The Economic Data Global Express (e-EDGE)
v.5 n.4 Released Jan. 22, 2001
Produced
by the Los Angeles County
Economic Development Corporation as a public service to the global
community.
HIGHER INFLATION IN YEAR 2000
The U.S. Consumer Price Index (CPI) rose 0.2%
in December. The decline in apparel prices (-0.4%) and transportation
costs (-0.1%) helped offset the increase in food prices (+0.5%) and education
& communication costs (+0.6%). There was also a sharp decline
in tobacco prices (-3.5%). For the year, the CPI rose 3.4%, compared
to 2.7% for 1999, 1.6% for 1998, and 1.7% for 1997. Energy prices
rose 14.2% in 2000 and 13.4% in 1999, after two years of declines in 1998
(-8.8%) and 1997 (-3.4%). The core CPI, which excludes volatile food
and energy prices, rose 2.8% in 2000 and 1.9% in 1999, which are somewhat
higher than the rates in 1998 (+2.3%) and 1997 (+1.5%). The low inflation
era that came with the Asian economic crisis is now over.
Locally, the LA Area CPI was unchanged in
December, following a 0.2% decline in November. Local CPIs are not
seasonally adjusted. Gasoline prices dropped 5.4% last month but
were 16.2% higher than a year ago. Utility electricity prices was
unchanged from a year ago due to the SCE rate freeze. Utility natural
gas service costs, however, jumped 9.4% last month and were 58.4% above
the December 1999 level. Excluding food and energy prices, LA Area
core CPI rose 2.7% in 2000.
Up north, the Bay Area CPI rose 0.4% since
October. Gasoline prices declined 4.2% last month but were 22.7%
above the year-ago level. Utility natural gas prices rose 13.6% last
month and was 60.3% higher than a year ago. Excluding food and energy
prices, the Bay Area core CPI rose 4.8% in 2000.
OPEC announced its plan to cut 1.5 million
barrels of production per day, effective Feb. 1. It does not want
the slowdown of oil demand and the U.S. economy to drive down the price
of crude oil (as the Asian economic crisis had done). Yet high energy
prices are one of the reasons why the economy is slowing down. We
have a chicken-and-the-egg problem here. Distillate inventories are
still low, and a prolonged or cold winter can cause another episode of
heating oil shortages in the Northeast. Natural gas prices are under
pressure on multiple fronts, including the cold weather and the demand
by electricity generating plants. Don't expect much relief in that
gas bill anytime soon. And of course, all consumers in California
are watching the electricity crisis carefully. Rate increases are
inevitable but may not ease the pain for PG&E and SCE.
If your labor or rental contracts contain
cost-of-living adjustment (COLA) clauses, you may wish to download the
appropriate data tables whose links are provided below. (George
Huang)
US PR: http://www.bls.gov/news.release/cpi.nr0.htm
LA PR: http://www.bls.gov/special.requests/sanfrancisco/ro9cpila.htm
Bay Area PR: http://www.bls.gov/special.requests/sanfrancisco/cpisanf.htm
LA CPI for All Urban Consumers (CPI-U) table: http://www.laedc.org/la-cpi-u.txt
LA CPI for Urban Wage Earners and Clerical Workers (CPI-W) table: http://www.laedc.org/la-cpi-w.txt
U.S. TRADE DEFICIT FALLS AS ECONOMIC PACE COOLS OFF
The U.S. trade deficit on goods and services declined
last November to $33.0 billion, $1.6 billion less than in October and $1.7
billion less than the September peak level. The decline of $1.3 billion
in imports in November is the first visible impact on the global economy
of U.S. economic slowing. The size of the December 2000 and early
2001 monthly deficits will tell us a lot about how much spillover effects
our trading partners will feel from America's less voracious appetite for
imports.
The new Bush Administration is starting its
term with an estimated $375 billion trade deficit for 2000. This
is set to get worse if our moderate growth scenario for 2001 is correct
and results in imports increasing more than exports in dollar terms.
Under a recession scenario, however, a more significant softening of import
growth is likely to dominate the picture and the trade deficit could actually
move down.
The new U.S. Trade Representative-designate,
Robert Zoellick, who is coming into the Bush Administration with full Cabinet
rank, takes over at a very interesting time. He is expected to pursue
more "aggressive" market-opening and trade liberalization policies and
make a strong case for Bush to regain fast-track negotiating authority
from Congress. If successful, these policies will help to boost U.S.
exports. Are we entering a new era in trade relations? It's
too early to tell, but let's hope so. (Ken
Ackbarali)
PR: http://www.census.gov/indicator/www/ustrade.html
HOUSING STARTS UP AGAIN IN DECEMBER
Housing starts edged up to 1.58 million dwelling
units in December from a revised 1.57 million units in November.
Single-family starts more than accounted for last month's increase, rising
to 1.31 million units, their highest level since March. Meanwhile,
multifamily starts declined from 331,000 units to 262,000 units.
Over the course of 2000, total housing starts peaked in the first quarter
at 1.73 million units, then dropped to 1.53 million units in the 3rd quarter
before picking up some during the past 3 months. Both single-family
and multifamily sectors participated in the earlier dropoff. However,
only single-family housing improved during the 4th quarter. Apartment
construction continued to decline, falling by 4%. [All figures in
this paragraph are seasonally adjusted annual rates.]
For all of 2000, total housing starts came
to 1.59 million units, off by 4.4% compared to 1999. [Figures in
this paragraph are actual counts, not seasonally adjusted.] Single-family
starts dropped by 5.4%, accounting for all of last year's decline in activity.
Multiple-family construction was almost even for the year, down by only
0.4%. Fixed mortgage rates have been falling since February and now
are in the 7% range. Thus, the falloff in housing activity many are
expecting in 2001 should be limited unless consumers get spooked.
(Nancy D. Sidhu)
PR: http://www.census.gov/indicator/www/housing.html
INDUSTRIAL PRODUCTION DOWN AGAIN IN DECEMBER
U.S. industrial production dropped by 0.6% in
December following 2 consecutive months with 0.3 percentage point declines.
Manufacturing was the problem area, plunging by 1.1% last month.
Mining activity edged up by 0.3%, while utility output surged by 6.5% (due
to cold weather in the eastern half of the country). The 4th quarter
was the first "down" quarter for total industrial production since early
1991, during the last recession. Declining production of autos, trucks
and automotive parts was the reason for last quarter's decline. The
Big Three automakers and their suppliers are cutting back production in
order to reduce bloated inventories. Excluding automotive, industrial
production was flat with the 3rd quarter.
Taking a longer view, total industrial output
in December rose by 3.1% compared to December 1999. However, this
figure hides much more than it reveals. Output of high tech products
(computers, communications equipment, semiconductors, etc.) soared by 75.5%
over the past 12 months, while production by the rest of U.S. industry
declined by 0.9%. The automotive products sector led the way
down, with December 8.6% below last year, followed by industrial materials,
down by 4.4%, and defense & space equipment, down by 2.1%. What
was up last year? U.S. production of home electronics rose by 9.2%,
business equipment excluding computers by 6.4%, and oil & gas drilling--lured
by higher energy prices--by 14.9%. (Nancy
D. Sidhu)
PR: http://www.federalreserve.gov/releases/G17/Current/
CONTAINER TRAFFIC FOR DECEMBER AND 2000
The December container numbers told a tale of
two ports. Los Angeles posted a 12.9% increase over the year in loaded
import containers, while the export container count was up by 11.7%.
Both increases were relatively restrained compared with activity earlier
in the year. The port of Long Beach recorded declines in both measures
for December with loaded import containers down 2.7% and the number of
loaded export containers off by 8.5%. After good gains during the
first half of 2000, Long Beach has posted declines in export activity in
3 of the last 4 months.
For the year, Los Angeles handled a total
of 4.88 million TEUs, an increase of 27.6%. The port of Long Beach
moved 4.60 million TEUs, up 4.4%. Los Angeles' gain was due to an
increase in the number of steamship lines serving that port.
The 2000 total for the San Pedro Bay ports was 9.48 million TEUs, up 15%
over the 1999 total. (Jack
Kyser)
CATCHING UP ON THE LOCAL HOTEL BIZ
Data for October and November have just been released
by PKF Consulting. In Los Angeles County, October occupancies ran
at 79.9%, compared with 76.5% the previous year. In November, the
occupancy rate ran at 74.4%, versus 70.0% a year earlier. The average
daily room rate continued to climb, up by 6.5% over the year in October
and by 4.9% in November. Year-to-date, Los Angeles County's hotel
occupancy rate averaged 77.7%, while the room rate averaged $122.51, up
6.7% over the comparable 1999 period. Four areas in the County
ran above the 80% mark, including Marina del Rey (84.7%), Santa Monica
(84.0%), the South Bay (also 84.0%), and Valencia (80.3%). And San
Fernando was a valley on the edge at a 79.5% occupancy rate.
Orange County's hotel occupancy rate came
in at 75.9% in October versus 68.1% a year earlier, while the November
reading was 67.1% compared with 64.0%. The average daily room rate
has also been moving ahead. For 11 months of 2000, the County's occupancy
rate has averaged 75.1%, while the room rate was up 5.5% to $110.50.
San Diego County's hotel industry also did
well in October and November, with occupancy rates of 76.2% and 70.0%,
respectively. Year-to-date, the occupancy rate averaged 77.9%, while
the average daily room rate was up 5.4% to $135.73. Three areas in
San Diego County averaged over 80% occupancy; Old Town (87.9%), North City/UTC
(81.2%) and Downtown (80.7%). PKF is also reporting on Ventura County's
hotel industry. The October occupancy rate was 69.9% and November
came in at 60.8%. For 11 months of 2000, the occupancy rate in the
County averaged 69.7%, while the room rate was $79.07, an 8.6% gain over
the like 1999 period. (Jack
Kyser)
QUICK STATS:
* BLS: US Consumer Price Index for 12/00: +0.2% (11/00: +0.2%)
* BLS: LA Area Consumer Price Index for 12/00: +0.0% (11/00: -0.2%)
* Census: US housing starts for 12/00: +0.3% to 1.575 million annual
units (11/00: +2.7% to 1.570mil. a.u.)
* Census/BEA: US exports for 11/00: -0.9% (10/00: -1.7%)
* Census/BEA: US imports for 11/00: -1.1% (10/00: -1.4%)
* Census/BEA: US trade deficit for 11/00: $32.99bil. (10/00: $33.55bil.)
* Conference Board: US index of leading economic indicators for 12/00:
-0.6% (11/00: -0.4%)
* Federal Reserve: US industrial production for 12/00: -0.6% (11/00:
-0.3%)
* Federal Reserve: US industrial capacity utilization rate for 12/00:
80.6% (11/00: 81.4%)
The Economic Data Global Express (e-EDGE) is a free service of the Los Angeles County Economic Development Corporation (LAEDC). Permission to quote any proprietary part of this release is granted given proper credit. Distribution is allowed provided that no modifications are made to the original content. Sponsors of this service do not necessarily endorse all opinions stated herein. For more information, please e-mail to research@laedc.org. To contact LAEDC, please call 213-622-4300.
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