CPI Up Less Than Expected

December 9, 2003

· Chain store sales slumped 2.5% last week as two snowstorms blanketed the Northeast region of the US, according to the BTM-UBSW survey. The decline followed a 0.1% dip in sales during Thanksgiving week.

· Sales during all of November rose 0.5% versus the prior month. That followed a 0.6% m/m decline in 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.

· Analysis from the Federal Reserve Bank of New York exploring what chain store sales indicate about consumer spending can be found here.

BTM-UBSW (SA, 1977=100)	12/06/03	11/29/03	Y/Y	2002	2001	2000
Total Weekly Retail Chain Store Sales	412.2	422.8	4.9%	3.6%	2.1%	3.4%

FOMC Indicates "Accommodation Can Be Maintained for a Considerable Period"

December 9, 2003

By Tom Moeller

· As expected, the Federal Reserve left the target rate for federal funds unchanged at 1.00%. The discount rate also was left unchanged at 2.00%.

· The decision was unanimous.

· The press release which accompanied the Fed’s action contained the following statement. "The evidence accumulated over the intermeeting period confirms that output is expanding briskly, and the labor market appears to be improving modestly."

· Surprisingly, the press release also indicated that "... with inflation quite low and resource use slack, the Committee believes that policy accommodation can be maintained for a considerable period." Most economists had expected the latter phrase would be omitted.

· The complete text of the Fed's latest press release can be found here.

· The stock market's reaction to Federal Reserve policy is explored by the Federal Reserve Bank of New York here.

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