CPI Up Less Than Expected

November 18, 2003

· The Consumer Price Index (CPI-U) was unchanged (2.1% y/y) last month following a 0.3% gain in September. Consensus expectations were for a 0.1% rise.

· Energy prices fell 3.9% as gasoline prices dropped 6.8% (9.8% y/y). So far in November gasoline prices have fallen another 3.3%. Fuel oil prices fell for the second month, down 1.3% (+10.3% y/y) and piped gas & electricity prices fell 1.1% (8.0% y/y).

· Analysis from the Federal Reserve Bank of Dallas titled "Business Cycles: The Role of Energy Prices" can be found here.

· Food prices were firm last month and rose 0.6% (2.9%). Meat prices have been strong, rising 1.8% in October and 7.8% y/y.

· Less food & energy prices were somewhat firmer than expected, up 0.2% (1.3% y/y) versus Consensus expectations for a 0.1% rise.

· Core services prices firmed last month and rose 0.4%, reflecting a 0.4% (2.4% y/y) gain in shelter prices. Public transportation prices also were firm, up 1.1% (3.9% y/y). Medical care services prices rose 0.4% (4.1% y/y).

· Prices of core consumer goods continued to deflate led by a 0.3% (-2.1% y/y) decline in prices for new vehicles. Prices for household furnishings & operation rose 0.2% (-2.2% y/y), the first monthly gain since February. Apparel prices also rose 0.2% (-1.6%).

· Tobacco prices rose 0.2% (-0.2% y/y). The CPI less food, energy & tobacco rose 0.2% (1.3% y/y).

· The chained CPI which adjusts for shifts in consumer buying behavior was unchanged. It is similar to the PCE price deflator. The core price measure rose 0.4%.

Consumer Price Index	Oct	Sept	Y/Y	2002	2001	2000
Total	0.0%	0.3%	2.1%	1.6%	2.8%	3.4%
Total less Food & Energy	0.2%	0.1%	1.3%	2.3%	2.7%	2.4%
Goods less Food & Energy	-0.3%	-0.4%	-2.5%	-1.1%	0.3%	0.5%
Services less Energy	0.4%	0.2%	2.9%	3.8%	3.7%	3.3%
Energy	-3.9%	3.0%	8.8%	-5.8%	3.7%	16.9%
Food & Beverages	0.6%	0.2%	2.9%	1.8%	3.1%	2.3%

Chained CPI: Total (NSA)	0.0%	0.3%	1.6%	1.3%	2.3%	2.0%
Total less Food & Energy	0.4%	0.1%	0.8%	1.8%	2.0%	1.4%

U.S. Budget Deficit Deepened Further in October

November 18, 2003

By Tom Moeller

· The U.S. Government budget deficit deepened to $69.5B in October. That was deeper than the $54.1B deficit in October of last year but near Consensus estimates for a $71.0B deficit.

· Federal net expenditures surged 15.0% versus last year due to a 29.4% jump in defense spending. Spending on health programs rose 8.4% and spending on education rose 7.9%. Growth in Medicare outlays jumped 15.7% y/y and Social Security outlays rose 4.0%. Interest expense fell 4.4% y/y.

· Net receipts jumped 9.1% versus last year. That reflected a jump in corporate income taxes which more than doubled versus last October. Individual tax payments fell 0.1% y/y. Social insurance contributions rose 2.8% y/y and excise taxes rose 0.4%.

US Government Finance	Oct	Sept	Oct '02	FY2003	FY2002	FY2001
Budget Balance	$-69.5B	$26.3B	$-54.1B	$-374.2B	$-157.8B	$127.3B
Revenues	$135.8B	$191.7B	9.1%	-3.8%	-6.9%	-1.7%
Outlays	$205.4B	$165.3B	15.0%	7.2%	7.9%	4.2%

Weekly Chain Store Sales Eased

November 18, 2003

By Tom Moeller

· Chain store sales eased 0.8% last week following a 1.2% pop the week prior according to the BTM-UBSW survey.

· So far in November sales are 0.5% ahead of last month's average. That followed a 0.6% m/m decline during all of October.

· During the last five years there has been a 61% correlation between the year-to-year percent change in the BTM-UBSW measure of chain store sales and the change in non-auto retail sales less gasoline.

· The BTM-UBSW retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

BTM-UBSW (SA, 1977=100)	11/15/03	11/08/03	Y/Y	2002	2001	2000
Total Weekly Retail Chain Store Sales	421.7	425.3	6.2%	3.6%	2.1%	3.4%

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