Deller's Two Cents: Slow week for economic news, but other than the gloom and fear of European governments (well, Greece, Italy, Portugal, Spain) not being able to pay their public debt, or more likely refinance at reasonable rates, positive economic signs. Until Europe can "fix" this problem it will be a cloud over the recovery.
Economic Week in Review: European drama still center stage
November 11, 2011
It was another trying week for the economy, as Europe's debt crisis and political upheaval reverberated through Italy and fostered more uncertainty at home. The European situation remains fragile-and probably will be for the foreseeable future-though signs of tentative progress in Italy and Greece eased investor concerns by week's end.
Domestic economic reports thus remained understudies to the major players involved in the European turmoil. Import/export numbers were better than expected while consumer spending was a mixed bag.
For the week ended November 11, the S&P 500 Index rose 1% to 1,264 (for a year-to-date total return of about 2.3%). The yield on the 10-year U.S. Treasury note fell 2 basis points to 2.04% (for a year-to-date drop of 126 basis points).
Trade gap narrows
The U.S. trade deficit declined 4% to $43.1 billion in September, less than forecast and below August's revised numbers. Exports surged to another record level, expanding 1.4% to $180.4 billion, fueled primarily by industrial supplies and consumer goods, while imports rose only 0.3%. The Commerce Department report showed that the average price of an imported barrel of crude oil fell for the fourth straight month to $101.02, which also helped narrow the trade gap for the month.
"This decline in the trade deficit could favor a small upward revision in the preliminary GDP growth estimate for the quarter," said Vanguard senior economist Roger Aliaga-Díaz.
Consumer credit jumps
Demand for consumer credit rose to $7.4 billion in September, more than forecast but not quite enough to offset August's steep (and revised) drop of $9.5 billion. Nonrevolving balances such as auto and student loans drove the gain, but revolving credit declined for the third straight month. Consumers still seem reluctant to assume credit card debt amid persistently high joblessness and tepid economic growth.
The economic week ahead
Tuesday brings reports on producer prices, retail sales, and business inventories, followed on Wednesday by information on consumer prices and industrial production. Figures for new residential construction will be released Thursday, and the week concludes Friday with leading indicators from the Conference Board.
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Steven C. Deller
Professor and Community Development Economist
Department of Agricultural and Applied Economics
515 Taylor Hall --- 427 Lorch Street
University of Wisconsin-Madison/Extension
Madison, WI 53706
608-263-6251
"I started out with nothing and I still have most of it left."
Seasick Steve
