The Economic Data Global Express (e-EDGE)
v.4 n.30 Released July 24, 2000
Produced
by the Los Angeles County Economic
Development Corporation as a public service to the global community.
CBP SAYS L.A. IS "NUMERO UNO" AGAIN
And nobody can dispute the Census Bureau numbers,
right? Traditionally, the County Business Patterns report, prepared
by the Census Bureau, is released in September, but this year it is early,
and the news is welcome. Between 1997 and 1998, Los Angeles County
had the largest employment gain, 104,706 jobs, of any county in the nation.
Los Angeles was also first in 1996-1997. Orange County placed third
between 1997 and 1998 with an increase of 61,385, while San Diego County
was fifth with 54,067 new jobs.
How do these numbers compare with the California
Employment Development Department's (EDD) data? First of all, the
Census Bureau does not include "government" in their report. Subtracting
the latter from the EDD data yields the following: Los Angeles County
+75,700; Orange County +62,400; and San Diego County +45,700.
Why the discrepancy for Los Angeles?
The Census Bureau does a better job at capturing "new economy" activities,
such as computer software development and motion picture production/"new
media," which are large and growing rapidly in Los Angeles.
The Census Bureau also provided a ranking
of counties based on nonfarm employment. Los Angeles was first
with 3,693,537 employees, Cook County (part of the Chicago metropolitan
area) was second with 2,446,113, and the Manhattan portion of New York
City was third with 1,951,646. (Jack
Kyser)
PR: http://www.census.gov/Press-Rlease/www/2000/cb00-116.html
State file downloads: http://www.census.gov/prod/www/abs/cbptotal.html
GREENSPAN'S "FED-SPEAK"--DECIPHERING HIS PEARLS OF WISDOM
Chairman Greenspan outdid past performances last
Thursday in his Humphrey-Hawkins testimony to the Senate Banking Committee.
What do you make of his comments? We saw the market's positive reaction
last Thursday, which can be characterized as pure euphoria, as driven
by the conclusion of investors and the Wall Street "experts" that interest
rate hikes are over. Not so fast. This interpretation of the
latest Fed-speak may be premature.
The Chairman cited continued gains in productivity
which have kept core inflation in check. He also cited a myriad of
indicators to document that the consumer is becoming "satiated" and may
not start a new round of borrowing and spending. Significantly, Mr. Greenspan's
forecast of GDP growth for this year is premised on slower growth in the
2nd half of the year. A key factor in this forecast is whether the
current pause in consumer spending is short-lived or on-going. The
warning of the Fed chief that "it is too soon to conclude that these concerns
(tight labor markets and energy prices) are behind us" seems to have either
not been clearly understood or ignored by financial markets.
We keep saying that forecasting the Fed's
next move is a tough call, but this is not an alibi or a plea for forbearance-it
is the simple truth. So, for the moment we will sit on the fence
concerning the FOMC's August 22nd meeting, since a bunch or economic indicators
and other new information will emerge before this date. Also, even
if the Fed holds steady at its next meeting (as it did in June), there
are 3 more opportunities this year to raise rates: October 3rd, November
15th, and December 19th. The political conventions and Election Day
(November 5th) are not likely to affect the Federal Reserve's decision.
It appears that the battle to slow the economy and rein in inflation
is being won, but we need to exercise a bit more patience before starting
to celebrate. This is not the time for the Fed or the financial markets
to become faint of heart or weak in the knees. (Ken
Ackbarali)
Testimony transcript: http://www.bog.frb.fed.us/boarddocs/hh/2000/July/Testimony.htm
WASHINGTON WATCH: BUDGET SURPLUS MOUNTS--AND FORECASTS TOO
The federal budget registered a surplus of $56.3
billion in June, up by $3 billion compared to June 1999. Calendar
quirks acted to reduce expenditures and increase revenues last month.
Adjusted, the year-to-year increase was approximately $16 to $17 billion.
Monthly expenditures increased by about 9%, while revenues grew by 8%.
The government is now 9 months into fiscal
year 2000, and the fiscal year-to-date surplus has grown to $177 billion,
almost double last year's 9-month surplus of $94 billion. Government
spending has been relatively restrained, up by 6% compared to the first
9 months of fiscal 1999. Outlays for defense and Medicaid have increased
somewhat more rapidly than most other spending areas. Growth in revenues,
up 11% through the past 9 months, has been remarkable. Individual
income tax receipts have soared by 14%, while corporate taxes rose by 12%.
Forecasts of the budget surplus have been
rising along with the funds pouring into the government's coffers.
The Congressional Budget Office now expects the surplus for the full fiscal
year 2000 to be some $232 billion. This estimate has soared by $53
billion from the CBO's last "best guess" made in April. However,
it is out of date already. Congress just passed an "emergency" spending
bill of $11.2 billion; so figure on $220 billion.
Under its "most conservative" assumptions,
the CBO now projects the budget surplus will total $1.7 trillion (yes,
with a "t") over the next five years. These assumptions include somewhat
slower growth in revenues than we've seen in the past few years and slightly
higher economic growth than assumed in previous long-term forecasts.
Are these numbers believable? Reasons to be skeptical can be summarized
under two headings. (1) Even the CBO's most conservative economic
assumptions are inappropriate. For example, economic growth is forecast
to proceed at a reduced speed, 2.7% per year, between now and 2005.
Note that the projection does not include any significant slowdown or recession.
(We assume CBO's economists simply don't want to guess the timing of the
next recession.) This omission is significant because income tax
revenues accelerate and decelerate faster than GDP. (2) Just as important,
the CBO's standard forecasting procedure assumes Congress and the Administration
do not enact any new programs that would, on net, increase spending or
reduce revenues. This means no estate tax cut, no tax relief for
married couples, no increases in defense spending, and no new drug benefits
for Medicare recipients (unless they are "paid for" by higher revenues
or lower spending elsewhere in the budget). As all of these proposals
are currently under discussion, CBO's rosy scenario may not have a long
shelf life. (Nancy D. Sidhu)
PR: http://www.fms.treas.gov/mts/mts0600.txt
HIGH ENERGY PRICES HITTING CONSUMER WALLETS
US Consumer Price Index (CPI) rose 0.6% in June
as energy prices advanced 5.6% with the beginning of the summer driving
season. Gasoline prices shot up 8.8%. The Midwest was hit particularly
hard: Chicago, +22.9%, and Detroit, +38.2% in two months! Utility
natural gas rose a record 7.8% last month. This increase will likely
hit the Midwest disproportionally hard this coming winter because of its
more extensive use of natural gas as heating fuel. Food prices continue
to be stable, rising just 0.1%. The overall CPI is now 3.7% above
the year-ago level. The second quarter compound annual rate is 2.6%,
or less than half of the 5.8% scored in 1Q00. The annualized inflation
rate so far this year is 4.2%, compared to 2.7% in 1999 and 1.6% in 1998.
The strong CPI increase should come as no surprise to consumers who are
constantly reminded of the high gasoline prices, which is one of the most
visible "prices" in our society. This may help raise the consumers'
expectations of inflation, which has the tendency of becoming a self-fulfilling
phenomenon. The core CPI, which excludes the volatile food and energy
prices, rose just 0.2%. Thus far this year the core CPI has been
quite stable, rising at the annualized rate of 2.6%. It was 1.9%
in 1999 and 2.4% in 1998. The core CPI gets more attention from analysts
while consumers tend to be more alarmed by food and energy prices because
of their volatility.
Locally, the Los Angeles metro area CPI declined
by 0.1%. (Local CPIs are not seasonally adjusted.) Gasoline
prices dropped 1.3% last month but were 19.2% above the June 1999 level.
Utility natural gas, however, rose 5.8% and is now nearly 30% above the
year-ago level. Food prices rose 0.2% and the core CPI dropped 0.2%.
June's LA CPI was 3.3% above the year-ago level.
Up in the Bay Area, the CPI rose by 0.2% in
the past two months. Gasoline prices declined by 1.0% while utility
natural gas jumped 16.1% in the past two months. Food prices rose
1.2%. June's Bay Area CPI was 4.2% above the year-ago level.
(George Huang)
US CPI: http://www.bls.gov/news.release/cpi.nr0.htm
LA CPI: http://www.bls.gov/special.requests/sanfrancisco/ro9cpila.htm
Bay Area CPI: http://www.bls.gov/special.requests/sanfrancisco/cpisanf.htm
JUNE PORT TRAFFIC HEARTY
The port of Long Beach just released its June
data. The number of loaded import containers was up 4.4%, while the
loaded export container count increased 5.5%. Together, the San Pedro
Bay ports moved 777,452 containers in June, up 12.5% over the year.
Through 6 months, the container count is 4.44 million. And "peak"
season is upon us. (Jack Kyser)
AND MAY TRADE VALUES "TAMBIEN"
Trade value data for May was also strong, with
export values at the Los Angeles Customs District up 24.9% over the year,
while imports moved ahead 19.1%. Total trade value for the month
was up 21.1% to $18.3 billion. For 5 months, the L.A. District is
running 18.3% ahead of the 1999 value.
At the San Francisco District, export values
in May were up 18.1%, while import values increased 12.9%. Total
trade value in May was up 16.6% over the year to $9.7 billion. For
the first 5 months of 2000, the San Francisco District is running 18.3%
ahead.
Things were also hopping at the San Diego
District, with May export values up 19.1%, while imports advanced 31.5%.
Total trade value for May was up over the year by 27.1% to $2.8 billion.
For 5 months, San Diego's total trade value is running 21.3% of the like
1999 period.
And how is Los Angeles doing vis-a-vis New
York? The strength of Europe's economy is visible in the latter's
5 month total of $88.6 billion. Los Angeles' 5 month total is $87.5
billion. (Jack Kyser)
QUICK STATS:
* BLS: US Consumer Price Index for 6/00: +0.6% (5/00: +0.1%)
* BLS: LA Area Consumer Price Index for 6/00: -0.1% (5/00: +0.3%)
* Census: US housing starts for 6/00: -2.6% to 1.55mil. annual units
(5/00: -3.4% to 1.60mil.a.u.)
* Census: US exports for 6/00: -1.0% (7/00: -0.2%)
* Census: US imports for 6/00: -0.3% (7/00: -0.2%)
* Census: US trade deficit for 6/00: $31.0bil. (7/00: $30.5bil.)
* Treasure Dept.: US Federal budget surplus/deficit for 6/00: +$56.3bil.
(5/00: -$3.6bil.; 6/99: +$53.6bil.)
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