The Economic Data Global Express (e-EDGE)

v.6 n.13       Released April 1, 2002
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

NEVER COUNT U.S. CONSUMERS OUT:  I

     On Friday the U.S. Bureau of Economic Analysis released its income and spending report, and the news was very good all around.  Personal Income rose by 0.6% over the month in February following revised monthly increases of 0.5% in January and 0.3% in December 2001.  Last month's gain was the best since December 2000, before the recession began.  Even better, Personal Income increased across all industry groups except manufacturing--which had the smallest decline since July 2001--and across all types of income.  Disposable Personal Income--income after personal income taxes and Social Security contributions--increased by 0.7% in February following a whopping 1.8% surge in January (caused by changes in the tax law plus inflation adjustments to Social Security payments, etc.).  Thus, it will not come as a surprise to learn that household consumer spending increased by 0.6% in February after a 0.5% rise in January.  Finally, the household saving rate has increased for the past four months, from 0.1% in October (when consumers were buying all the light vehicles in sight) to 0.6% in December, 1.9% in January and 2.0% in February.  Need I say more?
     Well, yes.  It looks like U.S. economic growth spurted in the first quarter (you may think the quarter is over, but economists won't accept that until April 26th when the government's initial GDP figures are released).  The economy's primary locomotive was a push by wholesalers and retailers to replenish inventories drawn down in 2001.  Such stock rebuilding usually provides the initial thrust to an economic recovery.  However, the recovery's second stage needs an additional source of fuel.  In this regard, it is especially nice to see the healthy growth of personal income in January and February, even though labor markets were sluggish.  Higher incomes will give households the wherewithal to keep spending, which in turn will be needed until businesses decide to invest more in new plant and equipment.  (Nancy D. Sidhu)
GDP PR: http://www.bea.doc.gov/bea/newsrel/gdp401f.htm
Personal income PR: http://www.bea.doc.gov/bea/newsrel/pi0202.htm
 

NEVER COUNT U.S. CONSUMERS OUT:  II

     Consumer confidence in strengthened markedly in March.  The Conference Board's Consumer Confidence Index (CCI) soared by 16% last month from February.  The University of Michigan's Consumer Sentiment Index (CSI) was much less exuberant, increasing by 5.5% in March from the previous month.  Even more interesting was that consumers' assessments of current economic conditions in March, which have ranged from negative to so-so in recent months, improved about as much as their expectations for the future, which have been rising for several months.  And both indexes underscore that consumer confidence has just about returned to pre-September 11 levels.  While consumer sentiment is only about halfway back to its previous peaks in early 2000, consumers are becoming increasingly optimistic, a hopeful sign for the U.S. economy and the rest of the world as well.   (Nancy D. Sidhu)
CCI PR: http://www.conference-board.org/search/dpress.cfm?pressid=4698
 

MANUFACTURING CONTINUED TO EXPAND IN MARCH

     After 18 consecutive months of contraction, the U.S. manufacturing activity expanded in February and March.  The Purchasing Managers' Index stayed above the 50% mark in March at 55.6%, up from February's 54.7%.  (An index value above 50% indicates expansion or an increase in activity.)  The index for new orders rose to 65.3%, and the backlog of orders rose to 62.5%.  The production index slid a bit from 61.2% in February to 57.8% in March.  Manufacturers don't want to boost production too much, since the memory of excessive inventories is still fresh.  Supplier deliveries were getting slower, an indication that demand is rising and suitable inventories are getting more scarce.  Inventories were still being liquidated.  Also significant was the rise of the price index to 51.9% after contracting for a year.
     The recovery in demand and the need for new production are allowing some suppliers to regain a bit of their pricing power, which is crucial for their profitability.  Employment continued to contract, albeit at a slower pace.  Employment recovery generally lags a production recovery anyway, because firms are reluctant to add more workers until they feel confident about future sales.  New export orders and imports were both in the positive territory.  It seems February's good reading was no statistical aberration.  It was about time.  Continued weakness in the manufacturing sector would only encourage further protectionist tendencies.  Interestingly, steel is the only commodity reported to be in short supply.  Global disputes over steel tariffs will be a major test of WTO's arbitration power.  (George Huang)
PR: http://www.ism.ws/ISMReport/ROB042002.cfm
 

LONG BEACH CONTAINER NUMBERS STRONG IN FEBRUARY

     The port of Long Beach reported on their February container activity, and it was good news.  Loaded import containers were up by 30.4% over the year, while loaded import containers moved ahead by 10.3%.  For the combined ports of Long Beach and Los Angeles, total containers handled in February were up over the year by 24.3% to 797,991.  This was the first double digit increase since November of 2000.  (Jack Kyser)
 

JANUARY TRADE VALUES STILL DISAPPOINTING

     The U.S. Department of Commerce report on trade values for January 2002 continued the string of disappointing numbers.  At the Los Angeles Customs District, export values were down by 24.8% over the year, while imports slipped by 12.0%.  The District's January total of $$15.75 billion was down over the year by 16.5%.  The January numbers for the San Francisco District were even more lackluster, with export values off by 42.3% and imports down by 42.4%.  Total January value fell by 42.3% to $5.78 billion.
     However, the San Diego District offered some redemption, with export values up by 3.5% over the year, while imports increased by 3.9%.  Total value for the month was up by 3.7% to $2.67 billion, the first positive month since May 2001.  (Jack Kyser)
 

QUICK STATS:

* BEA: US Gross Domestic Product (final estimate) for 4Q01: +1.7% (3Q01: -1.3%)
* BEA: US implicit GDP deflator for 4Q01: -0.1% (3Q01: +2.3%)
* BEA: US personal consumption expenditures for 4Q01: +6.1% (3Q01: +1.0%)
* BEA: US personal income for 2/02: +0.6% (1/02: +0.5%)
* BEA: US disposable personal income for 2/02: +0.7% (1/02: +1.8%)
* BEA: US personal consumption expenditure for 2/02: +0.6% (1/02: +0.5%)
* BEA: US personal savings rate for 2/02: 2.0% (1/02: 1.9%)
* Census: US construction spending for 2/02: +1.1% (1/02: +0.8%)
* Census: US new durable goods orders for 2/02: +1.5% (1/02: +1.3%)
* Census: US durable goods shipments for 2/02: -3.2% (1/02: +1.8%)
* Census: US unfilled durable goods orders for 2/02: +0.3% (1/02: -1.3%)
* Census: US durable goods inventories for 2/02: -0.5% (1/02: -0.9%)
* Census: US new home sales for 2/02: +5.3% to 875,000 annual units (1/02: -15.8% to 831K a.u.)
* Conference Board: US Consumer Confidence Index for 3/02: 110.2 (2/02: 95.0)
* Conference Board: US Help-wanted Advertising Index for 2/02: 51 (1/02: 47)
* Inst. for Supply Mgmt.: US manufacturing Purchasing Managers' Index for 3/02: 55.6% (2/02: 54.7%)
* Univ. of Michigan: US Consumer Sentiment Survey for 3/02: 95.7 (2/02: 90.7)
* USDA: US agricultural prices for 3/02: +7.1% (2/02: +4.2%)

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