Retail Sales Decline

December 17, 2002

· The Consumer Price Index (CPI-U) rose just 0.1% last month. The gain was as expected. Excluding food and energy, prices also rose as expected and the rise was equal to the YTD average.

· Tobacco prices (-0.0%) fell for the second consecutive month. The core CPI less tobacco rose 0.2% (2.0% y/y).

· Price discounting was widespread last month. Household furnishings and operation prices fell 0.1%, the sixth monthly decline this year. Apparel prices also fell (-0.4%) after being unchanged the month prior. New and used vehicle prices were down for the second consecutive month.

· Services prices were mixed. Shelter prices rose 0.3% following the 0.2% gain in the prior month. Public transportation prices rose 0.9% following two months of decline. Medical care services prices rose 0.6%, just below the elevated October reading. Education prices were flat for the second month. Recreation prices were flat for the second month in three.

· Energy prices fell last month led by a 0.2% decline in gasoline prices, the first since May. Fuel and utility prices were unchanged owing to a decline in piped gas & electricity prices

· For analysis of health care costs and coverage by the St. Louis Federal Reserve click here.

Consumer Price Index	Nov	Oct	Y/Y	2001	2000	1999
Total	0.1%	0.3%	2.3%	2.8%	3.4%	2.2%
Total less Food & Energy	0.2%	0.2%	2.0%	2.7%	2.4%	2.1%
Goods less Food & Energy	-0.3%	-0.1%	-1.6%	0.3%	0.5%	0.7%
Services less Energy	0.3%	0.3%	3.5%	3.7%	3.3%	2.7%
Energy	-0.2%	1.9%	8.1%	3.7%	16.9%	3.6%
Food & Beverages	0.2%	0.1%	1.2%	3.1%	2.3%	2.1%

Chained CPI: Total (NSA)	-0.1%	0.2%	1.9%	2.1%	2.0%	NA
Total less Food & Energy	0.0%	0.2%	1.5%	1.9%	1.4%	NA

Housing Starts Rose More Than Expected

December 17, 2002

By Tom Moeller

· Housing starts rose slightly more than expected last month. The 2.4% m/m rise partially recouped an 8.4% October decline that was revised slightly shallower. Total starts were up 7.2% versus last December.

· Single family starts rose a modest 0.9% m/m following a 5.1% October decline. Year to date, single family starts were up 7.4% versus last December.

· Multi-family starts rose 10.0% following two months of sharp decline. Year to date, multi family starts were up 6.2% versus last December.

· Building permits reversed all of the prior month's gain and fell 2.7% m/m. The decline was all due to lower multi family permits. Single family permits rose a slight 0.1% following three months of strong gain. The level of single family permits was near the record high of this past February.

Housing Starts (000s, AR)	Nov	Oct	Y/Y	2001	2000	1999
Total	1,697	1,657	5.8%	1,603	1,573	1,647
Single Family	1,390	1,378	12.0%	1,273	1,232	1,306
Multi Family	307	279	-15.4%	330	341	341

Industrial Production Up Slightly

December 17, 2002

By Tom Moeller

· Industrial production rose just slightly last month versus Consensus expectations for a 0.2% gain. It was the first monthly rise in output since July. October's decline was lessened and prior month's figures were revised up. Production was up 2.5% (AR) year to date.

· Output in the manufacturing sector rose 0.1% following two months of decline. Factory production was up 2.3% (AR) year to date.

· Output of motor vehicles and parts (5.2% AR, YTD) rose 3.9% for the first gain in four months. Output of appliance, furniture & carpeting rose 0.8%, but it was only the second monthly rise since May. Apparel output rose 0.4% but was down 4.2% (AR) year to date.

· Output of business equipment fell 0.5% (-3.0% AR, YTD), the fourth decline in five months. Output of information processing equipment rose for the second consecutive month (-1.1% AR, YTD).

· Capacity utilization rose slightly and is off the lows of late last year, but remains down considerably from prior years. Capacity again rose 0.1% (1.1% AR, YTD) as it has since early last year.

Production & Capacity	Nov	Oct	Y/Y	2001	2000	1999
Industrial Production	0.1%	-0.6%	1.8%	-3.5%	4.7%	4.3%
Capacity Utilization	75.6%	75.5%	75.1%(11/01)	77.3%	82.7%	82.4%

Chain Store Sales Recovered Sharply

December 17, 2002

By Tom Moeller

· Chain store sales surged 1.9% last week according to the BTM-UBSW survey. The gain recovered most, but not all, of the prior week's 2.3% plunge.

· Since early October, weekly sales have been volatile but essentially have moved sideways.

· December sales so far were 1.0% below the November average.

· The BTM Leading Indicator of chain store sales collapsed in early December and was 1.6% (-1.2% y/y) below November.

· 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. That correlation rose to 63% during the last five years.

BTM-UBSW (SA, 1977=100)	12/14/02	12/07/02	Y/Y	2001	2000	1999
Total Weekly Retail Chain Store Sales	400.1	392.8	4.5%	2.1%	3.4%	6.7%

Crude Oil Prices Surge to $30.00 per Barrel

December 17, 2002

By Tom Moeller

· Prices have surged $5.00/bbl for West Texas Intermediate crude oil since the mid-November lows. A labor strike in Venezuela has crippled the country's oil output.

· Wholesale gasoline prices have similarly surged, rising nearly $0.15 per gallon, or 19%, since late November. Fuel oil prices also have risen sharply.

· Wholesale natural gas prices have more than doubled this year.

Daily Crude Oil Prices	12/16/02	11/18/02	Y/Y	2001	2000	1999
West Texas Intermediate Crude Oil	$30.13	$26.73	56.7%	$25.97	$30.34	$19.34

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