Data was choppy this week. The Conference Board’s Leading Economic Index for the U.S. declined by 0.1 percent in April, marking the first drop in seven months. Industrial production for April increased by 1.1 percent after declining by 0.6 percent in March. Utility output rebounded by 4.5 percent in April after stalling out in December and January due to mild winter weather. Manufacturing output gained 0.6 percent. Motor vehicle assemblies were up 6.0 percent for the month. Retail sales for April gained just 0.1 percent. Price data in April showed the drag of falling oil prices. The consumer price index was unchanged for the month as gasoline prices fell by 2.6 percent after seasonal adjustment. Upstream producer prices were also cool as the producer price index for finished goods fell by 0.2 percent. Initial claims for unemployment insurance were unchanged for the week ending May 12. Downside risk factors for the U.S. economy have increased in recent weeks. The re-emergence of political drama in Greece, and confirmations of a broad recession across the southern tier of Europe, are adding to financial market jitters. Asia still shows growth, but cooling growth. Within the U.S., the fiscal cliff looms for early 2013. A new risk factor is emerging in our largest state economy, California. Recent California state tax revenue shortfalls, now totaling some $16 billion, will require additional fiscal tightening at the state level. This will compound the local effect from expected federal fiscal tightening.
Click here for the complete Comerica Economic Weekly for May 18, 2012: CMAEconWeekly051812.