by Calculated Risk on 7/16/2012 08:30:00 AM

On a monthly basis, retail sales were down 0.5% from May to June (seasonally adjusted), and sales were up 3.8% from June 2011. From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for June, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $401.5 billion, a decrease of 0.5 percent (±0.5%) from the previous month, but 3.8 percent (±0.7%) above June 2011.

Ex-autos, retail sales declined 0.4% in June.

Click on graph for larger image.

Sales for May were unchanged at a 0.2% decrease.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales are up 21.2% from the bottom, and now 6.0% above the pre-recession peak (not inflation adjusted)

The second graph shows the same data, but just since 2006 (to show the recent changes). Excluding gasoline, retail sales are up 18.1% from the bottom, and now 6.1% above the pre-recession peak (not inflation adjusted).

The third graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail sales ex-gasoline increased by 4.2% on a YoY basis (3.8% for all retail sales). Retail sales ex-gasoline decreased 0.3% in June.

This was below the consensus forecast for retail sales of a 0.2% increase in June, and below the consensus for a 0.1% increase ex-auto.

Some of the decrease was related to the decline in gasoline prices, but this is another indicator of a weak June.
All current retail sales graphs

by Calculated Risk on 7/15/2012 10:12:00 PM

This will be a busy week for economic data.

• At 8:30 AM ET, Retail Sales for June will be released. The consensus is for retail sales to increase 0.2% in June, and for retail sales ex-autos to increase 0.l%.

• Also at 8:30 AM, the NY Fed Empire Manufacturing Survey for July will be released. The consensus is for a reading of 4.5, up from 2.3 in June (above zero is expansion). This is the first regional survey for July.

• At 10:00 AM, the Manufacturing and Trade: Inventories and Sales for May report will be released (Business inventories). The consensus is for 0.3% increase in inventories.

The Asian markets are mixed tonight, with little change.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P future are down about 3, and the DOW futures down about 25.

Oil: WTI futures are down to $86.69 (this is down from $109.77 in February, but up last week) and Brent is at $102.35 per barrel.

Yesterday:
• Summary for Week Ending July 13th
• Schedule for Week of July 15th

Four more questions this week for the July contest:

by Calculated Risk on 7/15/2012 04:13:00 PM

From Reuters: Gasoline prices fall more, but slide may be over: survey

The Lundberg Survey said the national average price of self-serve, regular gas was $3.41 on July 13, down from $3.478 on June 22, and from $3.615 a year ago.
...
Gasoline prices have fallen 14 percent from a recent peak of $3.967 a gallon set on April 6.

Trilby Lundberg ...said prices may soon enter a period of "comparative stability,"...

Oil prices have rebounded some. Brent is back up to $102.62 per barrel (after falling to $89 per barrel on June 25th), and WTI is up to $87.10.

Professor Hamilton recently presented a calculator from Political Calculations that estimates the cost of gasoline based on Brent oil prices. Currently this suggests a price of around $3.40 per gallon - about the current price.

The following graph shows the decline in gasoline prices. Gasoline prices are down significantly from the peak in early April, but up a few cents over the last two weeks.

Note: If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

Yesterday:
• Summary for Week Ending July 13th
• Schedule for Week of July 15th

by Calculated Risk on 7/15/2012 10:28:00 AM

On Friday afternoon, one of the undecided FOMC members, Atlanta Fed President Dennis Lockhart appeared to move closer to voting for QE3 now. Back in June, Lockhart said he viewed the current "policy stance as appropriate". But, based on incoming data, his views are changing.

From Lockhart on Friday: The Debate Over Further Monetary Action. Excerpt:

The question that the members of the FOMC confront is whether there is more that can be done to address the related challenges of slower GDP growth and tepid job creation. So, to wind up, let me give you my take on the key questions underlying a decision to bring on more monetary stimulus.

I think the output gap—the amount of slack in the economy—is neither as sizeable as the high-end estimates, nor is it zero. ... I do not think a compelling case has yet been made that structural adjustment has played a dominant role in slowing growth and progress against unemployment.

On the risk associated with the balance sheet: in my judgment, some further use of the balance sheet to promote continued recovery and/or financial stability brings with it manageable risks. I think reversal of the cumulative balance sheet scale and maturity structure can be accomplished in an orderly manner. But the step of additional balance sheet expansion should be undertaken very judiciously. Such a step would take us further into uncharted territory.

On the likely effectiveness of further monetary stimulus—a policy that would necessarily be brought to bear at least in part through credit channels—I think we should have modest expectations about what further action can accomplish. I do not think this means monetary policy is impotent or has reached its limit. But I don't see more quantitative easing or similar policy action as a miracle cure, especially absent fixes in policy areas outside the central bank's purview.

So, as one policymaker, here's my situation: my support for the current stance of policy rests on a forecast that sees a step-up of output and employment growth by year-end and into 2013. If the economy continues on the track indicated by the most recent incoming data and information, that forecast will become untenable, as will the policy premises underlying it.

Although Lockhart weighed both sides of each issue in his speech, he concludes: 1) the risks of QE3 are "manageable", 2) QE3 will be modestly effective, and 3) his earlier forecast is becoming "untenable" and that means he will support more accommodation if the recent weak data continues.

Next up will be Fed Chairman Ben Bernanke's Semiannual Monetary Policy Report to the Congress on Tuesday and Wednesday. QE3 is coming. It is just a question of when.

by Calculated Risk on 7/14/2012 09:40:00 PM

From the NY Times DealBook: U.S. Is Building Criminal Cases in Rate-Fixing

The [Justice Department]’s criminal division is building cases against several financial institutions and their employees, including traders at Barclays ... The prospect of criminal cases is expected to rattle the banking world and provide a new impetus for financial institutions to settle with the authorities. The Justice Department investigation comes on top of private investor lawsuits and a sweeping regulatory inquiry led by the Commodity Futures Trading Commission.

The multiyear investigation has ensnared more than 10 big banks in the United States and abroad. With the prospects of criminal action, several firms, including at least two European institutions, are scrambling to arrange deals ...

According to people briefed on the matter, the Swiss bank UBS is among the next targets for regulatory action. ...

in April 2008, a senior enforcement official at the Commodity Futures Trading Commission, Vincent McGonagle, opened an investigation. ... At first the case stalled as the agency waited months to receive millions of pages of documents when Barclays pushed back ... By the fall of 2009, the trading commission received a trove of information, providing a broad view into the wrongdoing.

The questionable reliability of LIBOR was widely discussed in early 2008 - and iwe are finally seeing fines and possibly criminal charges.

Earlier:
• Summary for Week Ending July 13th
• Schedule for Week of July 15th