale increased 9.6% last month, recovering from a six-and-a-half-year low reached the month before. In related news, housing starts were also…

RETAILERS RECEIVE A MAJOR BOOST   Higher payroll taxes don’t seem to have hurt shopping or driving: the Commerce Department noted a 1.1% improvement in retail sales for February. As gas station receipts increased 5.0% and auto sales 1.1% last month, there was also a 0.4% gain in core retail sales and a 0.5% rise…

HIRING HAS REALLY PICKED UP During June-August 2012, non-farm payrolls grew by an average of 135,000 jobs a month. Across September-November, that average improved to 181,000 per month. From December-February, the economy added an average of 191,000 jobs a month. The icing on the cake: the latest monthly report from the Labor Department showed 236,000…