A Run on Greek Banks

Adolfo Laurenti | May 17, 2012 | Leave a comment

A run on Greek banks is currently going on. According to a statement by the Greek president and confirmed by the central bank in Athens, depositors withdrew nearly $900 million from bank deposits on Monday. Data are not yet available on outflows for Tuesday and today, but the European Central Bank (ECB) announced measures that hint at continued bleeding from the Greek banking sector.

Two factors are contributing to acceleration of the crisis: Read More »

Industrial Production and Housing Starts Improve

Adolfo Laurenti | May 16, 2012 | Leave a comment

Industrial production rose by a stronger-than-expected 1.1% in April, with most components of the index showing gains. In particular, durable consumer goods turned in a good performance, while automotive products, in particular, increased 2.4% for the month. Production of business equipment rose 1.5%, offering hope that we may soon see acceleration in the lackluster pace of business investment. Capacity utilization moved to 79.2%, the high mark for this (so far disappointing) recovery. Read More »

Inflation and Retail Sales Cool with More Seasonal Weather

Diane Swonk | May 15, 2012 | Leave a comment

The consumer price index was unchanged in April, as energy prices at the pump came down during the month. Prices excluding food and energy edged up 0.2%, mostly on higher new and, most notably, used vehicle prices. Indeed, the average age of cars is getting so old that we are hitting a turning point where it is now more advantageous to replace an almost-new or existing car than pay for repairs.

Retail sales also rose at a more tepid pace in April, Read More »

PPI Cools on Lower Oil Prices

Diane Swonk | May 11, 2012 | Leave a comment

Producer prices dropped by 0.2% in April, mostly on lower oil prices. Excluding food and energy prices, the Producer Price Index (PPI) rose 0.2%. Much of the rise at the core level was due to an increase in pharmaceutical preparations.  We also saw an increase in the price of aircraft, not usually an issue for consumers. Read More »

Trade Deficit Widens on Record Imports and Exports

Diane Swonk | May 10, 2012 | Leave a comment

The trade deficit widened in March to $51.8 billion, up from $45.4 billion in February, as record exports were not enough to offset record imports. Going forward, however, exports are expected to slow, particularly to Europe and China. Indeed, preliminary trade data for April from China released earlier this morning were not encouraging.

Separately, import prices plummeted 0.5%, primarily on lower oil prices. Read More »

European Elections Weaken Markets, but Strengthen Europe

Adolfo Laurenti | May 7, 2012 | Leave a comment

After initially shrugging off the headlines, markets are showing some concern over election news from Europe. We see today major setbacks in most European equity markets and the euro, resulting in a new flight to safety to U.S. Treasury bonds that is driving down American long-term yields to very low levels (1.83% on the 10-year, a level usually associated with major international financial stress).

The reason for this spike in volatility and uncertainty is electoral politics.  A weekend of elections resulted in few conclusions but a number of messy details: Read More »

Mixed Signals in the April Jobs Report

Diane Swonk | May 4, 2012 | Leave a comment

Payroll employment rose by 115,000 in April, weaker than many had hoped. Private sector employment rose 130,000, with a large drop in employment in local education making up much of the difference. Much of the “weakness” in the data reflects a give-back to the gains created by unseasonably warm, winter weather and will normalize as we move into May and June.

Manufacturing activity remained strong, but showed some signs of moderating. Read More »

Jobless Claims Down for One Week

Diane Swonk | May 3, 2012 | Leave a comment

Jobless claims fell a larger-than-expected 27,000 to 365,000 during the last week of April, after being elevated during the past two months. This move provides some hope that we are finally working through the weather distortions – first good, then bad – that we saw during the first half of the year, but one week does not necessarily a trend make.

Separately, productivity growth declined as labor costs edged up during the first quarter. Read More »

ADP Suggests Another Disappointment in April

Diane Swonk | May 2, 2012 | Leave a comment

The ADP preliminary report on employment grew by a modest 119,000 in April, suggesting another weak “official” report by the government on Friday. Small business continued to drive gains, which is encouraging for new business development.

The shortfall occurred in the manufacturing and construction sectors. Read More »

Residential Construction Offsets Decline in Non-Residential

Diane Swonk | May 1, 2012 | Leave a comment

Construction spending edged up a modest 0.1% in March, with strong gains in private, residential investment offsetting a 0.2% drop in all non-residential construction. A contraction in public construction activity was fairly broad-based, partly reflecting cuts to infrastructure investments now that state and local governments have tightened their belts, Read More »