Before getting into the numbers from today's employment release (check back for the forthcoming blog post on them), I want to dig a little deeper into the underlying data and examine what has been happening to a critical sector of the U.S. economy—manufacturing.
Not surprisingly, rising gasoline prices can affect motor vehicle buying behavior.1 And lately, prices have been rising fast. Based on daily estimates from the American Automobile Association (AAA), regular gasoline prices jumped again in April, following a string of increases that started in July of 2010. Over this same time period, the auto share of total light vehicle sales has been trending up.
Today’s release on income and spending for March fills out the data from the last month of the first quarter of 2011. But wait, didn’t Q1 GDP come out yesterday, which contained Q1 estimates of income and spending? Sure did camperoos, so the value added from today’s release is that it provides more detail on the income side (that is, the flow of cash to and from consumers). So what juicy tidbits does today’s release contain? A couple of items of interest include recent drivers of income growth and spending on fuel.
Q1 GDP growth came in at 1.8 percent – about what was expected. So, what does this mean? Well, 1.8 is less than 3.1 (the growth rate posted in the last quarter of last year) and is less than the rate most think the economy will grow at for the remainder of 2011. Therefore, Q1 appears to be a little bit of a pothole/air pocket/pause… which begs the questions, what caused this pothole and how concerned should we be?
The U.S. Commerce Department has two releases this week that analysts will look to as they try to quantify the role of business investment in the economic recovery – the March advance durable goods release coming out this Wednesday, April 27th, and the Gross Domestic Product (GDP) release for the first quarter of 2011 coming out on Thursday, April 28th.
Today’s report on retail sales is largely in line with expectations and holds few surprises: total sales increased 0.4 percent in March following a 1.1 percent gain in February. The other good news is that the data from January and February were revised upward a tad (the technical definition of “a tad” is a tenth of a percentage point in growth rates).
As we have emphasized in the past, never put too much focus on a single month’s trade numbers, as the monthly wiggles can be largely influenced by a wide set of idiosyncratic factors, such as exports of aircraft, imports of oil, spikes in the trading of pharmaceuticals, seasonal adjustments, the date of the Chinese New Year (seriously, see below)…
Before delving into some of the more interesting "weeds" of today's trade numbers, the top line stats show that imports decreased $3.6 billion in February from January, exports decreased $2.4 billion, and the trade deficit improved by $1.2 billion.
Question: Do increases in gas prices lead us to cut back on how much gasoline we put into our cars and trucks?
A. Yes, and home kits that transform bacon grease into diesel fuel fly off the shelves.
B. Not so much.
Today's blog features our first posting from the Department of Commerce's Under Secretary for Economic Affairs, Dr. Rebecca Blank, who addresses the March employment report below.
