Moskow noted that core inflation is still running above the 1 percent to 2 percent range that some policy-makers, including himself, see as an informal comfort zone.
"I'd like to see inflation rates running lower at this point and more toward the center of that zone," he said.
The average price of self-serve regular gasoline hit a record high of $3.18, rising more than 11 cents over the past two weeks, according to a nationwide survey released Sunday.
The latest figure topped the record of $3.07 set two weeks ago, which had been the highest price since the average cost of a gallon of gas hit $3.03 on Aug. 11, 2006, according to the Lundberg Survey of 7,000 gas stations across the country.
As the economy cooled last year, many companies found themselves with excess stock, particularly home builders, car makers and the suppliers that depend on them. The result was a sharp pullback in inventory accumulation that now appears to be over, a development that portends production increases. Business inventories declined in March. Although still 4.8% above year-earlier levels, they were 7.7% above year-earlier levels in August. Inventories in the languishing auto industry are running 2.7% below year-earlier levels, the U.S. Commerce Department says.
But so far this year, profit growth hasn't sagged quite as much as some anticipated, leaving many businesses with hoards of cash they can steer to capital purchases if the mood strikes. Noting plans by cable companies and telecommunications firms to increase capital spending, Federal Reserve governor Frederic Mishkin last month predicted a rebound in business investment this year. "Business balance sheets are strong, and although profits have slowed, profit margins remain elevated," Mr. Mishkin said. "The continuation of a moderate economic expansion is likely over time to restore confidence and lead to a firming in business investment."
Strong global growth together with the recent weakness of the dollar have created what should be an excellent climate for U.S. exporters. Most economists chalk up the decline in exports in the first quarter to a statistical fluke that will soon be undone.
* The leading index decreased in April, and the small March increase was revised up as actual data for manufacturing new orders for nondefense capital goods became available. The leading index declined or remained the same in three of the last six months. As a result, from October to April, the leading index fell 0.2 percent (a -0.4 percent annual rate). In April, housing permits made the largest negative contribution, but the weaknesses among the leading indicators have been somewhat more widespread than the strengths over the past few months.
* The coincident index increased again in April, the third consecutive gain. From October to April, the coincident index rose by 0.7 percent (a 1.3 percent annual rate). In April, all four coincident indicators contributed to the gain and the largest contribution came from industrial production followed by personal income. The coincident index grew at an average annual rate of about 2.5 percent in 2006, but its growth has moderated to about a 1.5 to 2.0 percent average annual rate in the first four months of the year.
* The leading index is 0.7 percent below its April 2006 level. In the second half of 2006, the leading index was essentially flat from July through November, followed by a small pick up in December, and it is now slightly below its October level. At the same time, real GDP grew only at a 1.3 percent annual rate (advance estimates) in the first quarter of 2007, following a 2.5 percent rate in the fourth quarter of 2006. The recent behavior of the composite indexes suggests that economic growth is likely to continue to be slow in the near term.
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The leading index now stands at 137.3 (1996=100). Based on revised data, this index increased 0.6 percent in March and decreased 0.6 percent in February. During the six-month span through April, the leading index decreased 0.2 percent, with three out of ten components advancing (diffusion index, six-month span equals thirty percent.)
Wal-Mart Stores Inc. said Tuesday that first-quarter earnings rose 8%, as robust results from the retailer's growing international division and at its warehouse stores offset persistent problems in its core U.S. stores.
The world's largest retailer also signaled that second-quarter results could fall short of expectations. Moreover, Wal-Mart said it would put greater emphasis on its "everyday low prices" to boost traffic and sales.
Bentonville, Ark.-based Wal-Mart saw its shares slip fractionally to close at $47.62 on the New York Stock Exchange.
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The retailer has blamed disappointing U.S. sales on a number of issues in recent quarters -- from disruptions tied to store-remodeling efforts to misreading consumers' desires. But Tuesday it narrowed its list of factors to three related financial concerns that Scott said currently face Wal-Mart customers:
* General money or income worries.
* Inflation's effect on consumers' budgets.
* Escalating prices at the gas pump, which Wal-Mart has long called the biggest factor affecting the purchasing decisions of its core customers.
Gasoline prices at the retail level have risen nearly 40% since the end of February, and on Monday the American Automobile Association said that the cost of filling up a vehicle had hit an all-time high.
"Overbuilding finally looks to have stopped, but the Herculean task of making any genuine inroads into the record supply overhang ... is only just beginning," BNP Paribas economist Richard Iley said in a note to clients.
For the third consecutive week, gasoline prices were up, increasing 4.9 cents to 310.3 cents per gallon as of May 14, 2007. Prices are 15.6 cents per gallon higher than this time last year and have now reached an all-time nominal high. All regions reported price increases. East Coast prices were up 2.3 cents to 298.1 cents per gallon. In the Midwest, prices jumped 9.8 cents to 317.2 cents per gallon, while prices for the Gulf Coast rose 4.5 cents to 291.5 cents per gallon. The largest increase was in the Rocky Mountains, where prices increased 10.3 cents to 319.3 cents per gallon. West Coast prices were up 0.5 cent to 337.8 cents per gallon. The average price for regular grade in California was down 1.1 cents to 345.0 cents per gallon, but remains 12.0 cents per gallon above last year's price.
Industrial production increased 0.7 percent in April after a decrease of 0.3 percent in March. Output in the manufacturing sector moved up 0.5 percent in April; the increase was led by advances in motor vehicles and parts and in high-technology goods. The output of utilities increased 3.5 percent; temperatures were relatively warm in March but fell below seasonal norms in April. Mining output decreased 0.3 percent in April. At 113.0 percent of its 2002 average, overall industrial production for April was 1.9 percent above its year-earlier level. The rate of capacity utilization for total industry rose 0.4 percentage point, to 81.6 percent, a level 0.6 percentage point above its 1972-2006 average.
All major market groups recorded increases in April. The output of consumer goods rebounded 0.9 percent after having fallen 0.8 percent in March. Production of consumer durables expanded 2.1 percent in April. Apart from the strength in automotive products, the output of home electronics climbed 4.8 percent because of gains in computers produced for households and in audio and video equipment. Also within consumer durables, the indexes for appliances, furniture, and carpeting and for miscellaneous goods increased. Within consumer nondurables, the output of non-energy goods edged up 0.2 percent, as a decline in foods and tobacco was more than offset by increases in clothing, in chemical products, and in paper products. Among consumer energy products, an increase in residential sales by utilities outweighed a decline in the output of fuels.
The output of business equipment moved up for a third consecutive month in April; an increase of 0.9 percent was led by gains in transit equipment and in information processing equipment. The rise of 1.9 percent in transit equipment was supported by increases in truck production and continued strength in civilian aircraft. Information processing equipment rose 0.9 percent because of output gains in electromedical equipment and in computers produced for businesses. The output of defense and space equipment rose 1.0 percent after having decreased 2.3 percent in March; this increase reflected a return to work in April at a shipyard affected by a recent strike. The output of construction supplies increased 0.4 percent in April. The output of business supplies advanced 0.7 percent because of strength in the production of medical supplies and in commercial sales of gas and electricity.
The production of materials moved up 0.6 percent in April, as gains in both durable and energy materials outweighed a decline in nondurable materials. Within durables, the output of equipment parts rose 1.3 percent; the output of semiconductors advanced for a second consecutive month. The output of consumer parts also increased 1.3 percent; the rise was boosted by increases in the indexes related to motor vehicle parts and steel. The production of other durables increased 0.5 percent. Within nondurable materials, the production of both textiles and chemicals fell, while the output of paper materials remained unchanged. The production of energy materials recovered 0.8 percent in April after having declined 2.4 percent in March.
For the three months ended May 5, net income was $36 million, or 8 cents a diluted share, compared with a loss of $52 million, or 9 cents a share, a year earlier.
Excluding merger integration costs, profit from continuing operations was 16 cents a share, up from 1 cent a year ago.
These results were lower than analysts were expecting. According to Thomson Financial, Federated was expected to earn 19 cents a share.
Sales slipped 0.1% to $5.92 billion from $5.93 billion last year, missing estimates for $5.99 billion.
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Federated, which also operates the Bloomingdales' chain, took a charge of $22 million, or 5 cents a share, to cover costs of converting regional department stores gained in the May acquisition to its flagship Macy's brand.
"Sales in the new Macy's locations were disappointing in the quarter," Chief Executive Terry Lundgren said, in a statement. However, he was "pleased" with sales at premerger Macy's and Bloomingdale's locations.
Housing starts in the U.S. unexpectedly rose last month, while building permits dropped to the lowest in almost a decade, signaling the increase in construction may be short lived.
Builders broke ground on new dwellings at an annual rate of 1.528 million in April, a 2.5 percent increase from a revised 1.491 million rate the prior month that was weaker than previously estimated, the Commerce Department said today in Washington. Building permits slumped 8.9 percent to a 1.429 million pace, the fewest since June 1997.
Some buyers are delaying purchases in anticipation of a drop in home prices as stricter lending guidelines and subprime mortgage defaults add to the glut of unsold properties, economists said. The housing recession remains the biggest threat to Federal Reserve forecasts of ``moderate'' economic growth.
``The drag from housing is going to continue for a while,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. ``The decline in permits suggests starts will weaken further.''
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The decline in permits was the biggest since February 1990. Permits, a sign of future construction, were estimated to drop to 1.52 million from 1.564 million, according to the median forecast.
Data from Standard & Poor's show that among S&P 500 firms, the yearly amount spent on buybacks has more than tripled this decade. S&P 500 firms spent $432 billion on buybacks in 2006, up 24% from a year earlier.
Meanwhile, annual capital expenditures have risen only 16% since the start of the decade — and actually fell in 2002 and 2003. S&P 500 firms invested $505 billion on global cap spending in 2006, up 23% from 2005. Spending this year has been sluggish, watchers say.
"The cap ex numbers have been pretty weak year to date, and buybacks are still strong," said Alec Young, an S&P equity strategist.
Many companies get the bulk of their sales growth from overseas. S&P data show that nearly half of the S&P 500's sales last year — excluding telecoms and utilities — came from foreign markets.
But while firms still invest overseas, it's becoming harder to do so.
"The Chinese really aren't hurting for investment capital — it's not like they need investment dollars from XYZ Corp.," van Dijk said. "The Chinese may very well build their own plants. U.S. companies are extremely useful, but not necessarily in terms of writing checks for a plant."
U.S. firms could build plants here, but fewer are doing so because it's cheaper to make goods elsewhere.
U.S. home prices tumbled to a two-year low in the first quarter, with declines in almost half of U.S. cities, the National Association of Realtors said.
The median price for houses and condominiums slid 1.8 percent to $212,300 in the first three months of this year, the lowest since the first quarter of 2005 when it was $199,700, the Chicago- based real estate trade group said. The median price for a single- family home fell in 62 of 145 metropolitan areas.
Tumbling prices sparked an increase in sales as bargain shoppers snapped up the cheaper properties. Seasonally adjusted, home sales rose 2.4 percent to an annualized 6.41 million from 6.26 million in the fourth quarter, the association said. Compared with a year earlier, the number of sales fell 6.6 percent.
U.S. banks dramatically tightened their standards for approving residential mortgages in the first quarter, the Federal Reserve said Monday
In particular, banks made it harder to get subprime residential mortgage loans and nontraditional loans such as interest-only loans, the Fed reported.
All told, at least 23 of the 53 domestic banks surveyed, or 43%, tightened their mortgage lending standards, up from 16% in the fourth quarter. The latest data are not strictly comparable to previous numbers, because the Fed has changed the wording of its questionnaire. Read the Fed survey.
In its quarterly senior loan officer survey, the Fed said 31% of banks surveyed "considerably" tightened credit standards for subprime loans, while 25% of banks tightened those rules "somewhat." None eased standards.
Ongoing concerns about subprime-related problems in the mortgage market caused builder confidence about the state of housing demand to decline three more points in May, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. With a current reading of 30, the HMI has now returned to the lowest level in its current cycle, which was previously hit in September of 2006.
“Builders are feeling the impacts of tighter lending standards on current home sales as well as cancellations, and they are bracing for continued challenges ahead,” said NAHB President Brian Catalde, a home builder from El Segundo, Calif.
“The crisis in the subprime sector has infected other parts of the mortgage market as well as consumer psychology, and as a result the housing outlook has deteriorated,” added NAHB Chief Economist David Seiders. “We’re now projecting that home sales and housing production will not begin improving until late this year, and we’re expecting the early stages of the subsequent recovery to be quite sluggish. There still are tremendous uncertainties regarding our baseline forecast going forward, owing largely to the subprime crisis that is having widespread effects throughout the mortgage market.”
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All three component indexes declined in May. The index gauging current single-family sales slipped two points to 31, while the index gauging sales expectations for the next six months fell three points to 41 and the index gauging traffic of prospective buyers fell four points to 23.
On a seasonally adjusted basis, the CPI-U advanced 0.4 percent in April, following a 0.6 percent increase in March. The index for energy increased 2.4 percent after advancing 5.9 percent in March. In April, the index for petroleum-based energy rose 4.6 percent versus a 10.1 percent increase in March. The food index rose 0.4 percent in April, slightly more than in March. The index for all items less food and energy advanced 0.2 percent in April, following a 0.1 percent rise in March; the index for shelter rose 0.3 percent after advancing 0.1 percent in March, resulting from an upturn in the index for lodging away from home.
The consumer price index increased 0.4 percent after rising 0.6 percent in March, the Labor Department said today in Washington. Core prices, which exclude food and energy, were up 0.2 percent after a 0.1 percent gain.
Core prices in the 12 months ended in April were up 2.3 percent, the smallest gain in year, a sign surging fuel costs aren't filtering through the economy. The report may reassure Federal Reserve policy makers, who are counting on slower growth to stem inflation.
``It is now becoming more apparent that core inflation has peaked and is moving lower in response to anemic economic activity,'' Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc., said before the report.
Economists forecast consumer prices would rise 0.5 percent, according to the median of 80 projections in a Bloomberg News survey. Estimates ranged from increases of 0.2 percent to 0.8 percent. Core prices were projected to rise 0.2 percent, according to the survey median.
Home Depot said that its first-quarter net income dropped 33% to $1.0 billion, or 53 cents a share, from $1.5 billion, or 70 cents a share, a year ago. Sales at the home improvement retailer rose 0.6% to $21.6 billion. Analysts had been expecting the company to produce earnings of 59 cents a share and revenue of $21.83 billion, according to data complied by Thomson Financial. Home Depot said that a challenging housing market and erratic weather across the country hit its Spring selling season. It added that its review of strategic alternatives for its supply operations is ongoing. Home Depot said that the home improvement market is expected to remain soft in 2007 and, based on the first-quarter, it's now expecting earnings at the low end of its guidance range. At the beginning of 2007, the company said that it was expecting earnings per share to decline by between 4% and 9% in the year
First-quarter net income fell 30 percent to $1.05 billion, or 53 cents a share, from $1.48 billion, or 70 cents, a year earlier. Sales rose 0.6 percent to $21.6 billion, the smallest gain in about four years, Home Depot said today in a statement.
Sales at the company's retail stores declined 4.3 percent. Chief Executive Officer Frank Blake, who took over in January after Robert Nardelli was ousted over compensation, tried to boost store sales by adding staff and hiring skilled trades people at about $30 an hour.
``There is not a heck of a lot of upside at this point,'' said Patricia Edwards, a Seattle-based money manager at Wentworth, Hauser & Violich. The firm holds $9.6 billion in assets including Home Depot shares. ``I don't expect sentiment to change until we see the whites of the uptick's eyes. That's going to take a while.''
U.S. same-store sales rose 0.6%, below expectations for a 1% to 3% increase. Wal-Mart's namesake stores had a 0.1% decline in comparable-store sales, while Sam's Club had a 4.7% gain excluding changes in fuel prices. Before November, Wal-Mart stores had never seen a drop in same-store sales for a single month.
Due to a calendar shift that pushed some Easter sales into the March reporting period, April same-store sales fell 3.5% on a 4.6% drop at Wal-Mart stores. The companywide decline was the just the third since the retailer began reporting monthly sales data in 1979, and was by far the biggest. The other negative months were November, when same-store sales fell 0.1%, and April 1996, when an earlier Easter also skewed year-over-year comparisons and helped result in a 0.6% decline.
Sales at older stores rose 0.6 percent, the smallest gain in at least 10 years, after fewer customers visited stores because of rising gasoline prices and stormy weather in the U.S. Chief Executive Officer H. Lee Scott promoted low prices for groceries and prescriptions after failing to lure consumers with more fashionable clothes and home goods.
Wal-Mart said first-quarter net income rose 8% to $2.83 billion, or 68 cents a share, with revenue up 8.5% to $86.41 billion. Analysts, on average, were expecting the Bentonville, Ark.-based retailer to earn 68 cents a share on revenue of $86.94 billion, according to Thomson Financial. Wal-Mart said the profit rise was driven by the group's Sam's Club and international operations. It's expecting U.S. comparable-store sales to rise between 1% and 2% after a 0.6% first-quarter rise, and second-quarter earnings from continuing operations to be between 75 cents and 79 cents. Analysts were expecting second-quarter earnings of 79 cents a share
Some analysts expect a share market correction. The benchmark CSI 300 Index is valued at 43 times earnings versus 24 times for India's Sensitive Index and 18 times for the Dow Jones Industrial Average.
Central bank Governor Zhou Xiaochuan is concerned about a stock market bust, after the benchmark CSI 300 Index rose more than 80 percent this year. Chinese households have opened share trading accounts at a record pace and reduced bank deposits instead of leaving their money to be eaten up by inflation.
A wall of cash from China's trade surplus is complicating government efforts to cool investment, lending, the stock market and inflation. The gap from the export boom widened 63 percent in April from a year earlier to $16.9 billion.
Companies in the Standard & Poor's 500 Index through May 11 reported an average earnings gain of 13 percent in the quarter, according to data compiled by Bloomberg. The last time growth was less than 10 percent was the second quarter of 2002.
International sales helped by a weaker U.S. dollar and continued spending by U.S. consumers fueled the earnings advance. Concerns that the U.S. housing slump and rising delinquencies by subprime mortgage holders would damp profits have eased, analysts said.
First-quarter earnings advanced four times faster than analysts had projected as of April 13, as 76 percent of the 444 companies in the S&P 500 that reported through May 11 met or topped projections. Twenty-seven percent beat estimates by at least 10 percent.
A surge of foreclosures over the past year or so has left lenders struggling to sell a growing backlog of homes. Rather than relying on real-estate agents, the usual practice, some are turning to large-scale auctions to speed up the sale proces
Real Estate Disposition Corp., the Irvine, Calif., company that organized Saturday's auction of lender-owned homes, plans similar sales May 19 in Los Angeles and May 20 in Riverside, Calif.
At the San Diego sale, houses and condos typically sold for about 30% below the previous sale or appraisal prices. In a few cases, the discounts were around 50%.
The Producer Price Index for Finished Goods increased 0.7 percent in April, seasonally adjusted, the Bureau of Labor Statistics of the U.S.Department of Labor reported today. This advance followed a 1.0-percent rise in March and a 1.3-percent increase in February. In April, the index for finished goods excluding foods and energy remained unchanged for the second consecutive month. At the earlier stages of processing, prices received by producers of intermediate goods rose 0.9 percent following a 1.0-percent increase a month earlier, and the crude goods index fell 1.5 percent after increasing 3.2 percent in March.
In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for April, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $372.0 billion, a decrease of 0.2 percent (±0.7%)* from the previous month, but up 3.2 percent (±0.7%) from April 2006. Total sales for the February through April 2007 period were up 3.7 percent (±0.5%) from the same period a year ago. The February to March 2007 percent change was revised from 0.7 percent (± 0.7%)* to 1.0 percent (± 0.3%).
Retail trade sales were down 0.2 percent (±0.7%)* from March 2007, but were 3.0 percent (±0.8%) above last year. Nonstore retailers were up 9.3 percent (±4.5%) from April 2006 and sales of health and personal care stores were up 8.1 percent (±1.7%) from last year.
The report heightens concern that a pullback in consumer spending, which accounts for more than two-thirds of the economy, will jeopardize the expansion. Federal Reserve policy makers, who this week maintained the economy would grow at a ``moderate'' pace and said inflation was their ``predominant'' concern, may now have more to worry about.
``Consumer spending could very well be slowing more than we expected,'' Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania, said before the report. ``Higher gasoline costs are reducing discretionary income for low and middle-income consumers.''
Retail sales are up 3.2% in the past 12 months. Excluding autos, sales are up 3.7%. The figures do not include price changes.
In one bright spot, sales in March were revised higher. Retail sales increased a revised 1.0% in March, compared with the initial estimate of a 0.7% gain. Sales excluding autos were revised up 1.1%, compared with the previous estimate of a 0.8% increase.
"Consumer confidence appears to be spinning its wheels," observed Richard Yamarone, economist at Argus Research.
"Although employment is mostly stable, there are many uncertainties on the horizon," Yamarone said. "Will energy prices go even higher? How is the housing slump going to play out? It is the fear of the unknowns that is coloring peoples' feelings."
Those fears were a factor in the big drop in peoples' feelings about how the economy and their own finances will fare over the next six months. This expectations measure fell to 24.3, a nine-month low. In April, this gauge stood at 41.7.
Wal-Mart Stores Inc. posted its worst monthly same-store sales results in at least 28 years, tallying a 3.5% decline in April due to this year's early Easter as well as generally challenging economic conditions for consumers.
Wal-Mart's 3.5% drop in the four-week period ending May 4 at U.S. stores fell below its earlier forecast of "flat" sales to a 2% decline. In a recorded phone message Thursday, Wal-Mart blamed bad weather last month in most U.S. regions and the early Easter on April 8, which pushed many Easter sales into March.
Foot Locker Inc: late Thursday cut it first-quarter earnings forecast to a range of 10 cents to 11 cents a share, down from its earlier forecast of 34 cents to 37 cents a share. "The shortfall in our expected earnings primarily reflects a first quarter comparable-store sales decline of 5.1% and additional markdowns taken in our U.S. stores," said Mathew Serra, chairman and chief executive, in a statement
The U.S. trade deficit widened sharply in March after having improved somewhat over the past six months, a government report showed Thursday.
The report shows that trade will be a bigger drag on first-quarter growth than previously estimated.
The nation's trade deficit widened by 10.4% in March to $63.9 billion, its highest level since last September, the Commerce Department said. It marked the largest increase in the deficit since September 2005.
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Economists said that after accounting for the March trade and inventory data, first-quarter growth would be cut to a slim 0.5%-to-0.8% range. This would be the weakest since the fourth quarter of 2002.
Oil prices have almost quadrupled since the beginning of 2002. For an oil-importing country like the U.S., this has substantially increased the cost of petroleum imports. International trade data suggest that this increase has exacerbated the deterioration of the U.S. trade deficit, especially since the second half of 2004. One factor can explain this evolution: The real volume of U.S. petroleum imports has remained essentially constant. One explanation for why the demand for petroleum imports has not declined in response to higher prices comes from a model in which firms are fairly limited in their ability to adjust their use of energy sources, such as oil, in the short term.
April was largely a sales disaster for most of the nation's largest retail chain stores.
But it wasn't unexpected. Retailers raised flags well ahead of Thursday's results and investors grounded themselves long before that for what undoubtedly would be the weakest month, so far, of the year.
Easter fell eight days earlier than in 2006, shifting most holiday purchases into March, when more than two-thirds of retailers beat estimates. The coldest April in a decade and more than average amounts of rain and snow crimped sales of shorts, dresses and other spring clothing.
``Easter took some sales from April into March,'' Steven Baumgarten, an analyst at PNC Wealth Management in Philadelphia, said May 8. ``You aren't thinking about buying the new bathing suit when there's an ice storm outside.'' The firm manages $54 billion, including shares of Wal-Mart and J.C. Penney Co.
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Last month was the coldest April since 1997 in the U.S., the wettest in four years and the snowiest in more than 14 years, according to Weather Trends International, a Bethlehem, Pennsylvania-based firm. The Northeast and North Central states were especially hit by snow, the firm said.
Retail spending may have also been hampered by higher gasoline prices. The average price of a gallon of unleaded gasoline rose to $3.05 for the week ended May 7, the highest since September 2005, the U.S. Energy Department said.
Gasoline prices rose sharply for the second consecutive week, increasing 8.3 cents to 305.4 cents per gallon for the week of May 7, 2007. Prices are 14.5 cents per gallon higher than at this time last year. All regions reported price increases. East Coast prices were up 4.1 cents to 295.8 cents per gallon. The largest increase was in the Midwest, where prices jumped 14.9 cents to 307.4 cents per gallon. Prices for the Gulf Coast rose 1.7 cents to 287.0 cents per gallon, while Rocky Mountain prices increased 13.3 cents to 309.0 cents per gallon. West Coast prices were up 9.6 cents to 337.3 cents per gallon. The average price for regular grade in California was up 10.2 cents to reach a record price of 346.1 cents per gallon, 12.9 cents per gallon above last year's price.
Personal debt has reached a record $2.6 trillion. According to the Organization for Economic Cooperation and Development, U.K. household debt as a percentage of annual disposable income hit 159% in 2005 -- the last year for which data is available -- compared with 135% in the U.S.
Economic growth slowed in the first part of this year and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to expand at a moderate pace over coming quarters.
Core inflation remains somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.
In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
The number of homes listed for sale in 18 major metropolitan areas at the end of April was up 7% from March, according to data compiled by ZipRealty Inc., a national real-estate brokerage firm in Emeryville, Calif. The data cover listings of single-family homes, condos and town houses on local multiple-listing services.
The increase was above the seasonal norm. Over the past 22 years, home inventories nationwide have increased an average of 4.5% in April from March, according to Credit Suisse Group. Spring is the busiest time of year for home shopping, as families with children try to get settled ahead of the next school year.
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In a report issued yesterday, Ivy Zelman, a Cleveland-based housing analyst for Credit Suisse, said her building-industry contacts have been surprised by the weakness of sales recently, "given the typical seasonal bounce that occurs at this time of year." She added, "Our contacts have officially declared the spring selling season a bust." Many people who had expected a recovery by year end "now believe the market rebound will be pushed out until 2008 at the earliest," Ms. Zelman wrote.
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The National Association of Realtors yesterday again lowered its forecast, predicting that sales of previously occupied homes will total 6.29 million, down 2.9% from 2006. A month ago, the trade group projected that sales this year would slip 2.2%. Lawrence Yun, a senior economist for the Realtors, said many speculators have fled the market.
A pickup in U.S. economic growth is becoming more elusive as climbing gasoline prices, falling home values and fewer jobs restrain American consumers, according to economists surveyed by Bloomberg News this month.
Amid concern about consumers' habits, big retailers issue April sales reports tomorrow, and the Commerce Department follows on Friday with its estimate of retail sales in April. Yesterday, Redbook research said its index of chain-store sales in April fell 4.1% from March. The International Council of Shopping Centers said its measure of chain-store sales last week was running only 1.7% higher than a year ago, the weakest ICSC reading since early March, when the index matched a nearly four-year low.
Bad weather and rising gasoline prices were early explanations, but now there is evidence of a lasting slowdown, said Michael Niemira, chief economist at ICSC. "Over the last two weeks there's been a little more unease that some of this weakness is broader based. The worry level is higher."
U.S. home price declines this year are going to be steeper than earlier forecast because of the drop in subprime mortgage lending and the adoption of stricter loan standards, the National Association of Realtors said.
The 2007 median price for an existing home likely will drop 1 percent to $219,800 from 2006, compared with its earlier forecast of a 0.7 percent decline, the Chicago-based association said in a report today. It now projects the median price for new homes to fall $100 to $246,400, the first decline since 1991, from its previous estimate of a 0.4 percent increase.
The slowdown in profit growth ``is temporary as we are planting seeds,'' said President Katsuaki Watanabe, speaking to journalists in Tokyo. ``Our earnings will improve.''
The surging Dow Jones industrial average has rallied for 24 of its past 27 sessions - raising some alarm bells because that hasn’t happened since 1927.
“You don’t find those sorts of streaks near what have historically been tremendous buying opportunities,” hedge-fund manager Bill Fleckenstein yesterday said after the Dow rose 48.35 points to close at a record 13,312.97.
The Dow has rallied in all but three sessions since March 29 - a run not seen since July 1 to Aug. 2, 1927, just 26 months before 1929’s stock-market crash.
Although experts don’t see a 1929-style collapse coming, some think the Dow is setting up for at least a short-term correction.
Editor Dennis Gartman wrote in the past week: "We stand in awe of the sheer majesty of this rise." But Gartman's response is to review what he wrote about an earlier unstoppable bull: the Japanese stock market of the late 1980s.
As Gartman remembers: "Shares there were running skyward even as the economies of the rest of the world were tanking. The Bubble was going "parabolic," and every modest decline was met with huge new buying, that soon took shares to incredible new highs as the Nikkei soared toward 40,000."
Gartman explains: "Already trading at incredibly over-bought levels when it had risen from 4,000 in late '75 to 8,000 by the mid-'80s, in reality the rally had only just begun! From '83-'85, the Nikkei rose 8,000 to 18,000 ... and still the rally had only just begun! From '86-early '88, it rose from 18,000 to 28,000 ... and still the rally had only just begun, for in those last two years, the Nikkei moved from 28,000 to 40,000, with the last 7.000 points coming in the final weeks of '89!"
Inventories at US wholesalers rose modestly for the third straight month in March, while sales rose at their fastest pace in a year and a half, the Commerce Department said today.
Inventories at US wholesalers rose 0.3% in March after rising 0.4% in February and 0.6% in January.
Sales surged 1.8% in March after rising 1.0% in the prior month. Sales had declined 0.9% in January. The March gain is the largest rise since September 2005.
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Wholesalers are middlemen operating between retailers and producers, who serve as absorbers for supply and demand shocks.
Consumer credit increased at an annual rate of 4-1/2 percent in the first quarter of 2007. In March, consumer credit increased at an annual rate of 6-3/4 percent.
Personal income increased $79.9 billion, or 0.7 percent, and disposable personal income (DPI)increased $65.5 billion, or 0.7 percent, in March, according to the Bureau of Economic
March's rise was much better than expected and the best since Nov. Credit-card borrowing and auto loans both showed notable gains. The overall economy grew at a sluggish 1.3% annual rate in Q1 amid a housing slump and stagnant business investment. But consumer spending held up reasonably well. There are some signs that spending growth may cool in Q2.
Food prices rose at a 5.2% annual rate in the three months to March, the biggest gain in years. That's a big reason, along with resurgent energy costs, why the overall consumer price index climbed at 3.8% pace in March vs. a 2.1% decline back in December.
Core CPI, which excludes food and energy, rose at a more-modest 2.3% pace over the latest three months.
Congress has mandated that 4.7 billion gallons of renewable fuel be added to the gasoline supply this year, rising to 7.5 billion gallons in 2012.
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Rising corn prices will "exert upward pressure on meat, dairy and poultry prices by raising animal- rearing costs, given the predominant use of corn and soy meal as feedstock," the International Monetary Fund said in an April report.
Soy meal is used to make biodiesel fuel.
Consumer food prices are expected to rise 2.5%-3.5% this year, up from 2.4% in 2006, according to the Department of Agriculture.
Most agriculture experts say milk prices will jump in coming months as producers pass along increased costs for livestock feed (read: higher corn prices because of ethanol) and a spike in overseas demand.
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Ken Bailey, a dairy expert at Penn State University's College of Agricultural Sciences, predicts an overall 8 percent increase for whole milk, from an average of $3.07 a gallon to about $3.35 in October.
The news is worse, though, if you live in New York, where milk this week shot up 60 cents a gallon to $3.54, a 20 percent increase, according to the U.S. Department of Agriculture. In Chicago, milk prices in April jumped 12 percent from a year earlier and are expected to rise further. In Boston, prices are 8 percent higher over last year and are also seen moving higher.
The price of gasoline has hit a new record high, averaging $3.07 for a gallon of self-serve regular in the United States, a survey reported Sunday.
When inflation is factored in, the new price trails the all-time high in March 1981. At the time, gasoline cost $1.35 a gallon -- in today's dollars, that's $3.13 a gallon, said Trilby Lundberg, publisher of the Lundberg Survey.
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The survey, which took into account the prices at thousands of gas stations nationwide on May 4, found a 19-cent jump from the previous survey two weeks earlier.
Last month there was "substantial evidence" that gas prices would fall, but a series of "incidents" at a dozen refineries worldwide led the price to reverse course, Lundberg said.
In some cases, refineries began scheduled maintenance, but in other cases they experienced accidents that led some to shut down entirely and others to limit their capacity, she said.
Also, demand for gasoline grows at this time of year as Americans drive more in the warmer weather, she said.
"We do indeed seem to be entering, in global terms, a period that is strikingly akin to the week, months and years very like that in the late 80's in Japan when that market 'went parabolic' to the upside. Why markets 'go parabolic,' is not a subject given to business school doctoral dissertations, for there is usually no real fundamental reason for them doing so. Indeed, there is every reason for them not to do so for prices move to levels that are simply unjustifiable in any terms economic. That matters not, however, for the psychology of the market trumps all other concerns and the quicker one learns to accept that fact the easier it is for one to deal with, trade in, profit from and eventual remove oneself from the events that shall transpire. Markets are psychological animals rather than economic ones...a lesson hard for many to learn. This market, however, is now at that point where psychology does indeed fully trump economics.
The major indexes have made moderate progress since the March 21 market follow-through, and the hunt for leading stocks near buy points isn't getting any easier.
Investors face a challenge common to other rallies: The best breakouts occur in the early days and weeks of a follow-through.
We're about six weeks past the rally confirmation, a stage where it gets harder to find top-notch stocks still in bases.
June crude lost $1.26 to 61.93 a barrel. That's $4.53, or 7%, ceded this week. But some traders call this a correction within a rising market. They point to Nigerian output problems and an imminent surge in gasoline demand in the U.S. as summer drivers hit the road, all bullish factors. June gasoline dropped 3.12 cents to $2.2164 a gallon. But prices at the pump are at $3.
Asian finance ministers' agreed-upon framework for pooling foreign-exchange reserves could allow governments to respond more quickly and with greater firepower to a brewing balance-of-payments problem.
Main aspects of the plan -- including the size of each nation's commitment and the circumstances under which a country can tap the pool -- haven't been set.
Implementation could take a couple of years.
Finance ministers from the 10-nation Association of Southeast Asian Nations, plus Japan, China, and South Korea agreed Saturday to set up a regional reserve pool that each country could access in a currency crisis.