May 13, 2006
So Was The Economic News Good Or Bad This Week?
It's kind of hard to tell, if you ask me. The economic news of the last couple of days did include the hint of the consumer retrenchment that everyone is waiting for: Weaker than expected retail sales and sinking consumer sentiment. Kash, reporting from Angry Bear, took it hard, indicating that he is hearing "echoes from the late 1970s." Not everyone was so moved. From MarketWatch:
"It's much ado about nothing," said Michael Niemira, chief economist at the International Council of Shopping Centers, of all the spending-slowdown talk.
"Consumers have been telling us they have a little less in discretionary spending, but it is extremely difficult to finad any retail category where there's been any major impact becasue of it,"he added.
There have been blips along the way, but that's to be expected. Overall, sales at the nation's largest chain stores were suprisingly strong in April, and Niemira reported that they're on track for a similarly good performance in May.
Some positives might also be found in the March improvement of the trade deficit which, as Calculated Risk points out, occurred despite the fact that the economy still seems to be cruising right along. Before you get too excited, though, Brad Setser advises you to not get used to it:
But the main reason for the better-than-expected deficit: oil.
That's right. Oil. Oil imports fell. Seasonally adjusted petroleum imports fell by about $2 billion in March...
The bad news: the March import price of $52.26 a barrel (a bit below February) is not going to last. And I hope that inventories were high despite the fall off in imports … otherwise, April isn’t going to be pretty.
Would it be churlish of me to point out that just last month we also thought the March numbers were going to turn south? Beats me. I don't know what churlish means. Jim Hamilton does note that, based on recent experience,
...the quantity should again decline next month (although why this pattern should recur is a bit speculative, since the series is seasonally adjusted)...
... since oil import prices rose 11.5% in April, the nominal value of total oil and oil related imports should probably rise next month. Hence, we should not expect relief on that front in the near future.
On the other hand, The Nattering Naybob Chronicles points out that the March oil price effects weren't exactly trivial:
Worse news: April Import prices +2.1% vs prior -0.2%. Export prices +0.6% vs prior +0.2%
Inside the number: The largest increase in imported petroleum since Mar 05 +11.5% stoked the import price increase. Ex petroleum Import Prices FLAT.
That last sentence injects a bit of fresh air into what have generally been some pretty stinky inflation numbers (ably summarized by the Dallas Fed, as appearing at Economist's View). I'll take some solace there, but Barry Ritholtz says hold on -- it's going to get worse. Not sure I want to argue that point, but for now I'll call the play inconclusive.
UPDATE: Jim Hamilton advises: Be concerned, don't panic.
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Tracked on May 14, 2006 2:30:31 PM
» A slowdown, not from Contango
The fundamentals behind commodities are still strong. The slump in oil imports was due to a drawdown in inventories to head off the usual price hike due to the summer increase in gasoline demand. [Read More]
Tracked on May 16, 2006 7:55:54 PM