General: Triggered by a number of circumstances, including the loose lips of a former Federal Reserve Chairman during a paid speech to Asian businessmen, the US stock markets experienced a massive correction February 27, along with most other major stock exchanges in the world. Despite some weakness, (the revised growth rate for Q4 was significantly lower than the previous number) including the ongoing crisis in the housing and
automotive sectors and an unexpectedly steep drop in durable goods, the US economy remains in a solid, though not spectacular, shape. Some analysts claim that the US is going through the perfect “soft landing,” engineered by the current Chairman of the Federal Reserve.
GDP: + 2.2% in Q4 2006. This first revision is sharply lower than the initial 3.5% for Q4.
Consumer Prices: + 0.2% in January; core inflation (without food and energy pricing): + 0.3%. Both numbers came in a bit higher than expected. However, the price index for personal
consumption fell - 0.9% in January.
Producer Price Index: - 0.6% in January
Consumer Confidence: rose to an index of 112.5 in February, a 5 ½-year high
Industrial Production: - 0.5% in January; durable goods (big ticket items including airplanes) took a severe tumble of – 7.8%; capacity utilization fell to 81.2% (81.8% in December). Over the 12 months ending in January, industrial
production grew 2.4% from a year earlier.
Unemployment: 4.6% in January
Housing Starts: - 14.3% in January, the lowest level in almost 10 years. Building permits dropped 2.8% in January. Home sales increased by 3.0% in January but 3.55 million units remain unsold on the market. At the current rate of sales, this represents a 6.6 month inventory.
Trade Balance: - $61.18 billion in December 2006 (up 5.3% from November). For the year, the trade gap was a record - $763.59 billion (+ 6.5% over 2005), one third of it, or $252.55 billion, came from trade with
China.
Automotive Vehicle Production: 855,652 units in January, or 8.2% less than January 2006. The Chrysler division of Daimler announced another massive quarterly loss of $1.5 billion, plant closures, further reduction of the work force through attrition and incentives, and a target of producing 400,000 less vehicles per year in
North America.
Steel Production: 8.3 million mt in January (8.1 million mt in January 2006)