Monday, June 13, 2022

May’s consumer prices; April’s trade deficit and wholesale sales

Major reports released during the past week included the May Consumer Price Index from the Bureau of Labor Statistics, the Commerce Dept’s report on our International Trade in Goods and Services for April, and the April report on Wholesale Trade, Sales and Inventories from the Census Bureau... this week also saw the Consumer Credit Report for April from the Fed, which showed that overall consumer credit, a measure of non-real estate personal debt, expanded by a seasonally adjusted $38.0 billion, or at a 10.1% annual rate, as non-revolving credit expanded at a 7.1% rate to $3,463.6 billion while revolving credit outstanding grew at a 19.6% rate to $1,103.2 billion...meanwhile, the major privately issued report released this week was the Mortgage Monitor for April (pdf) from Black Knight Financial Services, which indicated that 2.80% of mortgages were delinquent in April, down from the 2.84% that were delinquent in March, and down from the 4.66% delinquency rate of April 2021, and that 0.32% of mortgages remained in the foreclosure process in April, same as in March and up from the 0.29% of mortgages that were in foreclosure a year ago...the Mortgage Monitor for April is a graphics dense 23 page pdf, should you want to know more about the condition of US mortgages...

CPI Annual Increase at 40 Year High in May on Higher Prices for Food, Energy, Housing, Vehicles & Airfare

The consumer price index rose 1.0% in May, as higher prices for food, fuel, rent, utilities, airfares, health insurance, new and used cars, and clothing were only slightly offset by lower prices for TVs, appliances, and information technology commodities....the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices averaged 1.0% higher in May, after rising by 0.3% in April, by 1.2% in March, by 0.8% in February, by 0.6% in January. by 0.6% in December, by 0.7% in November, by 0.9% in October, by 0.4% in September, by 0.3% in August, by 0.5% in July, by 0.9% in June, and by 0.7% last May....the unadjusted CPI-U index, which was originally set with prices of the 1982 to 1984 period equal to 100, rose from 289.109 in April to 292.296 in May, which left it statistically 8.5815% higher than the index reading of 269.195 in May of last year, which is reported as a 8.6% year over year increase, up from the 8.3% year over year increase reported for April, and the greatest one year price increase since December 1981....with higher food and energy prices boosting the overall index increase, seasonally adjusted core prices, which exclude food and energy, were up by 0.6% for the month, as the unadjusted core price index rose from 290.846 to 292.506, which left the core index 6.0215% ahead of its year ago reading of 275.893, which is reported as a 6.0% year over year increase, down from the 6.2% year over year core price increase that was reported in April, and down from the 6.5% price increase that was reported in March, which had been the greatest year over year core price increase since August 1982...

The volatile seasonally adjusted energy price index rose 3.9% in May, after falling by 2.7% in April, rising by 11.0% in March, by 3.5% in February, by 0.9% in January, by 0.9% in December, by 2.4% in November, by 3.7% in October, by 1.2% in September, and by 1.9% in August, and hence is now 30.3% higher than in May of a year ago....the price index for energy commodities was 4.5% higher in May, while the price index for energy services was 3.0% higher, after it had risen by 1.3% in April....the energy commodity index was up 4.5% on a 4.1% increase in the price of gasoline. and a 16.9% increase in the price of fuel oil, while the price index for other energy commodities, including propane, kerosene, and firewood, was 1.5% higher...within energy services, the price index for utility gas service rose 8.0% after rising 3.1% in April and is now 30.2% higher than it was a year ago, while the electricity price index rose 1.3% in May after rising 0.7% in April.... energy commodities are now averaging 50.3% higher than their year ago levels, with gasoline prices averaging 48.7% higher than they were a year ago, while the energy services price index is up 16.2% from last May, as electricity prices are also 12.0% higher than a year ago…

Meanwhile, the seasonally adjusted food price index rose 1.2% in May, after rising by 0.9% in April, by 1.0% in March, by 1.0% in February, by 0.9% in January, by 0.5% in December, by 0.8% in November, by 0.9% in October, by 0.9% in September, by 0.4% in August, and by 0.7% last July, as the price index for food purchased for use at home was 1.4% higher in May, after rising by 1.0% in April, 1.5% in March, by 1.4% in February, by 0.4% in January, by 0.4% in December, by 0.9% in November, and by 0.9% in October, while the index for food bought to eat away from home was 0.7% higher, as average prices at fast food outlets rose 0.7%, prices at full service restaurants rose 0.8%, and food prices at employee sites and schools averaged 0.4% higher...

In the food at home categories, the price index for cereals and bakery products was 1.5% higher, even as average bread prices only rose 0.5%, as the price index for cookies rose 4.0%, the price index for rice, pasta, & cornmeal rose 2.1%, the price index for frozen and refrigerated bakery products, pies, tarts, and turnovers rose 1.7%, and the price index for fresh cakes and cupcakes rose 1.8%....in addition, the price index for the meats, poultry, fish, and eggs food group was 1.1% higher even though the price index for beef and veal fell 0.7%, as the price index for poultry rose 3.0%, the price index for fresh fish and seafood rose 2.2%, and the price index for eggs rose 5.0%....at the same time, the seasonally adjusted price index for dairy products was 2.9% higher, as milk prices rose 2.8%, the price index for cheese and related products rose 2.0%, the price index for ice cream and related products rose 4.3%. and the price index for dairy products other than cheese and ice cream rose 3.4%...meanwhile, the fruits and vegetables price index was 0.6% higher, as the price index for fresh vegetables rose 0.6%, the price index for canned fruits vegetables rose 1.9%, and the price index for frozen vegetables rose 1.8%...in addition, the beverages price index was 1.7% higher, as the price index for carbonated drinks rose 2.5%, the price index for frozen noncarbonated juices and drinks rose 1.5%, and the price index for coffee was 2.1% higher....lastly, the price index for the ‘other foods at home’ category rose 1.6%, as the price index for fats and oils rose 2.2%, the price index for snacks rose 1.7%, the price index for prepared salads rose 3.6%, and the price index for spices, seasonings, condiments, sauces was 1.6% higher....

Among the seasonally adjusted core components of the CPI, which rose by 0.6% in April, after rising by 0.6% in April, by 0.3% in March, by 0.5% in February, by 0.6% in January, by 0.6% in December, by 0.5% in November, by 0.6% in October, by 0.3% in September, by 0.2% in August, and by 0.3% last July, the composite price index of all goods less food and energy goods was 0.7% higher in May, while the more heavily weighted composite for all services less energy services rose 0.6%....

Among the goods components, which will be used by the Bureau of Economic Analysis to adjust January’s retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.1% higher despite a 2.0% drop in the price index for major appliances, as the price index for living room, kitchen, and dining room furniture rose 0.7%, the price index for floor coverings rose 2.2%, the price index for tools, hardware and supplies rose 1.1%, and the price index for housekeeping supplies rose 1.0%.....at the same time, the apparel price index was 0.7% higher on a 1.8% increase in the price index for men's shirts, a 1.5% increase in the price index for men's suits, sport coats, and outerwear, a 2.2% increase in the price index for women's dresses, a 2.0% increase in the price index for women's outerwear, a 3.2% increase in the price index for boys' and girls' footwear, and a 2.0% increase in the price index for infants' and toddlers' apparel... meanwhile, the price index for transportation commodities other than fuel was 1.4% higher, as prices for new cars were 1.1% higher, prices for used cars and trucks were 1.8% higher, tire prices were 1.1% higher, the price index for parts and equipment other than tires rose 2.6% and the price index for motor oil, coolant, and fluids rose 1.3%....at the same time, the price index for medical care commodities was 0.3% higher, as nonprescription drug prices rose 0.9% and the price index for medical equipment and supplies was 2.0% higher....in addition, the recreational commodities index was 0.1% higher despite a 3.0% decrease in TV prices, on a 0.4% increase in the price index for other video equipment, a 2.7% increase in the price index for photographic equipment and supplies, a 1.6% increase in the price index for pet food, and a 1.6% increase in the price index for sewing machines, fabric and supplies...however, the education and communication commodities index was 1.7% lower on a 5.0% decrease in the price index for smartphones, a 1.4% decrease in the price index for computers, peripherals, and smart home assistants, and a 3.2% decrease in the price index for telephone hardware, calculators, and other consumer information items….lastly, a separate price index for alcoholic beverages was 0.5% higher, while the price index for ‘other goods’ was 0.8% higher on a 0.9% increase in the price index for tobacco and smoking products, and a 2.4% increase in the price index for miscellaneous personal goods....

Within core services, the price index for shelter was 0.6% higher as rents rose 0.6% and homeowner's equivalent rent was also 0.6% higher, and prices for lodging away from home at hotels and motels rose 0.9%, while at the same time the shelter sub-index for water, sewers and trash collection was 0.3% higher, and the price index for moving, storage, freight expense was 2.4% higher....meanwhile, the price index for medical care services was 0.4% higher, as the price index for hospital and related services was 0.4% higher, the price index for dental care rose 0.6%, and price index for health insurance rose 2.0%....at the same time, the transportation services price index was 1.3% higher, as the price index for airline fares rose 12.6% after rising 18.6% in April, while the price index for motor vehicle body work rose 1.0%, and the price index for car and truck rental rose 1.7%....in addition, the recreation services price index rose 0.5%, as the price index for cable and satellite television service rose 1.3%, the price index for video discs and other media, including rental of video rose 2.3%, the price index for video discs and other media rose 6.5%, and the price index for pet services rose 0.5%....meanwhile, the index for education and communication services was 0.2% higher as the price index for elementary and high school tuition and fees rose 1.2%, the price index for internet services and electronic information providers rose 0.5%, and the price index for delivery services rose 2.6%...lastly, the index for other personal services was 0.1% higher, as the price index for legal services rose 1.0%, and the price index for haircuts and other personal care services was 0.5% higher..

April Trade Deficit Decreased by a record 19.1%, Led by Lower Imports of Consumer Goods and Industrial Supplies and Materials

Our trade deficit was 19.1% lower in April, as our exports increased while our imports decreased....the Commerce Dept report on our international trade in goods and services for April, incorporating an annual revision, indicated that our seasonally adjusted goods and services trade deficit fell by a record $20.6 billion to $87.1 billion in April, from a March deficit that was revised from the originally reported $109.8 billion to $107.7 billion, a revision which should result in an upward revision of about 0.14 percentage points to 1st quarter GDP when the third estimate is released at the end of June...however, since this month’s report also reflects revised statistics on trade in goods on both a Census basis and a balance of payments (BOP) basis going back to 2017, and revised statistics on trade in services beginning with 2015, the 4th quarter basis for the 1st quarter's growth in trade will also need to be revised to determine the ultimate impact on 1st quarter GDP, and the BEA will not make that revision until the annual revision to GDP is released at the end of July...

In rounded figures, the value of our April exports rose by $8.5 billion, or 3.5%, to $252.6 billion, on a $6.1 billion increase to $176.1 billion in our exports of goods and a $2.4 billion increase to $76.5 billion in our exports of services, while our imports fell by $12.1 billion, or 3.4% to $339.7 billion on a $13.0 billion decrease to $283.8 billion in our imports of goods, which was partly offset a $0.9 billion increase to $55.9 billion in our imports of services...export prices averaged 0.6% higher in April, which means the relative real increase in exports for the month was less than the nominal increase by that percentage, while import prices were unchanged, which suggests the decrease in real imports was close to the nominal dollar decrease for the month....

The increase in our April exports of goods came about largely as a result of higher exports of industrial supplies and materials, soybeans, and capital goods...referencing the Full Release and Tables for April(pdf), in Exhibit 7 we find that our exports of industrial supplies and materials rose by $2,302 million to $69,585 million on a $885 million increase in our exports of natural gas, a $667 million increase in our exports of petroleum products other than fuel oil, a $360 million increase in our exports of coal and other fuels, a $352 million increase in our exports of fuel oil, and a $351 million increase in our exports of metallurgical grade coal, which were partly offset by a $369 million decrease in our exports of natural gas liquids and a $701 million decrease in our exports of precious metals other than gold, while our exports of foods, feeds and beverages rose by $2,185 million to $17,513 million on a $2,111 million increase in our exports of soybeans...in addition, our exports of capital goods rose by $1,238 million to $47,481 million on a $1,273 million increase in our exports of civilian aircraft, our exports of consumer goods rose by $401 million to $20,715 million on a $574 million increase in our exports of artwork and other collectibles, a $405 million increase in our exports of jewelry and a $309 million increase in our exports of gem diamonds, which were partly offset by a $869 million decrease in our exports of pharmaceutical preparations, and that our exports of automotive vehicles, parts, and engines rose by $92 million to $13,024 million...slightly offsetting the increases in those export categories, our exports of other goods not categorized by end use fell by $221 million to $6,266 million....

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports of goods and indicates that lower imports of consumer goods, industrial supplies and materials, and capital goods were largely responsible for the April decrease in our imports, while those decreases were partly offset by an increase in our imports of automotive goods...our imports of consumer goods fell by $6,331 million to $76,393 million on a a $1,344 million decrease in our imports of apparel and textiles other than those of wool or cotton, a $1,102 million decrease in our imports of toys, games, and sporting goods, a $958 million decrease in our imports of pharmaceutical preparations, a $625 million decrease in our imports of furniture and related household goods, a $595 million decrease in our imports of household appliances, a $473 million decrease in our imports of footwear, and a $323 million decrease in our imports of cookware, cutlery, and kitchen tools, while our imports of industrial supplies and materials fell by $5,337 million to $70,690 million on a $5,609 million decrease in our imports of finished metal shapes, a $712 million decrease in our imports of nonmonetary gold, and a $669 million decrease in our imports of inorganic chemicals not itemized separately, which were partly offset by a $788 million increase in our imports of crude oil, a $732 million increase in our imports of organic chemicals, and a $402 million increase in our imports of natural gas....at the same time, our imports of capital goods fell by $2,581 million to $71,682 million on a $1,932 million decrease in our imports of computers, a $573 million decrease in our imports of computer accessories, and a $544 million decrease in our imports of drilling & oilfield equipment, partly offset by a $321 million increase in our imports of semiconductors, and our imports of other goods not categorized by end use fell by $539 million to $10,508 million....partly offsetting the decreases in those end use categories, our imports of automotive vehicles, parts and engines rose by $1,375 million to $33,727 million on a $1,174 million increase in our imports of trucks, buses, and special purpose vehicles, and our imports of foods, feeds, and beverages rose by $473 million to $14,546 million on increased imports in several food categories...

The Full Release and Tables pdf for this report also gives us surplus and deficit details on our goods trade with selected countries:

The April figures show surpluses, in billions of dollars, with South and Central America ($7.7), Netherlands ($3.0), Brazil ($2.4), Hong Kong ($2.2), Australia ($1.4), United Kingdom ($1.0), Belgium ($0.6), and Singapore ($0.6). Deficits were recorded, in billions of dollars, with China ($34.9), European Union ($17.0), Mexico ($11.5), Vietnam ($11.1), Canada ($8.7), Ireland ($6.0), Japan ($5.6), Germany ($5.2), South Korea ($3.9), Taiwan ($3.9), India ($3.8), Italy ($3.3), Malaysia ($3.1), Switzerland ($2.9), France ($1.7), Saudi Arabia ($0.9), and Israel ($0.6).

  • The deficit with China decreased $8.5 billion to $34.9 billion in April. Exports decreased $1.6 billion to $12.0 billion and imports decreased $10.1 billion to $46.9 billion.
  • The deficit with Switzerland decreased $4.7 billion to $2.9 billion in April. Exports increased $0.7 billion to $2.2 billion and imports decreased $4.1 billion to $5.1 billion.
  • The deficit with Mexico increased $1.7 billion to $11.5 billion in April. Exports increased $0.3 billion to $27.8 billion and imports increased $2.0 billion to $39.3 billion.

To gauge the impact of April’s trade on 2nd quarter growth, we use exhibit 10 in the pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted for inflation in chained 2012 dollars, the same inflation adjustment that’s used by the BEA to compute trade figures for GDP, with the only difference being that they are not annualized in the table here...from that table, we can figure that 1st quarter real exports of goods averaged 148,629.7 million monthly in 2012 dollars, while April’s inflation adjusted exports were at 155,006 million in that same 2012 dollar quantity index representation... figuring the annualized change between those two figures, we find that April's real exports of goods were rising at a 18.30% annual rate from those of the 1st quarter, or at a pace that would add about 1.28 percentage points to 2nd quarter GDP if it were continued through May and June.....from that same table, we can figure that our 1st quarter real imports averaged 270,993.7 million monthly in chained 2012 dollars, while inflation adjusted April imports were at 271,207 million in that same 2012 dollar representation...that would indicate that so far in the 2nd quarter, our real imports have increased at a 0.32% annual rate from those of the 1st quarter...since imports are subtracted from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, their increase at a 0.32% rate would subtract about 0.03 percentage points from 2nd quarter GDP....hence, if the April trade deficit is maintained at the same level throughout the 2nd quarter, our improving balance of trade in goods would add about 1.25 percentage points to the growth of 2nd quarter GDP....however, note that we have not estimated the impact of the change in services here, largely because the Census does not provide handy inflation adjusted data on those, but that with our nominal exports of services up by $2.4 billion while our nominal imports of services were up by $0.9 billion in April, we can figure that the change in our balance of trade in services would also likely have a positive impact on 2nd quarter GDP...

April Wholesale Sales Up 0.7%, Wholesale Inventories Up 2.2%

The April report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $691.6 billion, up 0.7 percent (±0.4 percent) from the revised March sales level, and up 20.9 percent (±1.1 percent) from wholesale sales of April 2021... the March preliminary sales estimate was revised from the $686.2 billion reported last month to $687.1 billion, which meant the February to March percent change was revised from the preliminary estimate of an increase of 1.7 percent (±0.5 percent) to an increase of 1.8 percent (±0.5 percent)....as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods produced or finally sold....

On the other hand, the monthly change in private inventories is a major factor in GDP, since any goods on the shelf or in intermediate storage represent goods that were produced but not sold, and this April report estimated that wholesale inventories were valued at a seasonally adjusted $861.8 billion at month end, an increase of 2.2 percent (±0.2 percent) from the revised March level and 24.0 percent (±1.4 percent) higher than in April a year ago, with the March preliminary estimate revised from the $840.3 billion reported a month ago to $843.6 billion at the same time, now up 2.7% from February....

That $3.3 billion upward revision to March's wholesale inventories should increase 1st quarter GDP by about 0.08 percentage points from what was reported in the 2nd estimate....meanwhile, April wholesale inventories, after an adjustment for price changes for each category of wholesale goods as indicated by the components of the April producer price index, appears to indicate a real wholesale inventory increase of between 0.0% and 0.5% at the beginning of the 2nd quarter, compared to a 1st quarter's real wholesale inventory increase that was more half the magnitude of the 1st quarter's real inventory increase as indicated by the key source data and assumptions (xls) for the second estimate of 1st quarter GDP....if that small April real inventory increase holds through May & June, the change in 2nd quarter real wholesale inventories would be seriously negative and subtract substantially from the growth rate of 2nd quarter GDP...

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)  

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