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Utah State Revenue Summary - First and Second Months FY2008-09

• World Business Confidence
• Global business confidence remains very low and consistent with a global recession. U.S. businesses are the most pessimistic, followed closely by European and Japanese firms. Expectations regarding the outlook six months from now plunged last week to a new record low. Hiring intentions are also very soft. In one hopeful sign, equipment and software investment improved last week after falling sharply the week before. Pricing pressures have also abated and show few signs of this summer's record oil and other commodity prices. The global economy is contracting according to the survey results.

• FOMC Monetary Policy
• In an emergency move, the Federal Open Market Committee lowered the fed funds target rate from 2% to 1.5%, in an action coordinated with other central banks. The statement cites weakening growth and the intensifying turmoil in financial markets. The statement also says that inflation should slow. The decision was unanimous. The Fed also lowered the discount rate 50 basis points, to 1.75%. The emergency, coordinated rate cut is an indication of the depths of the current crisis.

• Consumer Credit (G19)
• Total consumer credit balances fell by $7.9 billion in August finishing at a total of $2.577 trillion. This was by far the largest decline in the level of consumer credit on record, although it was not the largest percentage decline. The drop was mainly due to the effect of extremely weak vehicle sales on nonrevolving credit balances.

• JOLTS
• Job Openings and Labor Turnover Survey data provide supporting evidence for weakness in the labor market, which began at the beginning of this year. At the end of August, the number of new hires stood at 4.07 million, while separations increased to 4.39 million. During the four months, separations exceed hires in three months. Meanwhile, the level of jobs openings fell to 3.3 million, the lowest pace since 2004.

• International Trade (FT900)
• The U.S. trade deficit narrowed to $59.1 billion in August. The consensus had expected a similar narrowing, to $59 billion.

• Import and Export Prices
• Import prices declined a larger than expected 3% in September. This is the second consecutive decline and its largest since the 2003. Import prices are expected to moderate further as oil and other commodity prices have fallen sharply. The moderation in import prices is positive news on the inflation front and will allow the Federal Open Market Committee to take interest rates closer to 1%.

• Wholesale Trade (MWTR)
• Wholesale inventories rose by 0.8% in August, surpassing consensus expectations, following an upwardly revised 1.5% gain in July. Sales unexpectedly declined by 1% in August compared with a downwardly revised -0.8% decline in July. The inventory-to-sales ratio rose by two-hundredths of a point from an upwardly revised 1.08 to 1.10 in August

• Jobless Claims
• Initial claims for unemployment insurance decreased 20,000 to 478,000 for the week ending October 4. This was below our expectations. Still- elevated and indicative of a weak labor market, claims are coming down from their peak as the effects of recent storms wane.

• Pending Home Sales
• The pending home sales index surged 7.4% in August to 93.4. The level of pending home sales in July was revised higher as well. This increase exceeded our expectations for a 2.5% decline. The index in August stood at its highest level in more than a year. The surge in the index was concentrated in the West. The increase in pending home sales offers evidence that buyers may be taking advantage of falling house prices.

• MBA Mortgage Applications Survey
• The MBA market composites recovered somewhat in the week ending October 3. The market index increased by 2.2%, being led this week by purchase applications as the purchase index increased by 3.2%. The refinance index increased by 0.9%. The demand side of the market nevertheless remains weak, as credit tightening is scaring away most borrowers other than those who can amply meet Fannie and Freddie lending requirements.

• Chain Store Sales
• Chain store sales rose 1.0% in September, at the high end of the ICSC projection but well below numbers circulating Wednesday. Gasoline prices are supporting growth, lifting sales at warehouse clubs. Discounters and other value-oriented retailers outperformed as financially pressed consumers are focusing on necessities and lower-priced goods.

• Oil and Gas Inventories
• Crude oil inventories soared by 8.1 million barrels for the week ending October 3, according to the Energy Information Administration. Gasoline inventories rose sharply by 7.2 million barrels. Distillate supplies fell by 0.5 million barrels. Refinery operating capacity improved to 80.9% from 72.3%. Total domestic petroleum demand fell for the fifth consecutive week. This report is bearish.

• Natural Gas Storage Report
• Working gas in underground storage increased by 88 billion cubic feet during the week ending October 3, slightly above consensus expectations of an 86 bcf build in stocks.