Consumer Spending: retail sales were up .1%, which is actually a negative number when you consider inflation. The internals were mixed with auto sales up .7% but home furnishings down .8 and electronic stores down .2. Sporting goods were also down .7 and food service were down .4 -- all of which indicates consumers are pulling in their recreational/discretionary spending habits. In addition, consumer sentiment -- which has been in a lower, weaker position for the entire recovery -- dropped again. In short, last week we saw further evidence that consumer is pulling in his spending and hunkering down because of concern. This is a terrible development, as this accounts for 70% of economic growth.
Manufacturing: overall industrial production edged up .2% last month. While auto disruptions caused by Japanese fallout were part of the reason, there were other drops in appliances, furniture and carpeting which hurt the production of consumer goods. Business equipment was also lower, which could indicate that the business investment component of GDP will take a hit. Interestingly, construction supplies increased for the fourth month. For the Empire State manufacturing index, "[t]he general business conditions index remained below zero, at -3.8. The new orders index also remained negative, while the shipments index increased to a level slightly above zero." In addition, future expectations were down as well. Both of these numbers indicate that manufacturing -- which has led the recovery for the last 18 months -- is slowing as well.
Prices: There was good news on the price front as both PPI and CPI declined. Producers prices decreased .4%. The primary issue here was a decrease in energy prices, whose crude component decrease 2.8% and whose intermediate rate only increased 1.5%. A decrease in the upward pace of food prices also helped. CPI decreased .2%, largely as the result of a big dip in gas prices and the slowest increase in food prices in a year.
The above data continues to point to a slowdown or near stall in the economy. The biggest concern is the consumer, who is clearly holding back on purchases of all types. Confidence is low, unemployment is high and Washington is playing utter brinksmanship to the very end. As such, there is little reason to cheer -- or to start purchasing lots of things. In addition, the manufacturing sector is still slowing, partly as a result of Japan, but other areas of the sector are also showing signs of deceleration.
In short, last week's economic news highlighted more signs of an economic slowdown at the worst possible time. The good news is that inflation appears to be topping.