Our Take on Recent Economic Reports
A lot of bad, and a little bit of good, news in last week's numbers.
A lot of bad, and a little bit of good, news in last week's numbers.
Last week was pretty dismal for economic reports. The Commerce Department reported that retail sales in the U.S. fell a sharp 2.7% from November to December, on a seasonally adjusted basis. This data is reported in nominal (non-inflation-adjusted) dollars, and significant gasoline price declines and slower inflation elsewhere suggest real growth is not as bad as the headline data. Still, sales in durable goods categories such as furniture, automotive, and building material dealers weakened considerably in the last quarter of the year.
The Federal Reserve reported that industrial production fell 2.0% from November to December, capping off a miserable year. Production fell 8% over the 12 months ended in December, the largest 12-month decline since September 1975.
The BLS released its reports on producer and consumer prices late in the week. The Producer Price Index (PPI) for finished goods fell 1.9% in December, while the overall Consumer Price Index (CPI) fell 0.7%. Falling energy prices led the way in both surveys. The reports prompted a rising number of stories about deflation threats, but past recessions have been characterized by falling inflation rates late in the recession.
Finally, a little good news. The national average rate on a fixed-rate 30-year mortgage fell to 4.89% in the latest weekly survey results from the Mortgage Bankers Association. Back in October, the average rate was at about 6.5%. In the last two months, applications for refinancing have risen 500%, while applications for mortgages for new home purchases are up 30%.
This week is leaner, with housing starts and initial claims for unemployment insurance reports on Thursday likely to provide the most significant news.
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