Budget Deficit – What We Learned About the U.S. Economy Last Week

Job Openings Outpaces Unemployment Again: July 9 – 13

July 14, 2018July 14, 2018Kevin Roth

Employers continue to struggle to fill their job openings. Here are the five things we learned from U.S. economic data released during the week ending July 13.

There remain more job openings than people unemployed. The Bureau of Labor Statistics estimates there were a seasonally adjusted 6.638 million job openings at the end of May. While down 202,000 from the prior month, the count of job openings was not only 16.7 percent larger than that of a year earlier but also higher than the 6.065 million people the BLS had reported being jobless in last week’s employment report. Private sector job openings have grown 16.6 percent over the past year, with some of largest year-to-year percentage gains seen for construction (+32.8 percent), transportation/warehousing (+28.9 percent), manufacturing (+24.6 percent), and professional/business services (+20.6 percent). During the same month, hiring grew by 268,000 to 5.754 million (+4.9 percent versus June 2017). Private sector hiring has risen 5.2 percent over the past year, with substantial year-to-year percentage gains seen in transportation/warehousing (+11.6 percent), health care/social assistance (+9.7 percent), accommodation/food services (+9.6 percent), professional/business services (+5.3 percent), and manufacturing (+4.2 percent). 5.468 million people left their jobs during June, an increase of 44,000 for the month and up 3.8 percent from a year earlier. This included a record 3.561 million people voluntarily quitting their jobs (increasing 212,000 for the month and 10.4 percent over the past year), reflecting the robust employment opportunities for workers.

Consumer prices grew at a slower rate in June, thanks to lower electricity and natural gas prices. The Consumer Price Index (CPI) increased 0.1 percent on a seasonally adjusted basis, following two consecutive 0.2 percent monthly gains, as reported by the Bureau of Labor Statistics. Energy prices fell 0.3 percent (its first drop since March), thanks to lower electricity and natural gas prices. Meanwhile, gasoline prices grew 0.5 percent. Food CPI increased 0.2 percent. Net of energy and food, core CPI expanded 0.2 percent for the fourth time in five months. Growing during June were prices for used cars/trucks (+0.7 percent), medical care services (+0.5 percent), new vehicles (+0.4 percent), transportation services (+0.2 percent), and shelter (+0.1 percent). On the other end of the spectrum, apparel prices slumped 0.9 percent. CPI has risen 2.9 percent over the past year, while core CPI has a 12-month comparable of +2.3 percent.

Meanwhile, wholesale prices firmed further. The Producer Price Index (PPI) for final demand jumped 0.3 percent on a seasonally adjusted basis in June, down from May’s 0.5 percent bounce. The Bureau of Labor Statistics’ core measure for wholesale prices—final demand PPI net of energy, food and trade services—grew by a more modest 0.1 percent. Energy PPI blossomed 0.8 percent, with prices for fuels and lubricants surging 21.8 percent. Food PPI, however, fell 1.1 percent as vegetable prices plummeted 13.8 percent. Net of energy and food, core goods PPI increased 0.3 percent. PPI for final demand services grew 0.4 percent, its largest single-month rise since January. Trade services PPI (a measure of retailer and wholesaler margins) jumped 0.7 percent in June after rising 0.9 percent during May. Over the past year, PPI has increased 3.4 percent, with the core measure of wholesale prices growing 2.7 percent over the past 12 months.

Even with a slight pullback, small business owners remained confident in June. The Small Business Optimism Index from the National Federation of Independent Business lost 6/10^ths of a point during the month to a seasonally adjusted 107.2 (1986=100). Even with the decline, the index has been above a reading of 100 for 19 consecutive months. Five of the index components improved during the month (including those for current inventories and current job openings) while the other five lost ground (including those for expected real sales and whether it is a good time to expand). The press release argued that the “first six months of the year have been very good to small business thanks to tax cuts, regulatory reform, and policies that help them grow.”

The U.S. budget deficit continued to pace ahead of that from last year. Per the Department of the Treasury, the federal government ran a budget deficit of -$74.9 billion. Receipts totaled $316.3 billion for the month (down 6.6 percent from the same month a year earlier) while expenditures were $391.1 billion (8.8 percent smaller than that of June 2017). Over the first nine months of FY2018, the U.S. government has run up a -$607.1 billion trade deficit, up 16.1 percent from the same nine months during the previous fiscal year. Receipt collected over these nine months—$2.540 trillion—was pacing 1.3 percent ahead of that from the same period in FY2018. Over this same time period, personal income tax collections were 8.9 percent larger than that of a year earlier while corporate taxes were down 27.6 percent. Expenditures totaled $3.148 trillion, up 3.8 percent from the nine-month total of a year earlier.

Other U.S. economic data released over the past week:
– Jobless Claims (week ending July 7, 2018, First-Time Claims, seasonally adjusted): 214,000 (-18,000 vs. previous week; -30,000 vs. the same week a year earlier). 4-week moving average: 223,000 (-9.2% vs. the same week a year earlier).
– Import Prices (June 2018, All Imports, not seasonally adjusted): -0.4% vs. May 2018, +4.3% vs. June 2017. Nonfuel imports: -0.3% vs. May 2018, +1.5% vs. June 2017.
– Export Prices (June 2018, All Exports, not seasonally adjusted): +0.3% vs. May 2018, +5.3% vs. June 2017. Nonagricultural exports: +0.4% vs. May 2018, +5.4% vs. June 2017.
– University of Michigan Consumer Sentiment (July 2018-preliminary, Index of Consumer Sentiment, seasonally adjusted): 97.1 (vs. June 2018: 98.2, vs. July 2017: 93.4).
– Consumer Credit (May 2018, Outstanding Consumer Credit-net of real estate-backed loans, seasonally adjusted): $3.898 trillion (+$24.5 billion vs. April 2018, +4.8% vs. May 2017).

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

Retail Gains (for Some), Inflation Rebounds: May 8 – 12

May 13, 2017May 27, 2017Kevin Roth

Retail sales increased during April, although not all retailers benefited from increased consumer spending. Meanwhile, inflation rebounded during April after having taken March off. Here are the 5 things we learned from U.S. economic data released during the week ending May 12.

On the whole, retail sales grew during April, but not all sectors shared in the gain. The Census Bureau places its estimate of April sales for retail and food services at a seasonally adjusted $474.9 billion, up 0.4 percent from March and 4.8 percent from a year earlier. (The Census Bureau also raised its previously released estimate of March retail sales from a 0.2 percent decrease to a 0.1 percent gain.) Some of the gains came from a rebound in sales at auto dealers (and parts retailers) with a 0.7 percent sales increase. Net of activity at auto dealers, retail sales increased 0.3 percent during April and were up 4.5 percent over the past year. Sales grew at retailers focused on electronics/appliances (+1.3 percent), building materials/garden (+1.2 percent), personal care (+0.8 percent), and sporting goods/hobbies (+0.6 percent). Sales also improved at restaurants/bars (+0.4%). And, reflecting the continuing shift of sales away from traditional brick and mortar stores, sales at nonstore retailers (e.g., web retailers) jumped 1.4 percent during April and were 11.9 percent above their April 2016 rate. Sales weakened 0.5 percent at furniture retailers, 0.5 percent at apparel retailers, and 0.4 percent at grocery stores. Reflecting the shift above in consumer preferences, sales also fell 0.5 percent at general merchandise retailers, although sales did gain 0.2 percent at non-luxury department stores. Sales were 0.7 percent below those a year earlier at general merchandisers with the 12-month comparable at non-luxury department stores at -3.7 percent. Other retail segments with weak year-to-year sales comparables included sporting goods/hobbies (-2.4 percent), apparel (+0.5 percent), and electronics/appliances (+0.7 percent).

Energy and food price pulled up consumer prices during April. The Bureau of Labor Statistics reports that the Consumer Price Index (CPI) gained 0.2 percent on a seasonally adjusted basis during the month and was 2.2 percent above its year-ago mark. Energy prices rose 1.1 percent during April as gasoline prices jumped 1.2 percent (also rise were the price indices for utility delivered natural gas (+2.2 percent), energy services (+0.9 percent), and electricity (+0.6 percent). Energy CPI has risen 9.3 percent over the past year. Food CPI gained 0.2 percent during the month but only by 0.5 percent since April 2016. Core CPI, which removes both energy and food goods from the analysis, inched up 0.1 percent during the month and was 1.9 percent above where it was a year ago. While shelter prices grew 0.3 percent during April, falling were prices for medical care commodities (-0.8 percent), used vehicles (-0.5 percent), apparel (-0.3 percent), new vehicles (-0.2 percent), and transportation services (-0.2 percent).

Wholesale prices rebounded in April after slipping in March. The Producer Price Index (PPI) for final demand jumped 0.5 percent on a seasonally adjusted during April after having declined 0.1 percent during the previous month. The Bureau of Labor Statistics’ measure has increased 2.5 percent over the past year, its largest 12-month comparable since February 2012. The rise in PPI was widespread. The core measure for wholesale prices—final demand PPI net of energy, food, and trade services—jumped 0.7 percent during April and was has grown 2.1 percent over the past year. PPI for final demand goods grew a robust 0.5 percent, which included strong gains in wholesale energy and food prices of 0.8 percent, and 0.9 percent, respectively. Net of energy and food, core goods producer prices increased 0.3 percent, the fifth time over the past six months in which that measure had grown by at least that amount. PPI for final demand services grew 0.4 percent during the month, pulled up by higher prices for financial services, guestroom rentals, and transportation and warehousing services.

The number of job openings grew during March, but the pace of hiring held firm. The Bureau of Labor Statistics estimates nonfarm employers hired 5.260 million people on a seasonally adjusted basis during the month, up 11,000 from February but off 37,000 from a year earlier. Private sector employers hired 4.928 million workers during March, up 23,000 from February and 8,000 from March 2016. Industries with the largest year-to-year percentage increases in hiring were manufacturing (+22.9 percent), transportation (+10.2 percent), and health care/social assistance (+8.9 percent). Meanwhile, the count of people hired by retailers was off 3.2 percent from the same month a year earlier. The slow growth in hiring happened even as the count of job openings grew by 61,000 during March to a seasonally adjusted 5.743 million. (-1.9 percent versus March 2016). Private sector job openings totaled 5.207 million, 2.5 percent below March 2016 levels. Industries with the largest year-to-year percentage increases in job openings include manufacturing (+15.2 percent), health care/social assistance (+10.4 percent), financial activities (+7.7 percent), and wholesale trade (+3.4 percent). 5.088 million people left their job during March, up 80,000 from February and 1.0 percent from a year earlier. While layoffs edge up by 21,000 during the month to 1.615 million, this remained 6.4% below that of a year earlier. The voluntary quits figure of 3.036 million people was down 150,000 from February but still 3.5 percent above that of a year earlier.

A change in business tax payment deadlines leads to a larger budget surplus in April. Per the Bureau of the Fiscal Service, the U.S. government ran a budget surplus of $182.4 billion. This compares to a deficit of $172.2 billion during the previous month and a $33.4 billion surplus during the same month a year earlier. The significantly larger deficit is largely the result of a change in rules that shifted the due date for corporate tax payments from March to April. Receipts totaled $455.6 billion (up 16.3 percent from April 2016) while expenditures dropped 18.0 percent. The U.S. government ran a budget deficit of $344.4 billion during the first seven months of FY2017, 2.4 percent smaler than the deficit incurred during the same seven months of FY2016.

Other U.S. economic data released over the past week:
– Jobless Claims (week ending May 6, 2017, First-Time Claims, seasonally adjusted): 236,000 (-2,000 vs. previous week; -50,000 vs. the same week a year earlier). 4-week moving average: 243,500 (-9.8% vs. the same week a year earlier).
– University of Michigan Index of Consumer Sentiment (May 2017-preliminary, Index (1966Q1=100), seasonally adjusted): 97.7 (vs. April 2017: 97.0, vs. May 2017: 94.7).
– Import Prices (April 2017, not seasonally adjusted): +0.5% vs. March 2017, +4.1% vs. April 2016. Nonfuel imports: +0.3% vs. March 2017, +1.1% vs. April 2016.
– Export Prices (April 2017, not seasonally adjusted): +0.2% vs. March 2017, +3.0% vs. April 2016. Nonagricultural exports: +0.1% vs. March 2017, +2.9% vs. April 2016.
– Small Business Optimism Survey (April 2017, Index (1986=100), seasonally adjusted): 104.5 (vs. March 2017: 104.7, April 2016: 93.6).
– Manufacturing and Trade Inventories (March 2016, Business Inventories, seasonally adjusted): $1.841 trillion (+0.2% vs. February 2017, +2.6% vs. March 2016).

The opinions expressed here are not necessarily those of Kevin’s current and previous employers. No endorsements are implied.

Retail Sales Bounce Back, Federal Budget Deficit Expands: What We Learned During the Week of October 10 – 14

October 15, 2016Kevin Roth

Retail sales rebounded in September while the federal budget expanded by a third during FY2016. Here are the 5 things we learned from U.S. economic data released during the week ending October 14.

Retail sales bounced back in September. The Census Bureau puts the value of retail and food services sales at a seasonally adjusted $459.8 billion, up 0.6% for the month and 2.7% above the year ago pace. This followed a 0.2% slowdown in August. Sales at auto dealers (and parts stores) gained 1.1% during the month. Net of auto dealers and parts stores, retail sales gained 0.5% during the month and 2.7% from a year earlier. Sales grew at a number of different retail segments, led by a 2.4% jump at gas stations (reflective of gasoline prices not falling as much as they typically do in September). Other retail sectors enjoying sales increases were sporting goods/hobby stores (+1.4%), building material retailers (+1.4%), furniture stores (+1.1%), restaurants/bars (+0.8%), and grocery stores (+0.2%). But other retailers were not as fortunate. Sales fell at electronics/appliance stores (-0.9%), department stores (-0.7%), and health/personal care retailers (-0.5%). Nonstore retailers (e.g., internet retailers) saw sales grow 0.3% during the month, putting activity 10.6% above their year ago pace.

While the number of job openings fell during August, the pace of hiring held steady. The Bureau of Labor Statistics estimates that there were a seasonally adjusted 5.443 million job openings at the end of August, down 388,000 from July and its lowest point in 8 months. Even with the decline, the count of job openings was 2.5% above that from a year earlier. Roughly 57% of the drop in job openings was centered in professional/business services, although a number of other industries suffered significant declines too (including, wholesale trade, manufacturing, construction, and the government). On the flip side, the largest year-to-year percentage gains in job openings were in construction (+21.9%), transportation/warehousing/utilities (+21.0%), and retail (+9.3%). Nonfarm employers hired 5.210 million people during August, down 48,000 from July but up 3.0% from a year earlier. Industries with the largest 12-month percentage gains in hiring including professional/business services (+10.4%), mining/logging (+7.4%), government (+5.1%), financial activities (+4.9%), and manufacturing (+4.5%). Separations slipped by 37,000 to 4.954 million (essentially unchanged from August 2015). Of this, the count of people who voluntarily quit their jobs was up 5.1% from a year earlier while the pace of layoffs was 6.5% below that of August 2015.

Wholesale prices rose at their fastest pace since June, but year-to-year gains remain in check. The Producer Price Index (PPI) for final demand goods and services grew 0.3% during September and were 0.7% above prices in September 2015. The Bureau of Labor Statistics also reports that its core measure for final demand PPI (net of energy, food, and trade services) increased 0.3% during the month and was 1.5% above its year ago levels. PPI for final demand goods jumped 0.7%, which included gains of 2.5% and 0.7% for energy and food goods. A 5.3% increase in gasoline prices boosted the former while higher prices for fresh and dry vegetables pulled up the latter. Net of energy and food, PPI for core final demand goods increased 0.3%. PPI for final demand services inched up 0.1% despite a 0.4% decline in the price measure for trade services (which tracks retailer and wholesaler margins).

The U.S. budget deficit grew by a third during FY 2016. The Treasury Department’s Bureau of the Fiscal Service reports that the budget deficit for the just completed FY2016 was -$587.4 billion, up from the $439.1 billion deficit during FY2015 (+33.8%). The deficit equaled 3.2% of the GDP, up from 2.5% for FY2015. Receipts totaled $3.249 trillion for the full year, a mere 0.5% increase from FY2015. What did grow significantly were outlays—FY2016’s total of $3.854 trillion was 4.9% above the previous fiscal year’s spending. The biggest sources of spending increases were in Health & Human Services, the Social Security Administration, Veteran Affairs, and on the interest paid to service Treasury debt securities.

Small business owner confidence slipped slightly during September. The National Federation of Independent Business’ Small Business Optimism Index lost 3/10^ths of a point to a seasonally adjusted 94.1 (1986 = 100). This was down 1.9 points from a year earlier, keeping the index in the low-to-mid 90s range that where it has been every month since the winter of 2015 and more or less over the past few years. Just 4 of the index’s 10 components improved during the month, led by a robust 12 point jump in the measure for expected economic conditions. Also improving from August were indices for expected real sales, earnings trends, and plans to add workers. Falling were indices for plans to increase inventories, current job openings, current inventories, expected credit conditions, whether it is a good time expand, and plans to make capital outlays. The press release lays blame for the weakened sentiment on the “divisive” presidential election that “offers little promise of a bipartisan effort” to solve critical issues.

Other data released over the past week that you might find of interest:
– Jobless Claims (week ending October 8, 2016, First-Time Claims, seasonally adjusted): 246,000 (Unchanged vs. previous week; -16,000 vs. the same week a year earlier). 4-week moving average: 249,250 (-7.4% vs. the same week a year earlier).
– FOMC minutes
– Import Prices (September 2016, not seasonally adjusted): +0.1% vs. August 2016, -1.1% vs. September 2015. Nonfuel imports: unchanged vs. August 2016, -0.7% vs. September 2015.
– Export Prices (September 2016, not seasonally adjusted): +0.3% vs. August 2016, -1.5% vs. September 2015.
– University of Michigan Index of Consumer Sentiment (October 2016-preliminary, Index (1966Q1=100), seasonally adjusted): 87.9 (-3.3 points vs. September 2016, -2.1 points vs. October 2015).
– Business Inventories (August 2016, Manufacturers’ and Trade Inventories, seasonally adjusted): $1.817 trillion (+0.2% vs. July 2016, +0.7% vs. August 2015).

The opinions expressed here are not necessarily those of Kevin’s current and previous employers. No endorsements are implied.

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