General: The disappointing growth in Q1 seems to be confirming the general economic slowdown. Housing still is far behind last year's numbers, and the crisis in the subprime lending area has disqualified quite a few former potential home owners. But Federal Reserve Chairman Ben Bernanke expressed his opinion that the lending crisis will not affect the overall economic performance too dramatically. Inflationary data are acceptable, and the Federal Reserve left its benchmark interest rate at 5.25 percent when it last met at the beginning of May.
GDP: + 1.3% in Q1 compared to the previous quarter; + 2.1% compared to a year ago
Consumer Prices: + 0.4% in April. Core inflation (food - and energy prices not factored in) grew a moderate 0.2%. The annual rates as of April are 2.6% and 2.3% respectively.
Industrial Production: + 0.7% in April, + 1.9% compared to April 2006. Unit labor cost grew a mere 0.6% in Q1 compared to 2.6% in the previous quarter. The productivity rate in Q1 grew an unexpectedly strong 1.7% in the non-farm sector, and the Institute for Supply Management raised its index of manufacturing business to 54.7 in April -- a dramatic increase over its 50.9 mark in March. Experts see this as a big indication of growth than was recorded in the first quarter.
Unemployment: 4.5% in April; only 88,000 non-farm jobs were added in April -- well below the monthly average of 129,000 in the first three months of the year.
Automotive Production & Sales: 923,517 units were produced in April, slightly ahead of last year (+ 0.9%). Year-to-date at the end of April, 3,700,256 units were produced -- a decline of 7.2% to last year.
General Motors' sales declined 9.5% in April, compared to Ford's 13.0%. Even Toyota's sales dropped 4.3%. Daimler's Chrysler division eked out a gain of 1.6% in April sales. How bad is the situation at Chrysler? After disentangling their complicated arrangement, it seems that Daimler paid a private equity fund over $600 million to take over the majority of its Chrysler shares.
Housing: Housing starts surprised most experts and grew 2.5% in April. However, building permits dropped 8.9%, the deepest plunge in 10 years. Mortgage applications run 15% ahead of last year, but sales of existing homes fell 7.3% in April.
Trade Balance: - $63.89 billion in March, from - $57.89 billion in February. The highly politically charged trade deficit with China dropped to $17.25 billion (from $18.43 billion in February). China's overall trade surplus in April was $16.88 billion. It's not the same month, but it remains evident that the US is financing China's imports. US lawmakers are getting restless and there is again talk of trade action against China.