The Economic Data Global Express (e-EDGE)

v.5 n.21       Released May 21, 2001
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

FEDERAL BUDGET SURPLUS SOARED IN APRIL

     The federal government's budget ran a huge surplus of $189.8 billion in April, an all-time record and over $30 billion higher than April 2000.  April is always a big month, as individual taxpayers settle up for the previous year.  This year's surge mostly reflects taxes owed on non-withheld income sources like capital gains and property income.  Government receipts jumped by 12.4% compared to last April while expenditures were up by a more moderate 4.7%.
     The budget's surplus for the first seven months of fiscal year 2001 (which runs from October 2000 through September 2001) was $165.0 billion, up by about 33% from the same period in fiscal 2000.  Year-to-date receipts rose by 6.9%, with personal income tax revenues leading the way, up by 9.3%.  However, corporate profits tax payments have been running below last year for the past 3 months, and were down by 2.5% for the fiscal year-to-date.  Expenditures grew moderately during the seven-month period, rising by 3.8%.  Interest paid on the government's debt rose by a modest 1.1%, while defense military outlays increased by 2.7%.  However, spending for Social Security pensions, Medicare, and Medicaid all have accelerated noticeably.
     Thus far, the fiscal 2001 surplus has grown by almost $31 billion from the first seven months of fiscal 2000.  The Congressional Budget Office and Office of Management and Budget both anticipate a $280 billion surplus when the fiscal year ends this fall.  However, the outlook for the fiscal 2002 budget is more uncertain.  Revenue growth will be slower, as corporate tax payments continue weak and a tax cut for individuals kicks in.  Furthermore, defense spending looks like it too will begin to accelerate along with the entitlement programs.  Thus, the government's budget position might well worsen in fiscal 2002, after nine years of improvement.  (Nancy D. Sidhu)
PR: http://www.fms.treas.gov/mts/
 

INFLATION CREEPING UP...

     U.S. Consumer Price Index (CPI) rose by 0.3% in April and was 3.3% higher than a year ago.  A 1.8% increase in energy prices offset the 0.2% advance in the core CPI and the 0.1% increase in food prices.  Energy prices ended their downward trip and roared back with a vengence.  Gasoline prices jumped 5.0% last month and were 3.8% higher than a year ago.
     Locally, the CPI rose 0.2% last month, a small reprieve after a 0.5% increase in March.  (Local CPIs are not seasonally adjusted and thus should not be compared directly to the national figure.  The unadjusted national CPI increase was 0.4%.)  Gasoline prices rose by 6.9% in April, on top of the 9.6% increase scored in March.  It actually didn't look so bad when compared to a year ago: the increase was only 2.6%.  The survey was likely done in the middle of the month and so it probably missed the late April price surge.  The cost of natural gas service declined by 4.1% last month but was a whopping 43.1% above the year-ago level.  Electricity costs was 8.0% higher than a year ago thanks to the Emergency Procurement Surcharge of $0.01/kWh.  Excluding food (+0.1%) and energy prices (+2.7%), the core CPI rose by just 0.1% last month.
     Up north, the Bay Area CPI rose by 0.6% between February and April.  Gasoline prices rose by 6.1% between March and April and were 2.0% higher than in April, 2000.  The cost of natural gas service declined by 13.7% last month but was 67.8% higher than a year ago.  The core CPI rose 0.8% between February and April.
     We've seen dramatic gasoline prices increases since April and this May's CPI report, due late in June, should be a shocker.  AAA's survey for last Friday shows the average price for last Friday was about 28 cents higher than a month ago (regular unleaded, 87-octane rating).  It is yet uncertain how the price would move this summer.  It depends heavily on how drivers cut back on their consumption and how fast can refineries turn crude into fuel.  There's also the electricity price increase that would show up in your June bill.  Since it's retroactive to March 27, it would be an even bigger shocker.  It might be a good time for a Hawaiian vacation...  if you can find affordable airline tickets.  (George Huang)
US CPI PR: http://www.bls.gov/news.release/cpi.nr0.htm
LA CPI PR: http://www.bls.gov/special.requests/sanfrancisco/ro9cpila.htm
Bay Area CPI PR: http://www.bls.gov/special.requests/sanfrancisco/cpisanf.htm
AAA Gas Watch: http://www.aaa-calif.com/members/corpinfo/fuel/weekendgas.asp
 

CONTAINER TRAFFIC MIXED IN APRIL

     Container activity at the 2 local ports continued to meander along in April.  The number of loaded import containers increased by 0.9% at Long Beach, but slipped by 0.3% at Los Angeles.  The number of loaded export containers handled during the month fell by 15.8% at Long Beach (the 6th consecutive decline), but by advanced by 3.3% at Los Angeles.  And that old bug-a-bear, empty containers moved at the 2 ports, increased 11.1% to 205,970 during the month.  Total containers handled at the 2 ports in April increased 1.4% to 783,949.  (Jack Kyser)
 

MARCH HOTEL OCCUPANCIES -- MORE DIVERGENCE

     PKF Consulting has released March data on the hotel business in Los Angeles and Orange counties, and again trends are mixed.  In Los Angeles County, the March occupancy rate was 77.4%, compared with 79.4% a year ago.  However, the average daily room rate moved up by 3.2% to $125.91.   Five areas in the County posted occupancy rates over the 80% level:  Valencia (88.1%); LAX (84.3%); South Bay (84.0%); West Hollywood (82.2%); and Hollywood (81.9%).
     Orange County also saw some slippage in its March occupancy rate, with a reading of 79.0% compared with 79.9% last year.  But the average daily room rate moved ahead by 4.8% to $125.60.  Anaheim, helped by the opening of Disney's California Adventure, came in with a rate of 81.8%.  The Orange County Airport area had a March occupancy of 79.1%.   (Jack Kyser)
 

ENERGY PLANS -- DAVIS VS. BUSH: SHORT-TERM VS. LONG-TERM

     With the release of the energy plan by the Bush Administration, it is now clear that the President takes a long-term view on the solution to the nation's energy needs.  While there are calls and incentives for demand reduction, most of the focus is on increasing the supply and will not bear fruit for a few years.  Governor Davis, however, is taking a much more short-term view on the "crisis" (not quite a crisis for the nation yet).  California will get only 1/3 of the additional power that Gov. Davis promised.  Supply of electricity cannot be increased significantly in the short run, and people are urged to face the reality and prepare for a summer of blackouts.  Price caps, sought by some Californian politicians as a way to reduce wholesale electricity prices, will only discourage power plant development and reduce the availability of more supplies.  Conservation remains one of the few truly short-term options (and long-term too, if people are willing...), and price increases imposed by CPUC will help stimulate conservation.  But for now, it's sleepless and "power-less" in Sacramento.  It is understandable that California's politicians are worried--Californians make up 12% of the nation's voters and 0% of the voters for all but 54 members of Congress, but 100% of the voters for California's political offices.  California must look to itself for many of the solutions instead of wishing for a "knight in shining armor" to rescue her from a mostly self-made crisis.  (George Huang)
Note: This is a personal commentary and does not reflect the official opinion of LAEDC.  The forthcoming report on "The Causes of California's Electric Power Crisis" will be a mostly non-opinionated, fact-finding research report.
President Bush's energy plan: http://www.bushenergy.com
Gov. Davis' website: http://www.governor.ca.gov (see Issues, then Energy)
 

QUICK STATS:

* BLS: US Consumer Price Index for 4/01: +0.3% (3/01: +0.1%)
* BLS: LA Area Consumer Price Index for 4/01: +0.2% (3/01: +0.5%)
* Census: US housing starts for 4/01: -2.5% to 1.59 million annual units (3/01: -2.2% to 1.63mil.a.u.)
* Census: US e-commerce sales for 1Q01: -19.3% (4Q00: +35.6%)--it's up 33.5% from 1Q2000
* Census: US exports for 3/01: -0.1% (2/01: +0.9%)
* Census: US imports for 3/01: +2.9% (2/01: -4.6%)
* Census: US trade deficit for 3/01: $31.2 billion (2/01: $26.9bil.)
* Conference Board: US Index of Leading Economic Indicators for 4/01: +0.1% (3/01: -0.2%)

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