The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.

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April 15, 2005

More Signs Of A Cooling Economy?

The March report on industrial production and capacity utilization provides some more evidence that the economic expansion has cooled a bit since the end of last year.  From Bloomberg:

U.S. industrial production rose 0.3 percent in March, reflecting increased mining and utility output. Manufacturing produced fewer goods for the first time in six months.

The gain in overall production compared with a 0.2 percent increase in February, the Federal Reserve said today in Washington. The share of industrial capacity in use rose to 79.4 percent from 79.3, which was the highest since December 2000.

High energy prices, which helped boost overall production in March, are leading to a slowdown in manufacturing growth after its best year since 1999. Record gasoline prices helped restrain sales at retailers, a separate report showed this week.

I'm not sure the retail sales report "showed" that "record gasoline prices helped restrain sales," but the correlation was certainly there, and those energy prices are showing up elsewhere. From MarketWatch:

The spike in crude-oil prices pushed import prices 1.8% higher in March, the fastest increase in more than two years, the Labor Department reported Friday.

Imported petroleum prices jumped 10.6%, the largest gain since October.

Excluding petroleum, import prices increased 0.3% last month. Most of the increase came in industrial materials and supplies, while prices of capital and consumer goods fell.

In other news:

... according to a separate report from the Federal Reserve Bank of New York. Its so-called Empire Index of manufacturing in New York state expanded at the slowest pace in two years this month, the Bank said earlier today, registering 3.1, down from 20.2 in March.

On the other hand:

The manufacturing figures are at odds with a quarterly index of factory activity by the Manufacturers Alliance, released yesterday, which rose to 71 in March from 70 in December. The report showed rising orders, exports, and shipments.         

"The industrial economy is still expanding in its normal cycle,'' Douglas Duncan, chief executive of FedEx Corp.'s FedEx Freight trucking division, said in an interview yesterday.

But there was more not-so-good news today if you really want it.  According to (an additional) MarketWatch article:

The University of Michigan's consumer sentiment index fell to 88.7 in mid-April from 92.6 in March, according to media reports on the proprietary research.

The index has fallen four months in a row to the lowest reading in 18 months.

Economists were expecting a decline to about 91.3, according to a survey conducted by MarketWatch.

Take that for what it's worth.

April 15, 2005 in Data Releases | Permalink


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If the economy does cool, won't this decrease the demand for oil?

A decline in the demand for oil will lower the price no? At a lower price, you will see a pick up in activity?

Oil back down around $50 dollars today (I think). This is consistent with my hypothesis.

Posted by: Matt Festa | April 15, 2005 at 05:08 PM

I really like your site. Could you answer a question for me? Do you think the consumer sentiment index a leading or trailing indicator of economic growth?


Posted by: Dan | April 15, 2005 at 10:19 PM

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