Economic Research and Data

Economic Data Updates :: February 2008

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  • 03.03.08: ISM Manufacturing
  • 03.03.08: Construction Spending
  • 03.05.08: Productivity and Costs
  • 03.05.08: Factory Orders
  • 03.07.08: Employment Report (Feb)
  • 03.11.08: International Trade (Jan)
  • 03.13.08: Retail Sales
  • 03.13.08: Import Prices
  • 03.14.08: CPI
  • 03.17.08 Current Account (4Q)
  • 03.17.08: Industrial Production (Feb)
  • 03.18.08: PPI (Feb)
  • 03.18.08: Housing Starts
  • 03.24.08: Existing Home Sales (Feb)
  • 03.26.08: Durable Goods
  • 03.26.08: New Home Sales
  • 03.27.08: Real GDP (4Q final)
  • 03.28.08: Personal Income (Feb)
  • 03.28.08: Consumer Sentiment


Consumer Sentiment

The University of Michigan’s Index of Consumer Sentiment slipped 7.6 points in February, falling from 74.8 in January to 70.8. The consumer expectations component fell to 62.4, its lowest reading since February 1992. The current economic conditions component dropped 10.6 points to a value of 83.8. Short-term average inflation expectations ticked down in February, decreasing 0.1 percentage point to 3.9 percent. Longer-term (5-year to 10-year) average inflation expectations remained unchanged at 3.4 percent.

PCE Prcie Index

The Personal Consumption Expenditure (PCE) price index rose 4.5 percent (annualized rate) in January, following revised increases of 3.8 percent in December and 8.0 percent in November. The PCE index excluding food and energy (core PCE) accelerated during the month, rising 3.7 percent and outpacing last quarter’s 2.7 percent increase. The 12-month growth rate in the core PCE price index remained at 2.2 percent.

Personal Income

Nominal personal income rose 3.3 percent (annualized rate) in January, following a revised 5.6 percent increase in December. Wages and salaries increased 6.2 percent during the month, after two consecutive 5.1 percent increases. Disposable personal income increased 5.5 percent in December, in line with 2007’s average of 5.7 percent. Real (inflation-adjusted) personal consumption expenditures continued to grow slowly, rising only 0.4 percent in January, after posting a 0.1 percent gain in December. Spending on durable goods continued to fall, dropping 15.0 percent during the month, its fourth consecutive decrease.

Real GDP

Real GDP grew at an annualized rate of 0.6 percent in the fourth quarter of 2007, according to the preliminary estimate released by the BEA, and remained unchanged from the advanced estimate. Downward revisions to private investment and personal consumption were balanced by a positive improvementin net exports, leaving overall real GDP growth at 0.6 percent in the fourth quarter. Exports were adjusted up 0.9 percentage point, from 3.9 percent to 4.8 percent, while imports (which subtract from GDP growth) were revised down from 0.3 percent to -2.2 percent. Personal consumption of durable goods was adjusted down from 4.2 percent growth in the advanced estimate to 2.3 percent in the preliminary estimate.

New Home Sales

New single-family home sales fell 2.8 percent in January to their lowest level since 1995. Since peaking in July 2005, sales have fallen 57.7 percent, and over the most recent 12 months sales have fallen by a third. The inventory of new homes for sale relative to the current sales pace increased to a cyclical high of 9.9 months in January, a level last seen in 1981.

Durable Goods

New orders for durable goods fell 5.3 percent (nonannualized) in January, more than reversing December’s 4.4 percent increase. Orders for nondefense capital goods excluding aircraft decreased 1.4 percent during the month, following a 5.2 percent gain last month. Despite this month’s negative number, the 12-month growth rate in nondefense capital goods excluding aircraft is up 5.5 percent. Shipments of durable goods increased 1.8 percent in January and are up 2.8 percent over the past 12 months. Inventories continued to expand (albeit at a lower growth rate), rising 0.6 percent, after a 1.1 percent increase in December.

OFHEO Home Price Index

The Office of Federal Housing Enterprise Oversight (OFHEO) Purchase-Only Home Price Index declined for the second consecutive quarter in the fourth quarter of 2007. The index declined 1.3 percent over the quarter, considerably worse than the third quarter’s 0.3 percent decline. The four-quarter growth rate in the index dipped into negative territory for the first time, posting a 0.3 percent decline over the year. The OFHEO total index, which includes refinancings, showed less weakness, increasing 0.1 percent over the quarter and 0.8 percent over the year.

S&P/Case-Shiller Home Price Index

The S&P/Case-Shiller Home Price Index declined 5.4 percent in the fourth quarter, after posting smaller declines in each of the previous five quarters. The decline brings the four-quarter growth rate in the index to -8.9 percent, by far the worst growth rate since the series began 20 years ago.


The Producer Price Index (PPI) jumped up 12.6 percent (annualized rate) in January, following a 4.1 percent decrease in December and a 35.5 percent increase in November. Both energy and food prices contributed to the overall increase, but finished goods excluding food and energy (core) prices were elevated as well, rising 5.3 percent during the month. On a year-over-year basis, core PPI is up 2.4 percent. Further back on the production line, both core intermediate and core crude goods prices spiked in January, increasing 10.3 percent and 60.7 percent, respectively.

Existing Home Sales

Sales of existing single-family homes increased 0.5 percent in January, bringing the three-month growth rate to -2.1 percent, the slowest decline since February 2007. Despite January’s moderate sales increase, the 12-month growth rate in sales declined slightly to -22.4 percent, the lowest since 1989. The inventory of existing single-family homes on the market reversed its course and increased in January, after falling in each of the past three months. At 3.65 million units (up from 3.39 million in December), it currently represents 10.1 months of sales at the current sales pace, which is slightly ahead of December's equivalent of 9.4 months.

Consumer Price Index

The Consumer Price Index (CPI) rose at an annualized rate of 4.8 percent in January, following a 4.4 percent increase in December. The CPI excluding food and energy (core CPI) increased 3.8 percent during the month. The increase was the largest since March 2004, and it pushed the 12-month growth rate to 2.5 percent. There were strong price gains in many CPI components, as more than half of the index's components increased at rates in excess of 4 percent. The median and 16 percent trimmed-mean CPI measures were elevated as well, rising 4.2 percent and 4.3 percent, respectively. Over the last 12 months, the median CPI has increased 3.2 percent, while the 16 percent trimmed-mean has advanced 3.0 percent.

Housing Starts

Total housing starts were largely unchanged in January after a decline of nearly 15 percent in December. The less volatile, single-family series declined 5.2 percent; its eighth consecutive decline. Single-family starts peaked in January 2006 and since that time have fallen 60 percent, to their lowest level since 1991. Permits for single-family also fell 4.1 percent over the course of January.

Consumer Sentiment

Consumer sentiment plummeted in February, according to the preliminary estimate, falling from 78.4 in January to 69.6. A slight decline, to 76.0, had been expected. Index levels this low have only been seen outside of recessions twice: in the early 1990s and in between recessions in the early 1980s. The current economic conditions component fell 9 points to 85.4 in February, and the consumer expectations component fell 8.7 points to 59.4. Consumer expectations have fallen 28.2 points from their peak in January 2007. Average inflation expectations for the year ahead remained unchanged at 4.0 percent during the month, and ticked up slightly from 3.4 percent to 3.5 percent over the longer term (5 to 10 years ahead).

Import and Export Prices

Import prices surged ahead in January, rising 22.9 percent (annualized rate), after a 2.8 percent decrease in December. The jump in prices was driven largely by a 90.6 percent upswing in petroleum prices, which pushed the year-over-year growth rate in import prices up to an all-time high of 13.7 percent. Nonpetroleum imports increased 8.0 percent during the month, mostly due to a 60.6 percent advance in industrial supplies and materials. Export prices spiked up 15.0 percent in January, their highest spike since January 1989. Over the past 12 months, prices for exported goods rose 6.7 percent.

Industrial Production

Industrial production rose 1.1 percent (annualized rate) in January, following an upwardly revised 1.5 percent increase (from -0.5 percent) in December. Over the past 12 months, production has increased 2.3 percent. Output from the manufacturing sector was virtually unchanged, rising just 0.4 percent during the month, with durable goods activity remaining flat. A 20.0 percent drop in output from the mining sector was more than offset by a 30.0 percent increase in electric and utilities production. Total industry capacity utilization remained unchanged at 81.5 percent in January, 0.7 percentage point above its 1990-2007 average.

International Trade

The nominal trade deficit declined $4.4 billion in December, after increasing in each of the previous three months. Over the course of the month, exports increased 1.5 percent, their tenth consecutive monthly increase, while imports fell 1.1 percent. With the final month of 2007 reported, the annual trade deficit stands at $711.6 billion, $46.9 billion less than the 2006 trade deficit and the smallest annual deficit since 2004. The fairly substantial decline in the annual figure marks the first time since 2001 that the trade deficit has fallen.

Retail Sales

Total retail sales surprised forecasts of negative growth, rising 4.0 percent (annualized rate) in January, erasing much of December’s 5.2 percent drop. Sales, excluding motor vehicles and parts, increased 3.2 percent during the month. Nondurable sales (i.e., food, energy, and clothing) fared well in January, but sales at furniture and electronics stores fell 8.6 percent, and building materials, garden equipment, and supply dealers sales fell further, posting an 18.6 percent decrease. Recreation sales shared the same fate as durable goods, with sporting goods, hobby, and book and music store sales falling 14.8 percent in January.

Productivity and Costs

Nonfarm business sector productivity (output per hour of all persons) rose 1.8 percent (annualized rate) in the fourth quarter, after surging ahead 6.0 percent in the third quarter. On a year-over-year basis, productivity remained unchanged from the third quarter at 2.6 percent. Compensation per hour increased 3.9 percent, but after accounting for consumer prices, it fell 0.3 percent during the quarter. Unit labor costs, a measure some use to track the onset of inflationary pressures, increased 2.1 percent, after falling for the past two quarters. However, unit labor costs only rose 1.0 percent on year-over-year basis, compared to 3.0 percent in the third quarter.

Factory Orders

New orders for manufactured goods rose 2.3 percent (nonannualized rate) in November, following a 1.7 percent increase in November. New orders for durable goods excluding aircraft jumped up 4.5 percent during the month, following declines of 0.1 percent in November and 3.0 percent in October. Shipments of manufactured goods fell 0.3 percent in December, following 1.3 percent increase in November. Inventories continued to accumulate in December, rising 0.8 percent, their largest increase in seventeen months.

Employment Report

Nonfarm payroll employment fell by 17,000 in January, well below expectations but accompanied by an upward revision of December's number to an 82,000 job gain. The report was released with a benchmark revision that resulted in a downward adjustment of 191,000 to payrolls in 2007. Both construction and manufacturing employment continued to lose jobs in January, falling 27,000 and 28,000, respectively. Construction employment has fallen 284,000 since the peak of the housing boom in September 2006, and manufacturing employment has lost 269,000 over the past 12 months. In contrast, professional and business service payrolls have gained 290,000 over the past year. Government payrolls fell by 18,000 during the month, mostly because of reductions in state education workers, but added 185 workers over the past 12 months.

ISM Manufacturing

The ISM manufacturing index is indicating slight expansion, as it rose to 50.7 in January, a month after its first dip into contractionary territory in 11 months. The production component provided most of the bounce, jumping up from 48.6 in December to 55.2 in January. Both the new orders and inventories indexes increased slightly but remained in contractionary territory, posting values of 49.5 and 49.1, respectively. The employment index fell 1.6 points to 47.1, its lowest level since September 2003.

Consumer Sentiment

The University of Michigan’s Index of Consumer Sentiment rebounded in January, rising to 78.4, after readings of 75.5 in December and 76.1 in November. Gains were seen in both the current conditions and consumer expectations components. Short-term inflation expectations ticked down in January, falling 0.4 percentage point to 4.0 percent. Longer-term (5-year to 10-year) inflation expectations declined slightly to 3.4 percent.