Consumer Prices in U.S. Likely Rose in May at Slowest Rate in Six Months
Bloomberg | June 15
Economists predict that the cost of living in the U.S. increased in May at its slowest pace in half a year, driven in part by a decline in fuel prices. The consumer price index is expected to rise by 0.1 percent, following a 0.4 percent increase in April, based on the median forecast from 79 economists surveyed by Bloomberg News. The core measure, which discards more volatile food and energy prices, is anticipated to see a 0.2 percent increase for the fourth time in five months.
Retail sales saw a modest decline of 0.2% last month, adjusting for seasonal changes, as reported by the Census Bureau . This marked the first monthly drop in nearly a year. In light of the recent weakening in various economic indicators, observers are quick to view this retail sales news as a potential red flag. While concerns are valid, it’s important to recognize that the overall context for retail sales is still quite encouraging. This broader picture may not change the immediate implications, but it remains significant.
The May update for U.S. retail sales is imminent, contributing a fresh data point in evaluating whether the economy is indeed slowing, and if so, to what extent. For April, retail sales rose by 0.5% (seasonally adjusted). Analysts forecast a decrease of 0.7% for May, according to Briefing.com. Here’s a glimpse of what analysts are speculating ahead of today’s report:
Four Scenarios For The US Retail Sales Report
ActionForex | June 14
This Tuesday’s report on May retail sales is crucial because consumer spending constitutes a significant portion of the economy. Observing U.S. spending trends is vital to understanding the recovery’s wellness. Will May indicate that consumers are pulling back their spending? We already know that car sales were lower in May, which is likely to weaken the overall retail sales figure, with a total expected sales decline of 0.3%, following April’s 0.5% increase.
Over the past year, a noteworthy change in the Global Market Index (a proprietary benchmark categorizing all major asset classes) has been a significant reduction of nearly three percentage points in the weight of U.S. bonds, mirrored by a similar drop in foreign developed-market government fixed income. Conversely, the most substantial increase has been noted in the allocation for foreign-developed market stocks, rising by over two percentage points in the GMI’s collective share year-to-date.
I will be one of three panelists participating in tomorrow’s teleconference about how to utilize economic data for informed investment decisions (4-4:45 pm eastern, hosted by Focus). You can find all the details for this event here. Everyone is welcome to join and contribute questions.
Sluggish Hiring Seen as a Threat to Recovery
The Wall Street Journal | June 13
Economists now identify the prolonged slowdown in hiring as the greatest danger to the U.S. recovery, according to the latest economic forecasting survey by The Wall Street Journal, which has prompted a significant reduction in projected job growth for the upcoming months. Recent predictions estimate second-quarter GDP growth slowing to 2.3% on a seasonally adjusted annual basis, down from the previous month’s projection of 3.2%. However, expectations for a rebound exist with growth expected to accelerate to 3.3% in the latter half of 2011.
Second Half 2011 U.S. Growth Rebound Expected, Economists Say
Bloomberg | June 10
Despite a slowdown in consumer spending and job creation, economists surveyed by Bloomberg News remain optimistic, forecasting a rebound in U.S. growth during the latter half of 2011. After observing a growth rate of 2.3% annually in the current quarter, they project an increase to 3.2% from July to December, based on the median outlook from 67 economists polled between June 1 and June 8.
● Winning at Risk: Strategies to Go Beyond Basel
By Annetta Cortez
Excerpt via publisher, Wiley
Understanding risk is fundamental to the existence of any financial institution. It is expected that all executives, managers, and employees should have a solid grasp of risk management, and institutions should develop a cohesive language to discuss and assess risk with clarity and transparency. Unfortunately, the reality often falls short of these expectations—not due to their unreasonableness, but rather a lack of focus on risk management as a core competency. Understanding finance without a grasp of risk is as illogical as embarking on a molecular biology course without basic chemistry knowledge. Therefore, effective risk management should remain a primary capability within every financial institution. Regrettably, it is commonly viewed as an encumbrance that limits legitimate business activities without offering tangible value.
Recent economic news indicates that while the recovery may be facing challenges, there are some more optimistic forecasts. A forward-looking assessment from the latest Livingston Survey, featuring 35 economists, suggests that conditions may improve over the latter half of the year.
If you’re feeling optimistic, you might argue that the latest report on initial jobless claims doesn’t indicate an impending recession. Although new applications for jobless benefits increased modestly last week, rising by 1,000 to a seasonally adjusted 427,000, this figure remains too high to suggest strong growth in the labor market or the economy overall. However, this current number does not support the idea that the recent economic missteps are worsening, even as the trend isn’t necessarily one of improvement either, leaving us in uncertainty as we await the next update.
Indicators suggest that while economic growth may be slowing, financial markets seem to remain resilient. Credit markets show little sign of distress, and similarly, the stock market maintains its composure despite recent fluctuations. Further optimistic signals from the markets were provided by the latest update from the Kansas City Fed’s Financial Stress Index (KCFSI).
In summary, recent economic reports have provided a mixed picture regarding the U.S. recovery. While some indicators reveal signs of weakness, broader contexts suggest that market resilience and potential improvements could soon emerge. Keeping a balanced perspective is essential as we navigate these fluctuating trends.
