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Economy in Brief

Chain Store Sales Lower Again As Gasoline Prices Rose Further
by Tom Moeller May 25, 2004

Chain store sales fell 0.5% last week on top of a 0.8% decline the week prior, according to the International Council of Shopping Centers (ICSC)-UBS.

Retail gasoline prices rose to an average $2.06 per gallon last week (+38.8% y/y), up 14.8% from the April average of $1.80.

So far in May, chain store sales are 1.0% above the April average due to a 1.5% jump at the end of last month.

During the last ten years there has been a 59% correlation between y/y change in chain store sales and the change in non-auto retail sales less gasoline.

The ICSC-UBS 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.

ICSC-UBS (SA, 1977=100) 05/22/04 05/15/04 Y/Y 2003 2002 2001
Total Weekly Retail Chain Store Sales 439.8 442.2 5.5% 2.9% 3.6% 2.1%
Consumer Confidence Held The Higher Ground
by Tom Moeller May 25, 2004

The Conference Board’s Index of Consumer Confidence for May was about unchanged at 93.2 versus the upwardly revised April reading of 93.0. Confidence in April had improved 5.1% versus March. Consensus expectations were for a slight rise in May to 94.0.

The present situation reading was little changed at 90.3 (+34.2% y/y) and the index of consumer expectations ticked 0.4% higher (+0.7% y/y).

While perceptions of current business conditions improved to the highest level since June 2001, jobs were viewed as hard to get by 30.6% of respondents. The increase in this measure erased all of the improvement (decline) logged earlier this year.

Expectations for business conditions in six months jumped in May to the highest level since January as 19.2% of respondents expected there to be more jobs in six months, the highest percentage since January.

The May Confidence reading was right in line with the unchanged level of Consumer Sentiment in mid-May reported earlier by the University of Michigan.

During the last ten years there has been a 67% correlation between the level of consumer confidence and the y/y % change in real PCE.

The Conference Board’s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

Conference Board May April Y/Y 2003 2002 2001
Consumer Confidence 93.2 93.0 11.5% 79.8 96.6 106.6
Existing Home Sales Rose Unexpectedly to Near-Record
by Tom Moeller May 25, 2004

Sales of existing single family homes reported by the National Association of Realtors added another 2.5% in April to the gains of the prior two months. Sales of 6.640M were near the record of 6.68M set in September of last year. Consensus expectations had been for April sales 6.40M. March was unrevised.

Housing affordability has continued to rise despite higher mortgage rates as home price inflation has been stable near 7% and growth in real disposable income has accelerated to 4.0% from 2.6% last year.

Sales rose in all regions of the nation. In the Midwest sales rose 4.4% (+11.0% y/y) and in the South they rose 3.5% (+16.6% y/y). Lesser gains were logged in the Northeast where sales rose 1.4% (12.3% y/y) and in the West where sales rose 0.5% (17.9% y/y).

The median price of an existing home rose 1.1% m/m to $176,000 (+7.3% y/y). The prior month's figure was revised down.

The figures reflect closings of home sales in earlier months.

The latest release from the National Association of Realtors is available here.

Existing Home Sales (000, AR) April Mar Y/Y 2003 2002 2001
Existing Single-Family  6,640  6,480 15.1% 6,098 5,593 5,290
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