The Economic Data Global Express (e-EDGE)

v.5 n.47       Released Nov. 19, 2001
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

OCTOBER RETAIL SALES:  WOW (?)

     The Commerce Department reported that retail sales soared by 7.1% in October, following September's terrorist-impacted decline of 2.2%.  This was by far the largest monthly increase since at least 1991 (the data only go back through 1992).  Almost all of the improvement in October's sales was due to an increase of 26.4% in sales by motor vehicle and parts dealers.  Many auto dealers had a record month in October as buyers rushed to take advantage of extremely attractive vehicle financing (who can resist 0%?).  Excluding automotive, retail sales rose by a more moderate 1.0% last month following a decline of 1.5% in September.
     Outside automotive, sales of many retailers in October simply returned to trends that existed prior to September 11.  Electronics & appliance stores, building materials & garden shops, clothing & accessory shops, sellers of sporting & other leisure related goods, even department stores all registered improvement in October after seeing sharp sales declines in September.  However, some parts of retail remained weak.  Sales of apparel & accessory shops were unchanged from October 2000, while department store sales declined by 2.0% over the same period.  Which sectors appear to be doing best?  Sales of sporting goods, hobby, book & music stores have risen by 11.1% over the past 12 months, while health and personal care store sales rose by a healthy 8.5% and building and garden retailers registered an increase of 7.4%.  (Nancy D. Sidhu)
PR:  http://www.census.gov/svsd/www/retail.html
 

CONSUMER PRICES FELL IN OCTOBER

     To virtually no one's surprise, the U.S. Consumer Price Index (CPI) fell in October by a magnitude of 0.3% from September.  Over the past 12 months, the CPI rose just 2.1%.  The decline was led by a sharp 6.3% drop in energy costs, in particular a 10.7% drop in gasoline prices.  Natural gas costs dropped by 6.8%.  The energy index was 5.6% below the year-ago level.  Food prices rose by 0.5% over the month and were 3.4% above the year-ago level.  Excluding food and energy prices, the core CPI rose by 0.2% in October and was 2.6% above the year-ago level.
     The threat of deflation is minimal for now.  The recent decline in energy prices is related to the economic slowdown and would be somewhat "corrected" by a cutback in OPEC's petroleum production and the coming economic upturn.
     Looking at the sectors grabbing the headlines, the impact on consumer prices from the 9/11 attack actually seems quite limited. Airline ticket costs declined by 2.5% in October, after peaking in June of this year.  The cost of housing away from home (i.e. hotels & motels) fell by just 1.8%.  Many hotels and airlines have not cut their posted prices because some do not anticipate a significant rise in traffic from cutting their prices.  Yet in some markets, particularly "fly-in" destinations with a limited local market such as Las Vegas, consumers can find enticing hotel and airline deals.
     Locally, the Los Angeles area CPI declined by 0.3% in October.  Local CPIs are not seasonally adjusted.  The L.A. area CPI was 2.6% above the year-ago level.  This is the lowest 12-month change since January 2000.  The monthly decline was also led by a 5.5% decrease in energy costs.  Gasoline prices fell by 8.6% and were 15.0% below the year-ago level.  Natural gas service costs for homes fell by 10.7% last month and were a whopping 41.0% below the year-ago level.  The core CPI declined by 0.1% last month but was 2.7% above the year-ago level.
     Up north, the Bay Area CPI rose by 0.4% over the past two months and was 4.5% above the year-ago level.  The area is still seeing hefty increases in housing costs--1.2% between September and October--despite the drastic slowdown in the Bay Area economy.  Gasoline costs fell by 5.2% last month.  The core CPI rose by 0.5% over the past two months and was 5.1% above the year-ago level.
     In reality, consumers may be paying less than what the CPI indicates.  The CPI does not include the substitution effect, which means that consumers can switch to a cheaper alternative when available.  In the case of shaken consumer confidence after 9/11, some consumers may have changed their choice of retailers.  Discounters such as Wal-Mart are doing quite well while some other established retailers are reporting disappointing sales.  This substitution effect will also have some impact on prices in the long run, but for now its impacts are unclear.  Also, consumers have been offered many enticing incentives such as 0% financing for new cars or deferred payments on big-ticket items such as bigscreen TV or furniture.  These incentives do not show up in the CPI calculation but they in effect reduce the products' true costs to consumers.  (George Huang)
US PR: http://www.bls.gov/news.release/cpi.nr0.htm
LA Area PR: http://www.bls.gov/ro9/ro9cpila.htm
Bay Area PR: http://www.bls.gov/ro9/cpisanf.htm
 

OCTOBER CONTAINER TRAFFIC AT POLA DISAPPOINTS

     The October data from the Port of Los Angeles (POLA) were disappointing.  The number of loaded import containers was up a rather modest 5.9% over the year, after a hearty 21.3% jump in September.  No Christmas shipping rush here.  In addition, Los Angeles saw the number of loaded export containers decline by 3.2% over the year, the first negative number since April 1999.  The total number of containers moved during October at POLA was up by 4.9%, thanks to help from an 8.5% increase in empties.  No official numbers for Long Beach yet, but an early estimate points to a 1% increase in total container traffic.  (Jack Kyser)
 

QUICK STATS:

* BLS: US Consumer Price Index for 10/01: -0.3% (9/01: +0.4%)
* BLS: LA Area Consumer Price Index for 10/01: -0.3% (9/01: +0.2%)
* Census: US retail sales for 10/01: +7.1% (9/01: -2.2%)
* Census: US business sales for 9/01: -2.8% (8/01: +0.1%)
* Census: US business inventories for 9/01: -0.5% (8/01: -0.2%)
* Census: US housing starts for 9/01: +1.7% (8/01: -6.7%)
* Federal Reserve: US industrial production for 10/01: -1.1% (9/01: -1.0%)
* Federal Reserve: US industrial capacity utilization rate for 10/01: 74.8 (9/01: 75.7%)


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