Retail Sales Decline

November 26, 2002

· Real GDP last quarter was revised up more than Consensus expectations for a revision to 3.6% growth. Year to date growth in real GDP has been 3.4% (AR).

· The effect from inventory accumulation was raised notably, adding nearly one half of a percentage point to growth, as production was stronger than estimated initially.

· Corporate profits after tax were strong, rising 8.7%, though they were still down 1.0% y/y. Profits with IVA & CCA fell 7.0% (+12.2% y/y), the third consecutive down quarter. Tax law changes greatly boosted the Capital Consumption Adjustment (depreciation) as of 4Q01. The CCA has fallen sharply since the 4Q peak.

· Domestic final demand growth was revised slightly higher led by an upward revision to residential investment, revised to show a 2.1% increase rather than the decline reported initially. Personal consumption growth was revised to 4.1%.

· Capital spending declined 0.7% instead of rising 0.6% as reported initially. The decline in business spending on structures was deepened to 20.6%. Spending on equipment was revised up slightly to 6.6% as a result of a raised estimate of spending on information processing equipment & software (14.4%).

· The trade sector's contribution to growth was revised up slightly to zero as export growth was raised to 3.3% (2.5% y/y). Import growth was little changed at 2.3% (6.5% y/y).

· Estimated inflation was little changed and down slightly from 1Q02.

Chained '96 $, % AR	3Q'02 (Prelim.)	3Q'02 (Advance)	2Q'02 (Final)	Y/Y	2001	2000	1999
GDP	4.0%	3.1%	1.3%	3.2%	0.3%	3.8%	4.1%
Inventory Effect	0.4%	-0.1%	1.3%	0.7%	-1.2%	0.1%	-0.2%
Final Sales	3.5%	3.2%	-0.1%	2.5%	1.5%	3.7%	4.3%
Trade Effect	0.0%	-0.1%	-1.4%	-0.5%	-0.1%	-0.6%	-0.9%
Domestic Final Demand	3.4%	3.2%	1.3%	3.0%	1.6%	4.3%	5.2%
Chained GDP Price Deflator	1.0%	1.1%	1.2%	0.8%	2.4%	2.1%	1.4%

Weekly Chain Store Sales Recover a Bit

November 26, 2002

By Tom Moeller

· Chain store sales rose 0.9% last week according to the BTM-UBSW survey. The rise recouped some of the 1.2% drop the prior week.

· With the important Thanksgiving week to go, November sales were down 0.2% from the average sales level a month earlier. October sales fell 1.5% from September.

· During the last ten years there has been a 48% correlation between the year-to-year percent change in monthly chain store sales and the change in GAF retail sales.

BTM-UBSW (SA, 1977=100)	11/23/02	11/16/02	Y/Y	2001	2000	1999
Total Weekly Retail Chain Store Sales	400.8	397.1	2.0%	2.1%	3.4%	6.7%

Consumer Confidence Recovered a Bit

November 26, 2002

By Tom Moeller

· The Conference Board’s Index of Consumer Confidence this month recovered some of the October plunge. Consensus expectations were for a reading of 85.0. October's level was revised up slightly.

· The 5.7% m/m gain in Consumer Confidence was the first m/m gain since May. It was in line with the rebound in the Consumer Sentiment reading from the University of Michigan.

· The rise in confidence reflected higher readings of both the present situation and consumer expectations, but the gain in the present situation reading was just slight.

· During the last ten years there has been a 48% correlation between the level of Consumer Confidence and the y/y percent change in real PCE.

· The Conference Board's survey is conducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

Conference Board	Nov	Oct	Y/Y	2001	2000	1999
Consumer Confidence	84.1	79.6	-0.9%	106.6	139.0	135.3

New Home Sales Again Strong

November 26, 2002

By Tom Moeller

· Sales of new single family homes remained near record territory last month. Sales fell 4.5% from September, but the strong sales in both August and September were revised higher. Consensus expectations were for a 980,000 sales rate.

· Sales were mixed across the country’s regions. In the Northeast, sales fell 32.3% following the huge 88.2% gain a month earlier. Sales in the Midwest fell for the second consecutive month. In the West, sales rose for the third consecutive month and in the South sales recovered a piece of the September decline.

· The median price of a new home rose 0.3% to $176,700 (3.2% y/y). Prices in September were revised down.

· The new home sales data reflect current sales versus the existing home sales figure which reflect closings on past sales.

Homes Sales (000s, AR)	Oct	Sept	Y/Y	2001	2000	1999
New Single-Family	1,007	1,054	16.4%	908	880	879

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