Current Economic Conditions

Gross domestic product

Total value of goods and services produced in the United States; the standard measure of economic performance; quarterly, BEA.

+4.1% (ar) in 3^rd qtr. 05

+3.3% (ar) in 2^nd qtr. 05

+3.8% (ar) in 1^st qtr. 05

+3.7% Year Ago 3^rd qtr. 05

(1/27)

The final reading for annualized real GDP growth in the third quarter of 2005 was 4.1%, down slightly from last month’s preliminary estimate of 4.3%, but still a very healthy growth rate.

Unemployment rate

Share of work force looking for but unable to find a job; indication of economic slack; monthly, taken from BLS household survey.

4.9% in December

5.0% in November

4.9% in October

(2/3)

The unemployment rate fell to 4.9% in December.
The decline was largely due to lower unemployment for blacks and teenagers.

Payroll employment

Number of private and public nonfarm jobs; monthly, taken from BLS establishment survey.

+108,000 in December

+305,000 in November

+
25,000 in October

(2/3)

The economy created 108,000 payroll jobs in December. Seasonally adjusted retail and construction employment fell, while manufacturers added jobs.

Employment cost index

Change in the cost of workers’ pay and benefits; quarterly, BLS.

+0.8% in 3^rd qtr. 05

+0.7% in 2^nd qtr. 05

+3.0% in Y/Y 3^rd qtr. 05

(1/31)

Employer costs rose 0.8% in the third quarter.
Benefit costs remain the biggest driver of overall costs, although growth has moderated some over the past year.

Consumer price index

Cost of a “market basket” of consumer goods.
Change in index is most widely cited measure of inflation; many costs and payments are tied to it; monthly, BLS.

-0.1% in December

-0.6% in November

+0.2% in October

+3.4% Year Ago Nov. 05

(2/22)

The consumer price index fell 0.1% in December, largely because of declining energy prices. The core index, excluding food and energy prices, rose 0.2% in December.

Producer price index

Change in prices producers charge for items along the production process, before sale to end-user; monthly, BLS.

+0.9% in December

-0.7% in November

+0.7% in October

+5.3% in Year Ago Nov. 05

(2/17)

The PPI for finished goods jumped 0.9% in December.
The increase was almost entirely due to a 3.1% jump in prices for finished energy goods.
Core prices, which exclude food and energy, rose 0.1%.

Retail & food service sales

Change in sales at retail and food service outlets; monthly, Census.

+0.3% in November

+0.3% in October

+0.3% in September

+6.3% in Y/Y Nov. 05

(2/14)

Total retail sales rose 0.7% in December.
Auto sales were responsible for much of the gain. Sales excluding autos rose 0.2% due to increased sales at gasoline stations.

Leading economic indicators

Index of ten forward-looking indicators, suggesting the economy’s likely direction over the next six months; monthly, Conference Board.

+0.5% in November

+1.0% in October

-0.1% in September

(1/23)

The Conference Board index of leading indicators rose 0.5% in November, with seven of the ten components making up the index contributing to the gain.

Housing starts

Number of single-family and multifamily units started at an annual rate; monthly, Census.

1.933 mil (ar) in December

2.121 mil (ar) in November

(2/16)

Housing starts decreased 8.9% in December to 1.933 million units. Housing permits decreased 4.4% during the month.

Consumer confidence

Index of consumer feelings about current and expected economic conditions; monthly, Conference Board.

103.6 in December

98.3 in November

85.2 in October

(1/24)

Consumer confidence continues to firm. In December, consumer sentiment increased to 103.6, as both present conditions and future expectations notched gains.

Industrial production

Output of factories, mines and utilities; monthly, Federal Reserve.

+0.5% in December

+0.8% in November

+2.9% in Year Ago Dec. 05

(2/15)

Industrial production rose 0.6% in December, fueled by strong gains in utilities and mining output as refineries etc. in the Gulf continue to recover.

Capacity utilization

Share of industrial production capacity actually in use; monthly, Federal Reserve.

80.7% in December

80.3% in November

(2/15)

The capacity utilization rate rose to 80.7, and is up 1.7 percentage points from a year ago.

Purchasing Managers’ Index (PMI)

A PMI reading above 50% indicates that the manufacturing economy is generally expanding; below 50%, that it is declining; monthly, ISM.

54.2 in December

58.1 in November

59.1 in October

(2/1)

The PMI fell nearly four points to 54.2. Most of the component indices were lower, including significant declines in production, new orders, and employment.

Trade balance

Net of all imports and exports of goods and services; monthly, Census and BEA.

$ -64.2 billion in November

$ -68.1 billion in October

$ -66.0 billion in September

$-617.7 billion 2004 total

(2/10)

The nominal U.S. trade deficit narrowed in November following the previous month’s increase. In November, the U.S. trade deficit came in at $64.2 billion, down $3.9 billion from October’s revised $68.1 billion

Corporate profits

Total profits from current production for all U.S. companies (adjusted for inventories and capital consumption); quarterly, BEA.

$1293.1 billion (ar) in 3^rd qtr.

$1347.5 billion (ar) in 2^nd qtr.

Up 15.7% from a year ago

(3/30)

Corporate profits fell $54.4 billion in the third quarter due to hurricane related losses.
Without the storms, corporate profits would have set another record.

Federal funds target rate

Interest rate charged on overnight bank loans; the Federal Reserve Board can change the target rate at any time.

The federal funds target rate is 4.25%.

Next meeting January 31^st.

The FOMC has raised the fed funds rate to 4.25%. This was the thirteenth consecutive meeting where the Fed has raised the rate by 25 basis points.