• Treasury Budget
• The unified budget deficit for December was $84 billion, close to the CBO's estimate of $83 billion. Through the first three months of fiscal 2009 the budget deficit was $485 billion, 350% larger than at the same point in fiscal 2008. Purchases of stock in banks as part of the TARP program have greatly added to the deficit this fiscal year.

• International Trade (FT900)
• The U.S. trade deficit substantially narrowed to $40.4 billion in November. The consensus had expected a much smaller narrowing to $51.5 billion. This marks the fourth straight month of declining gross exports and gross imports.

• Producer Price Index
• Producer prices for finished goods gave up ground for the fifth month in a row in December, falling by 1.9% in response to weakening demand. The decline in top-line producer prices continues to be largely driven by falling prices for energy products, which dropped by 9.3% on the month. When food and energy prices are excluded, core inflation remained positive at 0.2%. Although core prices for finished goods have not begun to fall, core prices among intermediate and crude products both fell sharply for the third month in a row.

• Import and Export Prices
• Import prices declined 4.2% in December because of a sharp drop in petroleum prices. The smaller than expected decline follows a downwardly revised 7% drop in November (previously -6.7%). Import prices have declined for five consecutive months as both the U.S. and global recessions intensified in the fourth quarter. With import prices falling, the Federal Open Market Committee will leave its target rate near historic lows for most of this year.

• Business Inventories (MTIS)
• Total business inventories declined 0.7% in November, undershooting expectations for a milder decline. Retail inventories were the only new data in this report, falling 1.7%. However, dismal sales continue to contribute to gains in the inventory-to- sales ratio, which increased to 1.41, a multiyear high.

• Job Openings and Labor Turnover Survey
• JOLTS data confirm the bleak labor market situation. In November, gross hiring fell sharply, to 3.5 million from 4.2 million in October. The number of job openings dropped as well, from 3 million to 2.8 million. However, separations remained virtually unchanged-4.3 million workers left their jobs for various reasons. The hire rate fell to 2.6%, compared with 3.4% in November 2007, while the separation rate at 3.2% was actually lower than a year ago (3.4%).

• Employment Situation
• As expected, 2008 ended on a bleak note for the labor market. Payroll employment declined by 524,000 jobs in December, slightly more than expected. Losses for November and October were much greater than the preliminary data had indicated as well; an additional 154,000 jobs were subtracted from the total in those months. As a result, 1.5 million jobs were lost on net during the fourth quarter. Over the course of 2008, payrolls shrank by 2.59 million jobs. Meanwhile, the unemployment rate, calculated from the household survey, rose to 7.2%, while the rates for the prior two months were revised higher-to 6.8% for November and 6.6% for October. The revision to previous months was due to new seasonal factors. U.S. unemployment last topped 7% in the early 1990s.

• Jobless Claims
• Initial jobless claims increased by 54,000 to 524,000 for the week ending January 10. This was more claims than expected, though still considerably less than December's high. Generally, it is difficult to infer the state of the labor market from claims readings around the holiday season. It will likely be several more weeks before claims are consistent with other labor market indicators. Overall, labor market trends have been pointing to persistent weakening.

• MBA Mortgage Applications Survey
• In the week ending January 9, the MBA indices showed mixed results. The composite market index increased 15.8% to 1,324.8. This was driven by an increase in the refinance index, which rose 25.6% this week to close at 7,414.1. In contrast, the purchase index fell 14.1% to 295.8, despite a decline in contract rates.

• Retail Sales (MARTS)
• Total retail sales continued to plunge in December, down 2.7% in total and 3.1% excluding autos, far worse than expected. Further, November declines were revised down. Total sales fell 2.1% (originally down 1.8%), and sales excluding autos fell 2.5% (originally down 1.6%). Declines in December were widespread, although they were led by gas stations. Building supply stores, clothing stores, department stores, and restaurants also saw sales plunge as consumers cut spending aggressively. Core sales fell 1.5% and were revised from a gain of 0.3% to a decline of 0.2% in November.

• Chain Store Sales
• Chain store sales tumbled 2.3% in the week ending January 10, more than reversing the prior week's gain as consumers remain very hesitant to spend. The year-ago decline expanded to 2.2%, the largest decline in decades. The ICSC noted fewer gift card redemptions and unfavorable weather as drags in the week.

• Oil and Gas Inventories
• Crude oil inventories increased by 1.2 million barrels during the week ending January 9, according to the Energy Information Administration, below expectations of a 2.2 million barrel build. Distillate inventories surged by 6.4 million barrels, dwarfing expectations of a 1.1 million barrel increase. Gasoline inventories rose by 2.1 million barrels, also surpassing expectations. Refinery operating capacity rose from 84.6% to 85.2%. Total domestic petroleum demand fell appreciably. This report points to lower oil prices.

• Weekly Natural Gas Storage Report
• Working gas in underground storage decreased by 94 billion cubic feet during the week ending January 9. The consensus estimate was for a decline of 106 billion cubic feet.

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