The Economic Data Global Express (e-EDGE)

v.6 n.26       Released July 1, 2002
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.

VAST OIL RESERVES UNDERSCORE OPEC CARTEL'S POWER

     A recent publication by British Petroleum (BP), entitled "BP Statistical Review of World Energy 2002", underscores the vast oil reserves of the OPEC cartel and clearly documents its dominance of the oil market.  OPEC controls nearly three-quarters of the world's oil reserves and its policies on production quotas and price targets have enormous impacts on oil-importing countries as well as the overall world economy.
     The top 5 OPEC producers are in the Middle East.  Saudi Arabia's oil reserves are estimated at 262 billion barrels;  Iraq's 110 billion;  United Arab Emirates 100 billion;  Kuwait 100 billion, and Iran 90 billion.  BP estimates that the reserves of these five countries will last from 67 to 100+ years, at current production levels.  Outside of the Middle East, Venezuela's reserves are the biggest, 80 billion barrels, estimated to last 64 years.
     The reserve levels of leading OPEC countries dwarf  those of Russia (50 billion barrels), the United States (30 billion), and Mexico (25 billion).  Reserves of Canada, Norway, and the United Kingdom range between 5 and 10 billion barrels.
     One of the risks facing the U.S. economy, and indeed the world economy, is a spike in oil prices, stemming from increased hostilities in the Middle East and/or a U.S. attack on Iraq.  This scenario would entail oil prices rising to $35/barrel or higher for an extended period and exact a huge toll on consumers and businesses.
     It is clear that OPEC's market power is a long-term fact of life.  As long as the United States, Japan, and Western Europe remain dependent on imported oil, their efforts to pacify and stabilize the Middle East will continue and may become more creative.  U.S. disengagement or a strategy of lessened intervention in Middle East affairs is not a viable option. (Ken Ackbarali)
 

DURABLE GOODS BETTER IN MAY, BUT STILL A LONG WAY TO GO

     New orders for manufactured durable goods (vehicles, machinery, computers, aircraft, metals, etc.)  rose by 0.6% in May compared to an increase of 0.4% in April.  This was the 5th monthly uptick in the past 6 months, a welcome improvement after two years of sluggish growth and decline.  However, progress in this sector has been slow.  May's orders were almost 9% above the September 2001 lows but still 21.5% below the peak month of June 2000.
     The biggest positive contributors to last month's performance were nondefense aircraft and parts, fabricated metal products, and computers and electronic products.  The motor vehicle and electrical equipment industries reported lower new business in May after orders had increased the previous month.  Orders for defense capital goods fell in both April and May.
     The durable goods report provides a window into orders and sales of business equipment, one of the key unknowns in the economic outlook for the rest of 2002.  Here the news is also moderately good.  Orders for nondefense capital goods rose in both April and May and were up almost 10% from October, their worst month.  On the other hand, there's still a long way to go as May's orders were still about 27% below the peak month, also June 2000.
     The last nugget to be gleaned from this report has to do with inventories, which were the primary force propelling the whole economy upward during the first quarter of 2002.   Here the news is "more of the same," as stocks of durable goods manufacturers fell by 0.6% in May.  This was the 16th consecutive month of decline.  The economy won't turn up strongly until durable goods producers begin to re-stock their shelves.   (Nancy D. Sidhu)
PR: http://www.census.gov/indicator/www/m3/index.htm
 

PERSONAL INCOME ROSE IN MAY; SPENDING WAS LACKLUSTER

     Aggregate personal income increased by 0.3% in May, in line with earlier upticks of 0.2% in April and 0.4% in March.  Last month's income figure was boosted by higher wage and salary payments, which showed no change in April.  Total personal consumer expenditures (PCE) declined slightly in May, down by 0.1%, as falling purchases of motor vehicles, clothing, and gasoline exceeded the increase in spending for services.  Another interesting item:  the household saving rate was 3.1% last month.  Consumers saved only 1% of their take-home pay in 2000 and 1.6% in 2001.  The saving rate has averaged 3.0% thus far in 2002, the highest since early 1999.
     Consumer spending growth has slowed noticeably since February, which suggests that PCE growth in the second quarter will come in lower than the first quarter.  Consumer spending has propped up the U.S. economy in recent quarters, however.  If consumers really are taking a breather, economic growth in the second quarter, when it reported at the end of July, will turn out to be lower--perhaps much lower--than the first quarter's 6.1% pace.   (Nancy D. Sidhu)
PR: http://www.bea.doc.gov/bea/newsrel/pinewsrelease.htm
 

MANUFACTURING CONTINUES TO EXPAND

     The U.S. manufacturing Purchasing Manager's Index (PMI) compiled by the Institute for Supply Management shows that the U.S. manufacturing sector has grown for five consecutive months.  The PMI for June was 56.2%, up from 55.7% in May.  All indicators except employment showed signs of improvement.  Employment should also follow suit in the coming months.  (George Huang)
PR: http://www.ism.ws/ISMReport/ROB072002.cfm
 

APRIL LOCAL TRADE VALUES TURNING

     The surge in container traffic at West Coast ports is finally starting to show up in the monthly trade value data.  In April, export values at the Los Angeles Customs District were down by 5.4% over the year, the first single digit loss since March, 2001.  The news was better on import values, with a 4.7% gain.  April total two-way trade value at Los Angeles was up 1.5% to $17.4 billion.  This was the first increase since March, 2001.  The 4 month total was $65.4 billion, down by 7.6% from the comparable 2001 period.
     The news was better at the San Diego district, with April export values up by 9.1% over the year, while imports moved ahead by 12.0%.  The total two-way trade value for the month was not quite $3.0 billion, an increase of 10.9%.  The 4 month total was almost $11.0 billion, up over the comparable 2001 period by 2.6%
     The April trade numbers for the San Francisco district were not pretty, but again some improvement can be seen.  Export values were down over the year by 25.3%, while imports declined by 13.3%.  Total trade value for the month was $6.7 billion, down by 19.1%.  The 4 month total was $25.4 billion, a decrease of 32.7%.  (Jack Kyser)
 

LOCAL RESALE HOUSING IN MAY STILL HOT

     The May report from the California Association of Realtors (CAR) pointed to a still red-hot resale housing market.  Unit sales in the state were up by 22.7% over the year, while the median price advanced 25.5% to $321,130.  The CAR's Unsold Inventory Index (the number of months needed to deplete the supply of available homes at the current sales rate) was 2.1 months, compared with 3.6 months a year ago.
     In Los Angeles County, unit sales were a comparatively modest 6.0% over the year, while the median price moved ahead by 18.1% to $274,830.  In Orange County, unit sales advanced by 15.8%, while the median price moved up by 17.1% to $412,000.   The Riverside-San Bernardino area saw unit sales increase by 8.0% over the year, while the median price increased by 9.2% to $171,820.  Unit sales in San Diego County jumped by 34.6%, and the median price was up a stout 26.3% to $370,310.  After several really strong month, unit sales in Ventura County in May moved ahead by 1.3%, while the median price surged by 25.5% to $364,040.
     Despite a struggling economy, resale housing activity in the greater Bay Area was extremely strong in May.  "San Francisco Bay" saw unit sales leap by 45.8%, while the median price increased by 13.6% to $540,460.   In San Jose, unit sales spiraled upward by 84.2%, while the median price increased by 8.5% to $578,000.  Not surprisingly, the "B" word has been used in conjunction with this market.  (Jack Kyser)
PR: http://www.car.org/index.php?id=MzA5OTc=
 

HOLIDAY NOTICE

     LAEDC offices will be closed this Thursday, July 4th, in observance of Independence Day.
 

2000 CENSUS DATA NOW AVAILABLE -- FOR FREE!

     LAEDC has compiled the 2000 Census data and turned them into two books for easy comparison across the different cities and communities in Southern California.  One book covers the whole five-county area (Los Angeles CMSA, 142 pages) and the second covers only LA County (74 pages).  These books are available free of charge.  You may see the list of download servers from  http://www.laedc.org/census2000.html
     We would like to thank Holland & Knight LLP, Larta, and Los Angeles Public Library (City of LA) for their generous support through the hosting of these files.
     There are no restrictions on redistribution of these books except that they must not be sold or be given in exchange for any type of compensation.  Because of the anticipated large volume of downloading, the downloading process may be slow.  If at first you don't succeed due to server overload, you can try again a few days later.
* * * College teachers, government agencies, and non-profit organizations: the 2000 Census data is a valuable tool in research or quantitative analyses.  If you want the data in formats that are easier for analysis, please fax your request to 213-622-7100 on your organization's official letterhead, attn. George.  Businesses and other private parties can purchase the data CD for US$50.  CDs with only the Excel format is available for just $25.
 

A FOOTNOTE ON THE CENSUS DATA

     In Table 1, "Hispanics" are not considered as a racial group by the Census Bureau.  To get the right population count, please do not add the Hispanics column when you add up all the other columns.  We will avoid this confusion by changing the "Hispanics" column from actual numbers to percentage of total sometime this week.
 

TRADE SHOWS LISTINGS

     LAEDC is now compiling a comprehensive listing of trade shows in Southern California.  Please send us such information.  Thank you so much.
     Our current listing includes fashion/apparel, textiles, shoes, and home furnishings & giftware.  It's available at http://www.laedc.org/trade_shows.html
 

QUICK STATS:

* BEA: US Gross Domestic Product for 1Q02 (final): +6.1% (4Q01: +1.7%)
* BEA: US implicit GDP deflator for 1Q02 (final): +1.3% (4Q01: -0.1%)
* BEA: US personal consumption expenditures for 1Q02 (final): +3.3% (4Q01: +6.1%)
* BEA: US personal income for 5/02: +0.3% (4/02: +0.2%)
* BEA: US disposable personal income for 5/02: +0.3% (4/02: +0.3%)
* BEA: US personal consumption expenditure for 5/02: -0.1% (4/02: +0.6%)
* BEA: US personal savings rate for 5/02: 3.1% (4/02: 2.8%)
* Cal Assn of Realtors: California single-family home sales for 5/02: -3.5% to 620,300 seasonally-adjusted annual units (4/02: +9.7% to 642,800 a.u.)
* Cal Assn of Realtors: California median single-family home sale price for 5/02: +1.3% to $321,130 (4/02: +3.6% to $317,000)
* Cal Assn of Realtors: LA County home sales for 5/02: -1.8% (4/02: +9.5%)
* Cal Assn of Realtors: LA County median home sale price for 5/02: +0.1% to $274,830 (4/02: +2.9% to $274,560)
* Census: US construction spending for 5/02: -0.7% (4/02: +0.4%)
* Census: US new durable goods orders for 5/02: +0.6% (4/02: +0.4%)
* Census: US durable goods shipments for 5/02: -0.0% (4/02: +3.4%)
* Census: US unfilled durable goods orders for 5/02: -0.6% (4/02: -0.8%)
* Census: US durable goods inventories for 5/02: -0.6% (4/02: -0.5%)
* Census: US new home sales for 5/02: +8.1% to 1,028,000 annual units (4/02: +3.9% to 951K a.u.)
* Conference Board: US Consumer Confidence Index for 6/02: 106.4 (5/02: 110.3)
* Conference Board: US Help-wanted Advertising Index for 6/02: 45 (5/02: 47)
* Inst. for Supply Mgmt.: US manufacturing Purchasing Manager's Index for 6/02: 56.2 (5/02: 55.7)
* Natl Assn of Realtors: US existing home sales for 5/02: -0.3% to 5.75 million annual units (4/02: +6.7% to 5.77mil.a.u.)
* USDA: US agricultural prices for 6/02: +1.0% (5/02: +2.1%)

The Economic Data Global Express (e-EDGE) is a free service of the Los Angeles County Economic Development Corporation (LAEDC). Permission to quote any proprietary part of this release is granted given proper credit. Distribution is allowed provided that no modifications are made to the original content. Sponsors of this service do not necessarily endorse all opinions stated herein. For more information, please e-mail to research@laedc.org. To contact LAEDC, please call 213-622-4300.

Subscribe to e-EDGE and receive current economic news and major developments.  Your e-mail address will not be disclosed to any outside party (including e-EDGE sponsors) under any circumstances.

To send us comments regarding e-EDGE, please e-mail to research@laedc.org.