U.S. Gasoline Prices Up Again

Despite the U.S. recession and reduced demand, regular gasoline prices again moved higher last week to an average $1.89 per gallon prices. That was up from 10 cents from the January average and up 28 cents from the December low, according to the U.S. Department of Energy survey. Yesterday, the spot market price for regular gasoline fell sharply backward from Friday's level to $1.17 per gallon (where it began the month of January). Spot prices still were up, however, by 32 cents from their December low.

Weekly gasoline prices can be found in Haver's WEEKLY database. Daily prices are in the DAILY database.

Demand continued quite weak for gasoline in reaction to the economy's weakness. The U.S. Department of Energy reported that the demand for gasoline fell by 3.5% during the latest four weeks. While the rate of decline remained nearly the fastest since late-1995 (the latest four weeks versus the same four weeks in 2008) it has been stable since November. The demand for all petroleum products also is down a sharp 4.0% y/y. These numbers are available in Haver's OILWKLY database.

The source for that reduced demand for gasoline is the cutback in vehicle miles driven which have fallen 5.3% year-to-year during the twelve months ended November. The rate of decline has been accelerating since late 2007 and it is nearly unprecedented. These Department of Transportation figures are available in Haver's OGJ database.

The price for a barrel of West Texas Intermediate crude moved slightly higher last week to $42.52 per barrel and it was up 10 dollars from the low reached late in December. Prices reached a high of $145.66 last July. In futures trading yesterday, the one-month price for crude oil fell versus last week to $40.08 per barrel, down sharply from one week ago.

The price of natural gas fell again, last week to $4.75 per mmbtu (-40.9% y/y). The latest average price was down roughly two-thirds from the high reached in early-July of $13.19/mmbtu.

Labor Supply Responses to Changes in Wealth and Credit from the Federal Reserve Bank of San Francisco is available here.

With a 1.6% increase last week chain store sales recovered nearly all of the prior week's decline, according to the International Council of Shopping Centers-Goldman Sachs Index. Nevertheless, the year-to year change of -2.5% continued as the weakest in the series' history which extends back to 1990. For January as a whole, sales ticked up 0.1% from December after that month's 0.3% gain.

During the last ten years there has been a 64% correlation between the year-to-year growth in chain store sales and the growth in general merchandise sales.

The ICSC-Goldman Sachs retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

German nominal and real ex-auto retail sales are off for the third month in a row. In the fourth quarter nominal retail sales are off at a 4% pace; ex-auto real retail sales are dropping at a 2.1% pace. The sequential growth rates show an accelerating pattern of losses from 12-months to 6-months to 3-months, across the main categories in the table.

The downturn has spreading across other measures as well, as manufacturing has been notoriously weak. German consumers have not been much of a prop to this economy for a long time. In the quarter ended Sept 2008 they did rise by 1.9% Q/Q (saar), but that was after falling by 3.2% (saar) in the previous quarter. Yr/Yr quarterly average real (ex auto) retail sales have been negative in German since the quarter ended December 2006. Ironically the 2008-Q4 retail sales figures on this same basis are up by 0.1%, the first quarterly increase since Q4-2008 and it comes as sales have turned tail to move sharply lower in the quarter.

The German retailing association HDE is looking for retail sales to decline in real terms in 2009. Manufacturing is coming apart at the seams. Construction is weak, The German economy, Europe’s largest, is under fire.

The National Association of Realtors indicated that pending sales of existing homes in December rose 6.3% The increase reversed most of the declines during the prior two months. Consensus expectations were for no change in sales m/m. For the year as a whole, sales fell 9.3% after declines of 14.6% and 9.8% during the prior two years. Despite the monthly sales increase, the December level was near the series' low.

The home sales figures are analogous to the new home sales data from the Commerce Department in that they measure existing home sales when the sales contract is signed, not at the time the sale is closed. The series dates back to 2001.

Lower prices continued to bolster home sales. The median sales price of an existing home in December fell for the sixth straight month and was down 15.3% year-to-year. Prices were down 23.4% from their peak during June of last year. For single-family homes only, prices fell 2.9% during December and they were off 23.8% from their peak. Lower prices combined with lower interest rates significantly raised the affordability index of a home. It reached a record high for the series which extends back to 1970.

A 13.0% December rise in the South led the latest increase in total sales but were still off 16.2% for the year. Sales in the Midwest also posted a 12.8% gain in December but that was not enough to keep full-year sales from falling 9.7%. December sales in the West fell 3.7% in December but rose 7.8% for the full year. Home sales in the Northeast ticked lower by 1.7% for the month but repeated their decline of 2007 and fell 15.2%.

Weak home sales are encouraging potential sellers to keep their homes off the market. The Realtors Association indicated in an earlier report that the number of homes on the market and available for sale fell by 11.7% last month, down 7.5% for the full year.

At the current sales rate there was a 9.3 months' supply of homes on the market and there was a 10.4 months' supply during all of last year, up from the 8.9 months supply during 2007 and 6.5 months during 2006. For single family homes, there was an 8.7 months' supply in December versus a full-year figure of 10.0 months.

The pending home sales data are available in Haver's PREALTOR database. The number of homes on the market and prices are in the REALTOR database.

The American Recovery and Reinvestment Act of 2009 from the Congressional Budget Office can be found here.

The Term Structure of Inflation Expectations from the Federal Reserve Bank of New York is available here.