Publications

U.S. Economic Indicators

Retail sales fell 16.4% in March and were down 21.6% from a year ago. Core sales — which exclude autos, gasoline, building materials, and food services —  declined 15.3%. Census Bureau Report

Industrial production declined 11.2% in April – the largest monthly decline in the index’s 101-year history – and was down 15.0% year-over-year. Capacity utilization fell 8.3 points to 64.9. Fed Report

Business inventories edged down 0.2% in March and are down 0.3% from March 2019. Manufacturers’ sales declined 5.2% in March and were down 5.6% compared to a year ago. Census Bureau Report

The Empire State Manufacturing Survey indicates that business activity continued to deteriorate in May, as the headline index rose 29.7 points but remains well below zero at -48.5. The new orders index rose 23.9 points to -42.4, the shipments index rose 29.1 points to -39.0; and the index for number of employees rose 49.2 points to -6.1. NY Fed Report

The University of Michigan Consumer Sentiment Index rose 1.9 points to 73.7 in the preliminary May reading but is down 26.3 points from May of last year. The Index of Consumer Expectations fell 2.4 points to 67.7, while the Current Economic Conditions Index rose 8.7 points to 83.0. University of Michigan

U.S. Economic Indicators

Initial jobless claims fell 195,000 to 2,981,000 last week. The four-week moving average fell 564,000 to 3,616,500. DOL Report

U.S. News

Greg Ip writes for the Wall Street Journal that state governments’ need for federal aid to close impending funding gaps does not imply mismanagement of state finances prior to the crisis, as most states substantially improved budgeting practices in the decade following the Great Recession. Unlike states, which are generally required to balance their budgets, the federal government has an enormous capacity to borrow – a capacity Ip argues should be shared with struggling states to avoid deepening the virus-induced downturn. WSJ

The Financial Times reports that China’s ability to meet the first-year targets of its trade deal with the U.S. is becoming increasingly doubtful as cheap Brazilian soybeans flood Chinese markets. The phase one trade agreement involved pledges from Beijing to purchase $36.5 billion in U.S. agriculture products in 2020 – roughly two-thirds of which would likely be soybeans – but China has only purchased $3 billion so far this year, putting U.S. farmers in a bind as planting season begins. FT

U.S. Economic Indicators

The headline Producer Price Index (“PPI”) for final demand declined 1.3% in April – the largest decline since the series began in December 2009 – and is down 1.2% year-over-year. The core — which removes the volatile prices of food, energy, and trade services — fell 0.9% in April and is down 0.3% from a year ago. BLS Report

U.S. News

The Wall Street Journal reports that Fed Chairman Jerome Powell stated that the economic recovery is likely to take much longer than initially expected and more federal spending will be needed to ensure that the initial policy response is not wasted. While Powell did not address the future direction of monetary policy, he did emphasize the need to recognize that the current downturn is not a typical recession and that more fiscal stimulus, while costly, may be necessary to avoid long-term economic damage. WSJ

According to the New York Times, the pandemic-induced plunge in auto sales has the potential to permanently change the industry as auto manufacturers consider dramatic changes – including plant closures, mergers, and supply chain shifts – to ensure their survival. The pandemic could also have indirect effects on demand for different types of vehicles, with electric car sales proving more resilient so far. NYT

U.S. Economic Indicators

The NFIB Small Business Optimism Index fell 5.5 points to 90.9 in April, as nine components weakened and one improved. The decline in the headline index was driven by plummeting expectations of future sales which was partially offset by expectations of future economic improvement. NFIB Report

Consumer prices fell 0.8% in April (up 0.3% from a year ago). The “core” CPI, which excludes food and energy, fell 0.4% in April – the largest monthly decline in the series history dating back to 1957 – and is up 1.4% from last year. BLS Report

U.S. News

The Wall Street Journal reports that factory furloughs are becoming permanent layoffs as some manufacturers are forced to close plants for good, indicating that a growing share of recent pandemic-induced job losses won’t be temporary. Increased factory closures will further erode the U.S. industrial workforce, which has been falling as a share of overall employment for decades and never fully recovered from the financial crisis. WSJ

According to Bloomberg, even if the coronavirus is successfully contained in the coming weeks, the crisis will have long-lasting financial and psychological impacts on consumer behavior. Financial strain from income losses will limit consumers’ ability to spend when businesses reopen, and the fear of crowd-prone public spaces will be a difficult mentality to reverse. Bloomberg