- by New Deal democrat
This week was all about inflation and retail sales. Wholesale level inflation, the PPI at +0.8% is the highest YoY since just before the recession. The CPI came in at +0.4%, meaning YoY inflation is over 3%.. Unadjusted retail sales were up +0.5%, meaning that real retail sales were +0.1%. March's retail sales were revised up strongly from +0.4% t +1.0% turning March's real retail sales from -0.1% to a strong +0.5%. This was an important data point for me in the "economic stall" scenario, and it has been undermined. Consumer sentiment improved.
Turning to the high-frequency weekly indicators:
The BLS reported that Initial jobless claims last week were 434,000. The four week average is now 436, 750. The entire last half year or more progress on this number has been taken back, and will presumably be a big hit on April's LEI.
Oil ended the week at $99.65 a barrel, up about $2 over the week, but below $100. Nevertheless, it still remains slightly above 4% of GDP. Gas at the pump leveled off at $3.96 a gallon - with the exception of 8 weeks in 2008, an all time high. Gas prices have gone up over $1 a gallon in less than 5 months. Gasoline usage at 8826 M gallons was 3.4% lower than last year's 9140. This YoY comparison has been negative for the last none weeks in a row, averaging -1.9% for the last six weeks. If this level of decline continues for few weeks, that will be equivalent to the decline near the end of 2007. If we continue to get more poor economic data, expect the declines in Oil prices to stick around for a little while.
Railfax was up 3.2% YoY. Railfax has improved their data presentation on their site, which means I can tell you that baseline traffic at 220,153 carloads was down 2486 carloads or -0.7% from a year ago, Cyclical traffic at 160,832 is up 2431 carloads or +1.5% above last year this week. That means almost the entire gain was in intermodal traffic (a proxy for imports and exports) up 19,106 carloads or +7.5% compared with a year ago this week. Even so, intermodal traffic's YoY advance is at a low ebb, as is total traffic.
The Mortgage Bankers' Association reported an increase of 0.3% in seasonally adjusted mortgage applications last week. Refinancing increased 6.0%, preumably refelcting a decline in mortgage rates. It remains above its June-July 2010 lows. The purchase series has been generally flat for close to one full year - compared with its previous relentless decline, a good thing.
The American Staffing Association Index rose to 93, after 12 weeks at the 90-92 levels. This makes it better than its spring 2008 and 2009 growth, and much more like 2007 - slow growth, but not stalled.
The ICSC reported that same store sales for the week of May 7 rose 2.7% YoY, and were flat week over week. Shoppertrak reported a 5.8% YoY increase for the week ending May 7, completely reversing last week's 6.0% decline. It also reported a WoW increase of 24.0%, again reversing last week's 16.0% big w/o/w loss. This was probably the last week of distortion due to Easter-related calendar affects.
Weekly BAA commercial bond rates decreased .11% to 5.82%. This was slightly less thans the .12% decrease in the yields of 10 year treasuries to 3.24%. There remains no sign of corporate distress here, although there is hint of fear of deflation.
Adjusting +1.07% due to the 2011 tax compromise, the Daily Treasury Statement showed that for the first 8 days of May 2011, $60.0 B was collected vs. $57.8 B a year ago, for an increase of $2.2 B YoY. For the last 20 days, $133.6 B was collected vs. $130.2 B a year ago, for an increase of $3.6 B, or 2.6%. Use this series with extra caution because the adjustment for the withholding tax compromise is only a best guess, and may be significantly incorrect.
M1 was up 1.1% w/w, up 1.8% M/M, and up 11.0% YoY, so Real M1 is up 7.9%. M2 was up .3% w/w, up 0.8% M/M and up 5.2% YoY, so Real M2 is up 2.1%. Although Real M1 is still strongly in the "green zone" where it has been since before the end of the "great recession," Real M2 has faded back into the "yellow zone" below 2.5%.
The revised March and April real retail sales reports suggest consumers have approached their tipping point, but haven't tipped yet. Initial claims, Railfax, declining gasoline usage, declining bond rates, Real M2, and weak tax receipts suggest softness, but no downturn. at least among consumers. At the same time, intermodal rail shipping suggests that manufacturing continues its strong recovery.
Blogger permitting, we'll see you on Monday! Have a nice weekend.