Tom Moeller

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Retail gasoline prices increased last week to $3.42 per gallon (2.8% y/y) after rising to $3.31 per gallon during the previous week. Prices remained below the mid-June 2022 peak of $5.01 per gallon. The retail cost of diesel fuel rose to $4.60 per gallon (21.8% y/y) last week from $4.52 in the prior week. The price reached a peak of $5.81per gallon in the third week of June.

West Texas Intermediate crude oil prices rose to an average $80.34 per barrel (-6.7% y/y) in the week ended January 20 from $77.10 in the prior week and reached the highest level since the third week of November. Nonetheless, they remained below a high of $120.46 in the second week of June 2022. Yesterday, the price was $81.62 per barrel. The average price of Brent crude rose to an average $84.57 per barrel last week (-5.1% y/y) from $80.61 in the prior week. The price peaked at $127.40 in mid-June of last year. Yesterday, the price was $87.54 per barrel.

The price of natural gas declined to $3.17/mmbtu (-29.6% y/y) in the week ended January 20 after falling to $3.46/mmbtu in the previous week. The latest was down from $6.35/mmbtu in the fourth week of December. Prices peaked at $9.56/mmbtu in the last week of August, up from a low of $3.56/mmbtu in the last week of December, 2021. Yesterday, the price was $3.43/mmbtu.

In the four weeks ended January 13, gasoline demand declined 4.6% from a year earlier after falling 4.8% y/y during the prior four weeks. These declines compare to 15.2% y/y growth at the end of 2021. Demand for all petroleum products weakened 6.7% y/y in the latest four weeks in contrast to the 14.4% growth at the end of 2021. Crude oil input to refineries fell 5.0% y/y.

Gasoline inventories fell 6.6% y/y in the week ended January 13, while crude oil inventories declined 18.5% y/y.

Measured in days' supply, gasoline inventories in the week ended January 13 rose w/w to 28.4 days. The supply of crude oil rose to 30.1 days but remained below the 41.8 supply in early-March of 2021.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price data can be found in Haver’s **WEEKLY** and **DAILY** databases. Greater detail on prices, as well as the demand, production and inventory data are in **USENERGY**.

- Gasoline prices rise to highest level since late-November.
- Crude oil prices strengthen also to two-month high.
- Natural gas prices continue to fall.

U.S. Gasoline & Oil Prices Strengthen

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The Conference Board's Composite Leading Economic Indicators Index fell 1.0% (-6.0% y/y) during December after declining 1.1% in November, revised from -1.0%. The Action Economics Forecast Survey expected a 0.7% decline in the index for December.

Eight of the Leading Index's ten components made negative contributions to the index change in December. Declining influences came from the average workweek, initial unemployment insurance claims, the ISM new orders index, building permits, stock prices, the interest rate yield curve, consumer expectations for business/economic conditions and the leading credit index.

The Index of Coincident Economic Indicators edged up 0.1% last month (1.8% y/y) following no change in November, revised from a 0.1% rise. Three of the four index components rose minimally including payroll employment, personal income and business sales. Industrial production declined for a third straight month.

The Index of Lagging Economic Indicators increased 0.3% (6.9% y/y) following an unrevised 0.2% increase during November. A rise in the average duration of unemployment, a higher prime rate and rising business inventory/sales ratios contributed positively to the index change while the six-month change in the services CPI contributed negatively.

The ratio of the Coincident index to the Lagging index also is seen as a leading indicator as it measures current economic performance versus excesses. The ratio fell slightly last month and has been steadily declining since December of 2021, suggesting rising recession risks.

The Conference Board figures are available in Haver's **BCI** database; the components are available there, and most are also in **USECON**. The expectations are in the **AS1REPNA** database. Visit the Conference Board's [site](https://www.conference-board.org/) for coverage of leading indicator series from around the world.

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- Index declines for tenth straight month.
- Coincident indicators rise minimally.
- Lagging indicators continue to increase.

U.S. Leading Economic Indicators Fall in December

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Sales of existing homes declined 1.5% (-34.0% y/y) during December to 4.02 million units (SAAR) from 4.08 million in November, revised from 4.09 million.  Sales stood at the lowest level since November 2010. The Action Economics Forecast Survey expected December sales of 3.94 million units.

Sales of single-family homes fell 1.1% (-33.5% y/y) in December to 3.60 million units from 3.64 million in November. Sales have fallen in each month since January 2022. Condo and co-op sales weakened 4.5% (-38.2% y/y) in December following an 8.3% November fall.

The decline in total sales was most pronounced in the South where they fell 2.2% (-33.1% y/y) to 1.80 million units after falling 7.1% in November. Sales in the Northeast weakened 1.9% (-28.8% y/y) to 5.20 million after a 7.0% November decline. Sales in the Midwest were off 1.0% (-30.3% y/y) to 1.01 million following a 5.6% November drop. Sales in the Western region of the country held steady m/m (-43.4% y/y) at 6.90 million after a 13.8% decline in November.	

The number of existing homes for sale (NSA) fell 13.4% (+10.2% y/y) in December following four straight monthly declines. The months' supply of homes on the market (NSA) declined to 2.9 months at the current selling rate, the lowest rate in six months but increased from a record low of 1.6 months reached in January of last year. These figures date back to January 1999.

The median price of an existing home (NSA) fell 1.5% (+2.3% y/y) to $366,900, down for the sixth straight month. They were 11.3% below the June peak of $413,800. Prices declined last month in all four regions of the country.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.

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- Sales fall for eleventh straight month.	
- Declines continue in most of country.
- Prices at lowest level since February 2022.

U.S. Existing Home Sales & Prices Decline in December

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Total housing starts fell 1.4% (-21.8% y/y) during December to 1.382 million units (SAAR) from 1.401 million in November, revised from 1.427 million. Starts in December were 23.4% lower last month than their April 2022 peak. The Action Economics Forecast Survey expected 1.36 million starts in December. 

The decline in starts last month occurred as multi-family starts fell 19.0% (-14.9% y/y) to 473,000 after rising 3.0% in November. Single-family starts improved 11.3% (-25.0% y/y) last month to 909,000, after falling in each of the prior three months.

Housing starts remained regionally mixed. Starts in the Midwest fell 37.4% (-61.5% y/y) to 129,000, after falling 10.8% in November. Starts in the West weakened 9.5% last month (-17.1% y/y) to 324,000, following a 13.3% November rise. Starts in the South declined 4.0% (-20.4% y/y), after falling 4.8% in November. In the Northeast, starts surged 135.6% (50.4% y/y) to 212,000, following three months of sharp decline.

Building permits weakened 1.6% (-29.9% y/y during December to 1.330 million units after falling 10.6% in November. Single-family permits declined 6.5% (-34.7% y/y) to 730,000 after falling for nine consecutive months. Multi-family permits rose 5.3% (-22.9% y/y) to 600,000 after falling 15.1% in November.

The housing starts and permits figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Multi-family starts fall sharply but single-family increases.

- Decline is pronounced in most of the country.

- Building permits overall weaken.

U.S. Housing Starts & Building Permits Weaken in December

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The Federal Reserve Bank of Philadelphia reported that its Composite Index of Business Conditions rose to -8.9 during January from -13.7 in December. The index remained below its peak of 45.6 in April of 2021. A reading of -11.0 had been expected in the Action Economics Forecast Survey.

The ISM-Adjusted Composite Index improved to 49.2 this month from 46.1 in December. It was the highest level in three months, but still indicated a contraction in overall activity.    

Movement amongst the component series varied. The new orders series rose to -10.9, its least negative reading in five months. An increased 28.3% of respondents reported orders improvement while a steady 39.3% reported orders deterioration. The shipments index rose to 11.1 this month from -0.9 in December. An increased 29.9% of respondents reported shipments improvement while a lessened 18.8% reported a decline. The delivery times reading rose to -5.6 from -7.2. The unfilled orders index fell to -19.2 from -14.1, negative for the eighth straight month. The inventories index rose to 0.9, the first positive reading in five months.

On the labor front, the employment index rose to 10.9 from -0.9. It remained well below its April 2022 peak of 38.4 as an increased 21.6% of respondents reported more hiring and a lessened 10.7% reported less. The hours-worked index improved to 4.0 but remained below its high of 35.3 in March of 2021.

The prices paid index fell sharply to 24.5 from 36.3 in December. It has fallen from a high of 83.6 in November 2021. A slightly higher 39.9% of respondents reported higher prices while a greatly increased 15.4% reported price declines. The prices received index rose to 29.9 from 28.1 in December.

The future activity index increased to 4.9 this month, its first positive reading since May of 2022. Component changes were mixed. The expected prices paid index declined to a recovery low.  

The Philadelphia Fed data can be found in Haver's **SURVEYS** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Index is negative for seven of last eight months.
  
- New & unfilled orders remain depressed. Employment improves.

- Prices paid index reaches new low.

Philadelphia Fed Factory Index Remains Negative in January

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In a sign that activity in the factory sector came under increasing pressure in the second half of 2022, industrial production declined 0.7% (+1.6% y/y) during December after falling 0.6% in November. Production held steady in October. A 0.1% decline had been expected in the Action Economics Forecast Survey.

By **industry groups**, manufacturing production declined 1.3% in December (-0.5% y/y) after November’s 1.1% drop. Durable goods fell 1.1% (+0.8% y/y) after falling 1.4% in November. Computer & electronic products production fell 1.0% (-2.9% y/y), down for the fourth straight month. Motor vehicle & parts production fell 1.0% (+5.1% y/y) after falling 3.5% in November. Electrical equipment & appliance production weakened 1.5% in December (-0.4% y/y) following a 1.6% drop. Machinery output collapsed 3.4% last month (-2.9% y/y) after a 1.7% decline. Fabricated metal product output fell 1.3% (+1.7% y/y) but primary metals rose 0.8% (-2.8% y/y). 

In the nondurable goods sector, production weakened 1.5% (-1.7% y/y) after falling 0.8% in November. Apparel output weakened 0.4% in December (+10.1% y/y) after rising 1.7% in November, while petroleum & coal product output fell 3.1% (-2.3% y/y) after a 0.6% slip. Chemical output dropped 1.4% (-2.0% y/y) after falling 1.1%. Paper production fell 1.6% (-8.2% y/y), the eighth consecutive monthly decline. Food, beverages & tobacco production declined 1.0% (+0.1% y/y) after slipping 0.1% in November. 

Utilities output rose 3.8% (9.7% y/y) in December after rising 4.5% in November. Mining activity fell 0.9% in December (+5.8% y/y), after dropping 1.2% in the prior month.

By **market groups**, consumer goods output eased 0.1% (+1.7% y/y) in December, following a 0.5% decline. Business equipment production fell 2.0% (+1.5% y/y) while construction supplies production slumped 1.4% (-2.1% y/y).

Amongst **special classifications**, factory output of selected high-tech industries fell 0.2% in December (-0.6% y/y), down for the fifth straight month. Manufacturing production excluding both selected high-tech and motor vehicles & parts fell 1.3% (-0.9% y/y) after a 0.9% decline in November.

Capacity utilization fell to 78.8% in December from 79.4% in November. A 79.6% rate had been expected. Factory utilization fell to 77.5% in December from 78.5% in the prior month. This was the lowest utilization rate since September 2021.

Industrial production and capacity are located in Haver's **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.

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- Factory production falls sharply again.

- Consumer output eases, capital equipment weakens.

- Capacity utilization declines again.


U.S. Industrial Production Declines in December

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Consumers continue to retrain spending behavior. Retail sales declined 1.1% (+6.0% y/y) during December following a 1.0% November weakening, revised from -0.6%. A 0.9% decline had been expected in the Action Economics Forecast Survey. Excluding autos, sales also fell 1.1% (+7.0% y/y) after a 0.6% decline in November, revised from -0.2%. A 0.5% weakening had been expected.

Motor vehicle sales declined 1.2% last month (+1.8% y/y) after weakening 2.6% in November. The decline compared to a 5.6% fall in unit vehicle sales which came after 6.1% November drop. Lower prices dragged gasoline station sales down by 4.6% (+5.2% y/y), after falling 1.6% in November. 

Sales amongst other stores were weak. Sales in the retail control group, which excludes autos, building materials, gasoline & restaurants, fell 0.7% (+6.7% y/y) after easing 0.2%% in November. 

Furniture & home furnishing store sales fell 2.5% (+0.3% y/y) after a 2.2% November decline. Electronics & appliance store sales weakened 1.1% (-5.6% y/y) after a 1.2% November drop. Sales of nonstore retailers fell 1.1% (+13.7% y/y) after a 0.1% uptick while apparel sales eased 0.3% (+2.9% y/y) in December following a 0.8% drop. General merchandise sales weakened 0.8% (+3.8% y/y) after two months of slight decline. Sporting goods & hobby shop store sales improved 0.1% (3.9% y/y) after falling 0.3% in November. Building materials store sales rose 0.3% (2.3% y/y) after falling 3.1% in November.

In the nondiscretionary sales categories, food & beverage store sales held steady last month (6.9% y/y) following a 0.4% November increase. Health & personal care store sales declined 0.9% (+2.8% y/y) after a 0.6% rise.

Restaurant & drinking place sales declined 0.9% (+12.1% y/y) after easing 0.1% in November.

The Retail Sales data can be found in Haver's **USECON** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Decline is broad-based.

- Discretionary spending weakens.

- Falling gasoline prices accentuate decline.

U.S. Retail Sales Tumble in December

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The Federal Reserve Bank of New York reported that its index of factory sector activity declined to -32.9 in January from -11.2 in December. It was the lowest reading since May 2020 and down from a July 2021 high of 43.0. A reading of -8.0 had been expected in the Action Economics Forecast Survey.

Haver Analytics constructs an ISM-adjusted series which is comparable to the ISM composite index of factory sector series. This index fell to 45.5 in January from 52.1 in December. It was the lowest reading since May 2020 and down from a July 2021 high of 63.4.

The new orders reading declined to -31.1 this month from -3.6 in December. A lessened 15.5% of respondents reported higher new orders while an increased 46.6% of respondents reported a decline. The shipments index weakened to -22.4 from 5.3 in December.

The employment index fell to 2.8 this month from 14.0 in December. It was well below a November 2021 high of 26.0. Seventeen percent of respondents reported increased hiring while 13.9% indicated a decline. The average workweek index fell to -10.4 from -4.5 in December.

The index of prices paid weakened to 33.0 from 50.5 in December. It was significantly below an April 2022 high of 86.4 and the weakest figure since November 2020. Thirty-nine percent of respondents indicated paying higher prices while 6.3% paid less.

The index of expected business in six months improved to 8.0 in January from 6.3 in December. It was the highest level in four months. The improvement was led by higher readings for new orders and shipments although the expected employment index declined sharply. The indexes of prices paid & received fell sharply.

The N.Y. Fed survey data is contained in Haver’s **SURVEYS** database. The latest survey was conducted between January 3 and January 10. The expectations series is in Haver’s **AS1REPNA** database.

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- Decline paced by negative levels of new orders & shipments.
  
- Employment & price readings weaken as well.

- Expectations improve.

N.Y. Fed Factory Index Plunges in January

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) rose 0.2% (-14.0% y/y) during the four weeks ended January 13 after holding steady in the prior four weeks. The index has trended sideways since the end of September. 

Prices in the **metals** group strengthened 2.5% (-15.4% y/y) in the last four weeks. Steel scrap costs improved 7.1% (-10.5% y/y) while tin prices rose 6.6% (-36.5% y/y). Copper scrap prices increased 4.4% in four weeks (-10.1% y/y) while lead prices improved 2.2% (-4.6% y/y). Showing weakness recently were zinc prices which fell 3.7% (-12.0% y/y) in the last four weeks and aluminum prices which eased 1.1% (-19.5% y/y).

**Crude oil & benzene** costs rose 2.6% (-4.0% y/y) in the last four weeks. The cost of crude oil rose 1.7% to $75.86 per barrel in four weeks but fell 6.0% y/y. The price of the petro-chemical benzene gained 10.5% (-8.8% y/y) during the last four weeks. Excluding crude oil & benzene, the industrial commodity price index edged 0.1% higher (-14.4% y/y).

Prices in the **textile** group rose 0.6% during the last four weeks but fell 5.8% y/y. Cotton prices gained 4.1% but fell 26.2% y/y. The cost of burlap slipped 0.1% (-9.8% /y) in the last four weeks.

The **miscellaneous** price index declined 3.3% (-22.9% y/y) during the last four weeks. Framing lumber prices fell 2.7% (-68.8% y/y) while natural rubber prices improved 1.3% (-4.6% y/y).

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

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- Metals prices strengthen.
- Crude oil prices increase.
- Lumber costs decline.

FIBER: Industrial Commodity Prices Edge Higher

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The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index increased 4.6% (-33.1% y/y) to 95.5 in November after a 5.5% October decline and a 6.9% September shortfall. Affordability is down 45.6% since the most recent high in January 2021.

The November gain occurred as the median price of a home fell 2.1% (+3.2% y/y) to $376,700. It was the fifth consecutive monthly decline. The average mortgage rate eased to 6.81%, but was higher than the December 2020 low of 2.73%. Principal & interest payments declined 3.7% (+57.4% y/y) to $1,967.

Median family income rose 0.8% (5.3% y/y) to $90,211 in November following a 0.9% October gain. That lowered the payment as a percent of income to 26.2%, which remained above its 14.2% level in January 2021.

Affordability rose in each of the four Census regions. In the West, it rose 6.3% (-31.7% y/y) while in the South, it rose 3.9% (-33.8% y/y). In the Midwest, affordability rose 4.4% (-33.5% y/y) while in the Northeast, it increased 6.6% (-32.8% y/y).

The Housing Affordability Index equals 100 when a median-income borrower qualifies for an 80% mortgage on a median-priced existing single-family home. Until the HAI fell below 100 in May 2022 (98.3), it had exceeded 100 in each month since July 1990, reaching its all-time high of 213.3 in January 2013.

Data on Housing Affordability can be found in Haver's **REALTOR** database. Median home sale prices are also located in **USECON**. Higher frequency interest rate data can be found in **SURVEYW**, **WEEKLY**, and **DAILY**.

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- Home prices & interest rates fall.
- Personal income strengthens.

U.S. Housing Affordability Improves During November

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U.S. import & export prices were under extreme downward pressure last year as world economies were either in recession or experiencing little growth. In the U.S., that weakness lowered import price inflation to 3.5% last year from 10.3% in 2021. 

The U.S. economy grew a negligible 0.2% in the first nine months of 2022. That lowered nonoil import price inflation to 1.9% from 6.4% in 2021. Nonauto consumer goods prices rose 0.4% versus a 2.2% 2021 rise and food price inflation fell to 4.0% from 13.7%. Auto prices rose 3.1% after a 2.6% increase in 2021 and capital good prices rose a little-changed 2.9%.

Petroleum & oil product prices increased 20.2% y/y as of December, though prices declined 24.9% (NSA) in the second half of the year. Prices for imported products excluding petroleum rose a lessened 1.9% last year, but fell 1.0% (NSA) in the second half of the year.  

The restrained economic growth story can be told about foreign economies where U.S. export price inflation fell to 5.0% from 14.9% in 2021. Agricultural product prices rose 9.2% last year after a 21.5% rise in 2021. Nonagricultural product prices rose 4.4% after a 14.1% gain.  

Amongst product categories, foods, feeds & beverage price inflation declined to 9.6% from 20.2% in 2021. Industrial supplies & materials prices rose 5.6% after a 33.9% gain. Prices held up elsewhere as auto prices rose 4.7%, double the 2021 gain, and nonauto consumer goods prices improved 2.9% after a 2.6% rise in 2021. Capital equipment firmed 3.2% versus 3.8% in 2021.

The import and export price series can be found in Haver's **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database.

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- Lower oil prices dampen price gains.
- Widespread weakness occurs elsewhere.

U.S. Import & Export Price Inflation Weakens in 2022

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The U.S. Treasury Department reported a federal budget deficit of $85.0 billion during December following a deficit of $21.3 during December FY’22. For the first three months of the current fiscal year, the government ran a budget deficit of $421.4 billion versus a deficit of $377.7 billion over the same period last year. The Action Economics Forecast Survey expected a $20.0 billion deficit for December.

Overall revenues declined 2.5% so far during FY’23 versus FY’22. Individual income tax receipts fell 5.8% y/y. Corporate tax payments increased 6.8% y/y this fiscal year. Social insurance revenues rose 6.2% y/y and excise taxes grew 2.2% y/y so far in FY’23.

Federal government outlays increased 1.2% y/y so far in FY’23. Income security payments fell 23.2% y/y after the level halved in FY'22 with the absence of economic stimulus checks. National defense outlays grew 3.9% y/y so far in FY’23. Outlays on health programs declined 2.3% y/y. Social Security outlays increased 8.7% y/y so far in FY’23. Medicare outlays fell 10.8% y/y. Interest payments rose 41.8% y/y do far in FY’23.

Haver's data on Federal Government receipts & outlays are contained in **USECON**. The expectations figure is in the **AS1REPNA** database.

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- Revenues decline sharply.
- Outlays increase.

U.S. Government Budget Deficit Deepens Y/Y in December

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