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Economy in Brief

U.S. Retail Sales Firm
by Tom Moeller March 11, 2004

Retail sales rose 0.6% last month and matched the Consensus expectation. The previously reported 0.3% decline in January sales was revised up to a 0.3% increase.

Retail sales excluding motor vehicles & parts dealers were little changed but January sales were revised up to a 1.2% surge from 0.9%. Consensus expectations had been for a 0.5% February increase.

Sales at general merchandise stores jumped another 1.3% (7.2% y/y) after an upwardly revised 1.2% January surge.Sales of furniture/home furnishings & electronics/appliances were unchanged (12.3% y/y) after a 0.7% January gain that was revised from a 0.4% decline. Clothing and accessory store sales rose 0.4% (9.6% y/y) following several months of strong gain.

Motor vehicle dealers' sales rose 2.7% m/m as unit sales of light vehicles rose 1.5% to 16.37M.

Sales of building materials were unchanged (14.7% y/y) following a little-revised 1.0% January drop. Sales at food stores fell 0.5% and gasoline service stations' sales fell 0.1%.

  Feb Jan Y/Y 2003 2002 2001
Retail Sales & Food Services 0.6% 0.2% 7.9% 5.6% 3.0% 2.9%
  Excluding Autos -0.0% 1.2% 7.3% 5.3% 3.6% 2.9%
Import Prices Rose
by Tom Moeller March 11, 2004

Imported commodities prices rose 0.4% in February, just under the Consensus expectation for a 0.5% rise.

Non-petroleum import prices rose 0.4%. The gain mostly reflected a 1.6% (3.9% y/y) jump in food prices. Capital goods prices were unchanged (-0.9% y/y) and as were non-auto consumer goods prices (0.6% y/y). Auto prices rose 0.1% (1.2% y/y).

During the last fifteen years there has been a (negative) 54% correlation between the trade-weighted exchange value of the dollar and the y/y change in non-petroleum import prices

Petroleum prices rose 0.2% last month. So far in March the price of Brent Crude Oil has risen another 13% to $34/bbl.

Export prices rose another 0.6%. Higher prices for food exports, up 2.1% (15.0% y/y), drove the gain. Capital goods export prices rose just 0.2% (-1.0% y/y) and non-auto consumer goods prices fell for the second month (0.4% y/y).

"Import Prices and the Exchange Rate" from the Federal Reserve Bank of St. Louis is available here.

"A Perspective on U.S. International Trade" from St. Louis Bank President William Poole can be found here.

Import/Export Prices (NSA) Feb Jan Y/Y 2003 2002 2001
Import - All Commodities 0.4% 1.5% 0.8% 2.9% -2.5% -3.5%
  Petroleum 0.2% 8.2% -4.9% 20.9% 3.0% -17.2%
  Non-petroleum 0.4% 0.8% 1.8% 1.1% -2.4% -1.5%
Export - All Commodities 0.6% 0.6% 2.4% 1.6% -1.0% -0.8%
Initial Jobless Insurance Claims Down Again
by Tom Moeller March 11, 2004

Initial claims for jobless insurance fell 6,000 (-1.7%) to 341,000 last week, near the Consensus expectation for 345,000 claims. The prior week was revised up slightly.

During the last ten years there has been a 77% (negative) correlation between the level of initial claims and the three-month change in non-farm payrolls.

The four-week moving average of initial claims fell to 345,750 (-17.5% y/y).

Continuing claims for unemployment insurance fell 41,000 from the prior week's level that was revised to show a 17,000 decline.

The insured rate of unemployment was unchanged at 2.4% for the third week.

Unemployment Insurance (000s) 3/6/04 2/28/04 Y/Y 2003 2002 2001
Initial Claims 341.0 347.0 -18.8% 403 404 406
Continuing Claims -- 3,032 -12.0% 3,535 3,575 3,022
U.S. Budget Deficit Deeper
by Tom Moeller March 11, 2004

The U.S. Government budget deficit deepened to $96.7B in February.That about equaled expectations and also about equaled last year's deficit in February, but for the first five months of FY04 the deficit of $226.8B was 17% larger than last year.

As a percentage of US GDP the Federal deficit is projected to hit 4.5% this year versus 3.5% last year and a peak of 6.0% in 1983.

Net receipts for the first five months of FY04 rose 0.8% versus the first five months of FY03. The gain reflected higher corporate tax receipts, up 46.7% y/y. Contributions for social insurance, estate taxes, and miscellaneous taxes also rose. Individual income tax receipts fell 4.6% y/y.

Federal net expenditures rose 4.2% versus the first five months of last fiscal year. Defense expenditures surged 14.2%. Medicare outlays grew 0.5% and spending on health programs rose 10.0%. Interest expense fell 4.5% y/y.

US Government Finance Feb Jan Feb '03 FY2003 FY2002 FY2001
Budget Balance $-96.7B $-1.6B $-96.7B $-374.2B $-157.8B $127.3B
  Revenues $85.3B $184.3B -4.7% -3.8% -6.9% -1.7%
  Outlays $182.0B $185.6B -2.2% 7.2% 7.9% 4.2%
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