Economic Update
#1
12-18-2006, 05:52 PM
Economic Update
On December 12, the Federal Reserve held interest rates steady at 5.25% for a fourth straight meeting, a move widely anticipated by industry experts. This comes on the coat tails of the Fed calling the recent cooling in the housing market "substantial."
Even so, retail sales jumped 1% in November, their largest rise since July 2006, the Commerce Department reported December 14. Excluding autos and gasoline, which gives a more reliable core measure of household spending, retail sales increased 0.9%. Analysts had forecast a 0.2% rise in retail sales in November. November's sharp rise supports the Fed's view that there is little evidence that a cooling housing market will have a negative effect on the wider economy.
Meanwhile, the Consumer Price Index dropped 0.1% in November, the Labor Department reported December 15. The November level of 201.5 was 2% higher than in November 2005.
The U.S. trade deficit (the gap between what this country sells overseas and what it imports) hit a 14-month low in October, due to cheaper oil prices, said the Commerce Department December 12. The October shortfall in goods and services came to $58.9 billion, down sharply from $64.3 billion in September. The deficit is at its lowest point since August 2005, and its monthly decline of 8.4% was the largest since December 2001. Over the first 10 months of 2006, the overall U.S. trade deficit stands at $643.4 billion, and is on course to surpass last year's annual record of $717 billion.
This week, look for updates on building permits, housing starts and producer prices on December 19.
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