Comerica Economic Weekly

Chaos in Iraq is driving oil prices up. U.S. oil production is surging, but crude oil markets are global and the U.S. is expected to remain a net energy importer for several years to come. In 2013, the U.S. satisfied 84 percent of its energy demand with domestic sources. The NYMEX price for WTI crude has elevated to near $107/barrel. Gasoline prices can be expected to increase as well, adding yet another glowing coal to warm up inflation indicators.

Other U.S. data for the week were consistent with our view of a moderate Q2 GDP rebound following a dismal Q1.

Retail sales increased by a less-than-expected 0.3 percent in May. Despite stronger auto sales, non-auto retail sales might be hitting a budget constraint after very high winter heating bills and a surge in consumer spending on healthcare related to the roll-out of the Affordable Care Act.

The Producer Price Index for Final Demand fell in May by 0.2 percent after strong gains through March and April. On a year-over-year basis, the index is up 2.0 percent. We expect energy to be a factor in the June and July indexes.

Business inventories were up 0.6 percent in April. The solid start to Q2 inventories suggests that most of the drag from the early 2014 inventory correction is behind us, supportive of Q2GDP.

Labor data continues to improve. Job openings increased in April and the hiring rate remained strong. Initial claims for unemployment insurance for the week ending June 17 ticked up by 4,000 to hit 317,000, still a good number.

Mortgage applications jumped in early June, good news for summer home sales.

For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly 06-13-14.

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