The Federal Reserve Beige Book showed continued stabilization in economic activity with most Federal Reserve district banks reporting that business contacts “remained cautiously positive”.
Notable points included:
1) Tepid consumer activity aside from vehicle sales increases related to the cash-for-clunkers program; and
2) slight improvement in residential real estate but soft commercial real estate demand; and
3) improvement in manufacturing activity, and 4) labor market weakness. Commentary on inflation suggested downside risks remain in the near-term.
The US trade balance widened substantially to negative $32.0bn in July 2009 from negative $27.3bn in June 2009 on a surge in import growth, offsetting what had been emerging upside risks in our Q3 GDP growth forecast. A wider deficit in vehicles accounted for $1bn of the overall move. Import growth was broad-based with capital goods, consumer goods, and industrial supplies rising.
Initial jobless claims fell to 550k, down from 576k the prior week. Continuing claims fell more sharply to 6.088 million, although this may be due to expiring benefits.
Reuters/University of Michigan's consumer sentiment index rose 4.5 points to 70.2 with gains split evenly between expectations and the assessment of current conditions. The report signals some recovery in consumer expectations, which have been under pressure due to job losses.
Tuesday, September 15, 2009
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