U.S. Data Continue To Signal Recovery

By John S. McClenahen Although data the federal government released Jan. 15 continue to show the U.S. economy recovering from the 2001 recession, the numbers also are a reminder that sometimes things don't live up to expectations. Retail sales for December 2003 are a case in point. They totaled $325 billion in December, up 0.5% from November's mark, the U.S. Commerce Department reported. However, the increase was well below the 0.8% to 0.9% that economists and analysts generally had anticipated. Meanwhile, the U.S. Labor Department's Bureau of Labor Statistics reported that the Consumer Price Index (CPI) for December rose 0.2%, in line with what economists had expected. The so-called core CPI, which excludes price changes for food and fuel, increased only 0.1% in December. "No matter what seems to happen on either the supply or demand side of the equation, price gains remain muted, as the CPI was very tame in December," observes David A. Rosenberg, chief North American economist at Merrill Lynch & Co., New York. "The core rate, on a year-to-year basis, rose only 1.1% -- its smallest gain in 43 years." And initial claims for unemployment insurance fell to 343,000 last week, 11,000 fewer than the previous week's revised average of 354,000, the Labor Department's Employment and Training Administration reported. The department's four-week moving average for initial claims also declined, falling to 347,500, a decrease of 3,000 from the previous week's revised average of 350,500. Last week was the first time the four-week average has been below 350,000 since February 2001, and, notes UBS Investment Research, "claims appear to be drifting lower, consistent with a steady if slow strengthening in the job market."

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