General: The continuous interest rate hikes by the Federal Reserve have had their desired effects. The economy seems to be cooling down, however, there are indications that it will be a controlled rather than a dramatic downturn.
GDP: currently on a course of + 3.6% in annual terms after an adjusted growth of 5.3% in the first quarter
Manufacturing Activity: Figures by the Institute for Supply Management (ISM) show a drop in the
manufacturing index to 53.8 in June, down from 54.4 in May and 57.3 in April. Still, readings above 50 point to an expansion of the economy.
Total Construction Spending: fell by 0.4% in May to a seasonally adjusted annual rate of $1.206 trillion (Wall Street had expected
construction spending to increase by 0.2% in May)
Private Sector Construction Spending: Fell by 0.6% in May to $939.39 billion
Government Construction Spending: increased 0.7% to $266.82 billion in May (+ 0.5% in April)
Housing Starts: grew 5% in May to a seasonally adjusted rate of 1.957 million, reversing a three month downward trend. Prices have declined, though. Median price in May was $235,000, down from $245,000 in April. Inventory of unsold homes eased a bit to a 5.5 month supply.
Consumer Prices: + 0.4% in May, 2006 compared to + 0.6% in April, core price index (excluding energy and food) + 0.3% in May
Disposable Personal Income (after taxes): + 0.3% in May compared to a revised 0.6% in April
Personal Savings: - 1.7% of disposable personal income
Base Lending Rate: 5.25% as of June 29, 2006,
Prime Rate: 8.25% as of June 29, 2006
Special Focus: The US car industry remains in the doldrums. The most recent figures for General Motors, Ford, and Daimler Chrysler compared to a year ago are particularly bad, because of huge incentive programs last summer.
GM: Sales in June dropped 26% compared to June 2005 (407,513 light vehicles, down from 550,829)
Ford: Sales down 6.9% (car sales actually went up 7.1% but light truck sales dropped 14%)
Chrysler: Sales in June were down 15% (its Mercedes brand was up by 14%)
Except for Nissan (- 19%) and Honda (steady), sales for foreign car brands were up in June. Toyota (+ 14%), VW (+ 5.5%) and Hyundai (+ 3.4%) all had sales gains.