Retail Sales Rise 1.1%, Much Higher Than Expected; Imports Prices Up 1.1%, Export Prices Up 0.8%
Looks to me like Americans paid more $ for the same or fewer goods and services?
That is, cutting back on purchases but not able to save $ due to higher prices?
Should show up as an increase in consumer debt/drop in savings rate?
Standing by for details.
Just maybe $5 billion less in net govt spending each weak does matter???
U.S. Auto Sales Pace at Slowest Since GM, Chrysler Bankruptcies
By Alan Ohnsman
March 13 (Bloomberg) — Sales of new cars and trucks in the U.S. have cooled to the slowest pace in more than three years even as automakers increase spending on incentives.
The average number of days needed to sell new vehicles rose to 64 at the end of February, the most since August 2009, Bloomberg Industries said in a report today. Carmakers have also raised incentives to 7.8 percent of a vehicle’s price to lure buyers, the highest ratio since 2011, analyst Kevin Tynan wrote in the note. Incentives increased more than 8 percent in both January and February, he said.
Vehicle sales have remained a bright spot for the U.S., expanding more than 10 percent annually since 2010, the year after bankruptcies for the former General Motors Corp. (GM) and Chrysler LLC. Growth is slowing this year, with total light- vehicle sales rising 3.7 percent in February, according to Autodata Corp.
Still, it’s premature to be concerned as the pace of growth is returning to pre-recession levels, said Jessica Caldwell, industry analyst for Edmunds.com.
“Even though it’s creeping up a bit, it doesn’t start to raise eyebrows at this point,” she said. “The number of days needed for a sale have risen, but it’s stabilized in the low 60s.”
Brands seeing some of the biggest increases in average numbers of days needed to sell their vehicles include Chrysler, GM’s Chevrolet and GMC brands and Ford Motor Co. (F)’s Lincoln line, said Caldwell, who’s based in Santa Monica, California.
Addition: Excellent color from Greg, thanks!
On Wed, Mar 13, 2013 at 9:41 AM, Greg wrote:
Hi Warren – to be clear, I do believe there is some impact from less net govt spending on the industry, but I wanted to point out that the author of this article fails to account for fewer selling days in the U.S. during Feb 2013 vs. Feb 2012 (24 days in Feb 2013 vs. 25 days in Feb 2012). Adjusted for selling days, total U.S. Feb 2013 light vehicle sales were up +8.0% YoY. On a seasonally adjusted rate, US light vehicle SAAR is up 8% YTD, although the 15.3mm unit selling rate in Feb was only up 6.25%.
Avg. vehicle sales in the U.S. between 2001-2006 were 16.9mm units before falling off a cliff during the crisis, troughing at 10.4mm units in 2009 (which would have had a 9-handle were it not for “cash-for-clunkers”). A lot of that pre-crisis volume was driven by large incentives to drive volumes and share as OEMs we only profitable well north of 14mm SAAR. Breakevens for OEMs in the U.S. were reduced to just north of 10mm SAAR during the crisis, and one view is that, going forward, the new normalized U.S. SAAR may not reach the level of the early 2000’s, meaning 2013’s consensus 15.5mm units is approaching peak. Nonetheless, we’ve seen incentive activity increasing notably in Jan and Feb, reversing the trend of post-crisis discipline, which may be another signal that it’s becoming more difficult for households to pull the trigger on car purchases.
How stupid is this?
Unless they want to reduce funds available to distribution to the members?
Bundesbank Almost Doubles Risk Provisions on ECB Crisis Measures
By Jeff Black & Stefan Riecher
March 12 (Bloomberg) — Germany’s Bundesbank almost doubled its risk provisions in 2012, citing increased potential for losses stemming from the European Central Bank’s monetary policy.
The Frankfurt-based central bank increased provisions for general risks by 6.7 billion euros ($8.7 billion) to 14.4 billion euros, it said in an e-mailed statement today when releasing its 2012 annual report. Due to higher interest income, the Bundesbank’s profit rose to 664 million euros from 643 million euros in 2011. The increase in provisions stems from the ECB’s enhanced support of the financial sector over the course of the year, the Bundesbank said.
“The past year had seen an overall increase in counterparty credit risks stemming from refinancing loans and purchasing bonds,” Bundesbank President Jens Weidmann said in the statement.
The ECB injected more than 1 trillion euros into the banking system with two three-year refinancing loans designed to avoid a credit crunch. Some 22 percent of those loans have since been paid back as the ECB’s pledge to buy unlimited government bonds if certain conditions are met eased tensions on financial markets.
Weidmann reiterated in a foreword to the annual report that the Bundesbank is critical of some of the measures taken by the ECB because “they blur too much the responsibilities of monetary and fiscal policies.”
“We think we owe the American people a balanced budget,” House Budget Committee Chairman Paul Ryan said on “Fox News Sunday.”
My only question remains, ignorant or subversive?
Obama to seek ‘fiscally sustainable path,’ not balanced budget
White house press secretary Jay Carney said: “And that is the president’s goal: Deficit reduction large enough to put our economy on a fiscally sustainable path so that the ratio of debt-to-GDP is below 3 percent for a period of time that would allow concurrently, through investments and other policy decisions, allow the economy to grow.”
MMT to Washington: There Is No Long-term Deficit Problem!
By Warren Mosler
‘inflation’ there can mean a lot of people can’t afford to eat, and, hence, regime change:
Food price increases drive China’s inflation to 10-month high
March 9 (Xinhua) — China’s annual consumer inflation rebounds to a 10-month high of 3.2 percent in February on accounts of rising food prices during the Spring Festival season. On a month-on-month basis, February’s CPI gained 1.1 percent from the previous month. Food prices, accounting for nearly one-third of weighting in China’s CPI, remained a key driver of inflation in February as the Spring Festival season, which fell within that month, pushed up demands. The NBS statement said food prices jumped 6 percent last month from the same period last year, propelling the CPI up by 1.98 percentage points. But the upward trend is unlikely to sustain as the holiday effect fades off and the warming weather will help supplies, the NBS said.
China’s Economic Data Show Weakest Start Since 2009
March 10 (Bloomberg) — China’s industrial output had the weakest start to a year since 2009 and lending and retail sales growth slowed, toughening challenges for a new leadership that wants to narrow the gap between rich and poor.
Production increased 9.9 percent in the first two months and retail sales rose 12.3 percent, government data showed March 9, trailing economists’ estimates. New local-currency loans in February fell to 620 billion yuan ($99.6 billion), the People’s Bank of China said yesterday, lower than the estimates of 27 out of 28 analysts in a Bloomberg News survey.
Strengthening U.S. demand after the unemployment rate fell to a four-year low may help incoming Premier Li Keqiang achieve the 7.5 percent expansion in gross domestic product sought by policy makers entering the final week of their meeting at the National People’s Congress in Beijing. China’s exports jumped 23.6 percent in the first two months of the year, the most for a January-February period since 2010.
“Exports are still an important growth driver for China so the pickup should make policy makers less concerned about the disappointment in some of the other indicators,” said Louis Kuijs, chief China economist at Royal Bank of Scotland Plc in Hong Kong. “When push comes to shove, they know the recipe to kick-start growth, so if things do slow down to a rate they aren’t comfortable with, they can encourage investment.”
At the same time, February credit data indicate the central bank may be working to contain the expansion in lending and aggregate financing that started last year, said Kuijs, who previously worked as an economist for the World Bank in Beijing.
Increasing Optimism
New local-currency loans in February trailed the 700 billion yuan median estimate in a Bloomberg survey and were lower than the 710.7 billion yuan in the same month last year and the 1.07 trillion yuan figure in January. Aggregate financing, a broader measure of credit, fell to 1.07 trillion yuan last month from a record 2.54 trillion yuan the previous month, PBOC data showed.
U.S. stocks have risen 8.8 percent this year, compared with a 2.2 percent gain in the Chinese benchmark index, as optimism increases that the world’s biggest economy is responding to an unprecedented monetary stimulus. In China, the decline in four February purchasing managers’ indexes, and official data released over the past week, are raising concerns that a recovery that started in the fourth quarter may be peaking even as house-price gains accelerate and inflation risks increase.
Spending Crackdown
The growth in January-February retail sales was below the lowest economist projection of 13.8 percent and was the smallest for that period since 2004. The moderation follows a crackdown by new Communist Party chief Xi Jinping on lavish spending by government officials and state-owned companies, part of efforts to curb corruption and waste.
Shares of Kweichow Moutai Co. (600519), maker of the eponymous high- end white spirit, have dropped 19 percent since Xi took power on Nov. 15, compared with a 14 percent gain in the Shanghai Composite Index.
The increase in factory output compared with the 10.6 percent median estimate in a Bloomberg survey. The statistics bureau doesn’t break out figures for January and February retail sales and industrial output in an attempt to smooth distortions caused by the timing of the Lunar New Year holiday.
Fixed-asset investment excluding rural areas in the first two months of the year rose 21.2 percent, against a median economist estimate of 20.7 percent and a 20.6 percent pace for the whole of 2012.
Inflation Worry
Consumer prices climbed a more-than-estimated 3.2 percent in February from a year earlier. Standard Chartered Plc estimates inflation will average 4 percent this year, compared with the government’s target of 3.5 percent.
“From a monetary policy perspective, by mid-2013, the inflation issue should begin to move up policy makers’ list of things to worry about,” Li Wei, a Shanghai-based economist with Standard Chartered, said in March 9 note. Li forecasts the central bank will raise benchmark interest rates once in the fourth quarter by 25 basis points as the CPI rises above 5 percent.
China’s economic growth slowed for seven quarters before recovering to 7.9 percent in the final three months of 2012, led by government-directed spending on infrastructure. The central bank also allowed expansion in credit in the less-regulated shadow banking sector.
The rebound may accelerate to 8.2 percent in the first quarter before slowing to 8 percent in the last three months of the year, according to median estimates in Bloomberg surveys last month.
Policy Dilemma
At the same time, the PBOC has flagged growing inflation and financial risks since December and the government stepped up efforts to curb resurgent home prices on March 1, ordering higher down payments and interest rates for some mortgages and implementation of a 20 percent capital gains tax.
“Policy makers face a dilemma as growth is weakening yet inflationary pressure keeps building,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong. “The government will eventually have to tighten policy to contain inflation but in the short term, the next several months, the government may put policy on hold to observe how growth and inflation move and fine-tune accordingly.”