Author Archives: Diane Swonk
Fed Stays the Course Despite Dissent
The Federal Open Market Committee (FOMC) voted to maintain its purchases of longer-term Treasuries and mortgage-backed securities (MBS) at a pace of $85 billion per month. There were two dissents: Esther George of Kansas City continued to vote against the policy to purchase assets; James Bullard of St. Louis, however, dissented in the other direction, [...]
Inflation Low; Wages Decline; Housing Disappoints
The Consumer Price Index (CPI) rose a modest 0.1% in May, with a spike in natural gas prices and electricity costs offsetting declines and negligible increases in nearly all other categories. Food prices dropped, everywhere but in restaurants (which explains some of the weakness in dining out in May), despite increases in agricultural prices. Food [...]
Production Levels Remain Weak in May
Industrial production flatlined in May after declining in April. Gains in the mining sector were offset by a sharp drop in utilities production. March and April were unusually cool months for spring, which meant more use of heat than usual for those months. Production of consumer goods was mixed, with gains in vehicles and everything [...]
Headline PPI Overstates Inflation Pressures
The Producer Price Index (PPI) rebounded 0.5% in May after declining sharply in April. Higher prices at the pump and natural energy prices for residential use accounted for the majority of the rebound. The PPI, excluding food and energy, rose a modest 0.1%. Pipeline inflation continued to moderate, which is an issue for the Federal [...]
Autos Drive Retail Sales
Retail sales rose 0.6% in May, driven by a large gain in vehicle sales. Sales excluding autos rose 0.3%, with strong gains at discount stores offsetting a drop in spending at department stores. More people also decided to eat at home instead of dining out; they did go out to buy sporting goods and garden [...]
Employment Report Confirms Moderation in Growth
Payroll employment in the month of May rose by 175,000, which was more than most expected. Revisions to both March and April, however, showed a downward adjustment of 12,000. In general, employment growth has moderated from a 207,000 + per month pace in the October to March period, to a 158,000 pace in the second [...]
ADP Report Shows Slowing Economy
The ADP report on private payroll employment rose 135,000 in May, less than expected; it was also revised down for the month of April. This confirms our view that the economy has weakened since the start of the year. Manufacturing was the primary drag on the number with a drop of 6,000. Weakness has been [...]
Construction Edges Higher; Manufacturing Index Disappoints
Construction spending rose a less-than-expected 0.4% in April, but the decline for March was revised up for a smaller-than-initially reported drop. A sharp fall in public sector works projects explains much of the weakness that we have seen this year. Many of the projects supported by the fiscal stimulus of 2009 are coming to an [...]
Consumer Spending Headline Overstates Weakness
Personal consumption expenditures declined 0.2% in April, after being revised down slightly for March. Inflation abated, however, which means that consumer spending squeaked out a small, 0.1% increase after adjusting for price changes. Falling prices at the pump (everywhere but in Chicago, where refinery problems raised prices) pushed inflation down during the month. We also [...]
Little News in GDP Revision for Q1
Real GDP for the first quarter was revised down slightly on larger declines in government spending. Those cuts in government will persist into the second and third quarters. It looks like sequestration (automatic spending cuts) could easily stay put in 2014.
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