The Economic Data Global Express (e-EDGE)
v.8 n.26 Released June 28, 2004
Produced by the Los
County Economic Development Corporation as a public service to the
GREENSPAN'S "GRADUALISM" TO PREVAIL -- BABY-STEPPING RATES UP
The Federal Reserve Open Market Committee
(FOMC) will meet on Tuesday and Wednesday to consider the state of the
U.S. economy and its monetary strategy. One scenario can be
quickly ruled out, i.e. keep interest rates where they have been since
June 2003. A hike in the Fed Funds Rate (FFR) this week should be
no surprise, as Chairman Greenspan has gone to extraordinary lengths to
signal a policy change. The issue is whether the FOMC will follow
a "gradualist" approach and raise the FFR by 25 basis points several
times this year or opt for a more aggressive 50 basis-point rise.
The last time the Fed engaged in monetary tightening was four years
ago, before the stock market (dot-com) bubble burst and before 9/11.
Some observers have argued that inflation is
once again rearing its ugly head. Oil prices recently were over
$40/bbl, commodity prices across the board are up, and the economy's
growth rate is robust. However, it must be noted that strong
gains in productivity have constrained cost increases and moderated the
rise in the CPI. Headline inflation, the overall CPI, has
increased by 3.1% from May 2003 to May 2004, while core inflation (ex
energy and food prices) has jumped only 1.7% in the same period.
With the focus on rising inflation, the battle lines at the FOMC are
drawn between most of the regional Fed presidents, a more "hawkish"
bunch and the majority of the Fed governors, a more "dovish"/moderate
At this time, monetary policy is in one of its
classic dilemmas, truly a catch-22 and no-win situation. If
inflation gathers traction during the 2nd half of '04, the gradualist
strategy will be seen as wrong headed and critics of the Fed will
chastise the FOMC for misreading the tea leaves. On the other
hand, adopting a more aggressive policy of monetary restraint runs the
risk of shortening the life of the current economic expansion and
damaging financial markets. To top off the difficulties, the
presidential election climate has intensified the spotlight on the
25% (1/4%) rise in FFR, a probability of 70%
50% (1/2%) rise in FFR, a probability of 20%
No Change, a probability of 10% (Ken Ackbarali)
MAY DURABLE GOODS PICTURE: MIXED
New orders for durable manufactured goods fell
by 0.7% in May after registering a decline of 0.8% in April.
However, these declines were relatively modest and followed a 4.4%
surge in March. Thus, orders are still on an upward trend.
Only two industry sectors received more orders in May. Primary
metals orders increased by 3.6% after a 4.3% plunge in February, while
orders for "All Other Durable Goods" rose by 0.7% over the month.
The largest order declines were registered by communications
equipment--down by 12.5% after an April surge of 21.1%--and motor
vehicles and parts, which fell by 4.0% over the month.
This year's upturn in manufacturing shows up
best in the year-to-date comparisons. New orders for all types of
durable goods through May have increased by 12.2% compared to the first
five months of 2003. On the upside were--surprise,
surprise--nondefense aircraft and parts, up by 26.4%, and primary
metals, up by 23.4% due mostly to rising prices. Orders for
computers and electronic parts have increased by a respectable
14.9%. Defense aircraft and parts was the only sector to register
lower new orders year-to-date, falling by 28.6%. However, defense
aircraft shipments were up by 22.3%, reflecting strong orders in
previous years. (Nancy D. Sidhu)
RESALE HOUSING MARKET VERY WARM FOR MAY
According to the California Associations of
Realtors (CAR), the states resale housing market rumbled upward during
May. Unit sales increased by 10.5% over the year, while the
median price advanced by 25.6% to $465,160. The median number of
days it took to sell a single family home was 24 days in May, compared
to 27 days a year-ago. However, there have been reports that
homes are starting to stay on the market a little longer than in recent
Around Southern California, the May numbers
were mixed. The median price of a resale home in Los Angeles
County advanced by 29.2% to $434,790, but unit sales declined by 10.8%
over the year. In Orange County, the median price shot up by
40.7% to $662,290, but unit sales dropped by 7.5% from May 2003.
In Ventura County, the median price rose by 34.5% to $614,850, while
unit sales dropped by 8.2%. The unit sales numbers in all three
counties reflect both a shortage of attractive inventory as well as
some resistance to asking prices.
The Riverside-San Bernardino area saw median
prices jump by 40.8% during May to $292,060, while unit sales zipped up
by 22.1%. In San Diego County, the median price increased by
38.3% to $565,030, while unit sales inched up by 1.4%.
In the San Francisco Bay area, resale prices
increased by 17.6% in May to $649,240, and unit sales moved ahead by a
healthy 17.6%. In the San Jose area, the median price increased
by 16.5% to $635,000, while unit sales roared ahead by 35.2%.
In the meantime, the great debate about a
housing bubble (is there is or is there aint one) continues. (Jack Kyser)
AIRPORT TRAFFIC FOR MAY (WITH A FEW LAST NUMBERS FROM APRIL)
We have been trying to get all the airport
traffic numbers for April, and now the May figures are rolling
in. No matter what month you are looking at, there is no
mistaking the fact that air traffic is coming back.
At Bob Hope Airport, April passenger traffic
was up by 6.3% over the year, the third month in a row of increases,
after a period of ups and downs during the second half of 2003 into
early 2004. At Long Beach Airport, April traffic was up by 10.9%
over the year.
Now for those May numbers. At Los
Angeles International, total passenger traffic during the month was up
by 15.9%, with a 27.0% increase in international activity (this makes
three months in a row of double digit gains in the latter).
Ontario International was up by 6.1% during May, with the international
passenger count ahead by 50.1%. An accompanying press release did
warn about long lines at security checks during the summer travel
Elsewhere in Southern California, May traffic
at John Wayne/Orange County Airport advanced by 8.6%, helped along by
some new service, while Palm Springs was up by 13.0%. However,
Long Beach recorded what for it was a wan 0.1% gain. But
remember, this facility is bumping up against its limit on flights, and
in the some- things-never-change department, the surrounding
communities are still nervous about more activity (a very pleasant
facility and Jet Blue are a very powerful combination.
The news air cargo during May was mixed.
LAX recorded a 5.1% increase in tonnage, but Ontario was down by
0.5%. International air freight tonnage at LAX was strong during
May. Export tons were up by 27.1% (the third month in a row of
double digit gains), while import activity was ahead by 12.0%.
Total international air freight tonnage was up by 18.0% over the
month. (Jack Kyser)
BUR data: http://www.burbankairport.com/pdf/STATS2004April%20for%20PDF.pdf
LAX data: http://www.lawa.org/statistics/tcom-0504.pdf
ONT data: http://www.lawa.org/ont/statistics/tcom-0504.pdf
PSP data: http://www.palmspringsairport.com/documents/May2004_recordpax_62204.prs.pdf
LGB data: http://www.longbeach.gov/airport/airport_statistics.asp
APRIL INTERNATIONAL TRADE VALUES
The April numeros on international trade
values contained more good news. At the Los Angeles Customs
District, export values were up by 7.2% over the year, while imports
increased by 12.6%. Total two-way trade value at Los Angeles was
up by 11.1% to $21.2 billion. The 4-month total was up by 14.1%
over the comparable 2003 period to $81.2 billion.
The San Francisco CD continued on the comeback
trail in April, with export values up by 21.5%, while import values
increased by 16.9%. The April two-way trade total was up by 18.7%
to $7.5 billion, while the 4-month total was up by 15.3% over the
comparable 2003 period to $29.2 billion.
At the San Diego CD, export values during
April increased by 9.0%, while export values moved ahead by
12.2%. The months total two-way trade value was up by 11.1% to
$3.1 billion, while the 4-month total of $12.1 billion was 8.9% above
the like 2003 period. (Jack Kyser)
DON'T FORGET TO SUPPORT OUR TROOPS OVERSEAS
Here are some links to show them our
Send them gift certificates: http://www.aafes.com/docs/homefront.htm
-- for purchases by soldiers or their families
Send them a USO Care Package: http://www.usocares.org/home.htm
Send grocery certificates for Guards & Reserves families: http://www.commissaries.com/certificheck/index.htm
Send them phone cards (for them to call home): http://www.operationuplink.org
Donate airline miles: http://www.heromiles.org
over 540 million miles (=22,600+ tickets) have been donated!) -- for
soldiers on emergency leave to get home for free or for family members
of wounded soldiers to visit them; a bill is pending in both houses of
the Congress to make this a permanent program...
Send them a note: http://anyservicemember.navy.mil
Send virtual thank-you cards: http://www.defendamerica.mil/nmam.html
QUICK STATS: * BEA: US Gross Domestic Product (final) for 1Q04: +3.9% (4Q03: +4.1%)
* BEA: US personal consumption expenditure (final) for 1Q04: +3.8% (4Q03: +3.2%)
* BEA: US nonresidential fixed investment (final) for 1Q04: +5.3% (4Q03: +10.9%)
* BEA: US implicit GDP deflator (final) for 1Q04: +2.9% (4Q03: +1.5%)
* BEA: US personal income for 5/04: +0.6% (4/04: +0.6%)
* BEA: US disposable personal income for 5/04: +0.6% (4/04: +0.6%)
* BEA: US personal consumption expenditure for 5/04: +1.0% (4/04: +0.2%)
* BEA: US personal savings rate for 5/04: 2.2% (4/04: 2.6%)
* Cal. Assn. of Realtors: California existing single-family detached
home sale for 5/04: -1.3% to 632,380 annual units (4/04: +8.6% to
* Cal. Assn. of Realtors: California existing condo sale for 5/04: -5.0% (4/04: +5.9%)
* Cal. Assn. of Realtors: California median single-family detached home
sale price for 5/04: +2.9% to $465,160 (4/04: +5.8% to $453,590)
* Cal. Assn. of Realtors: California median condo sale price for 5/04: +4.3% to $366,770 (4/04: +4.9% to $351,650)
* Cal. Assn. of Realtors: LA County existing home sale for 5/04: -4.2% (4/04: -0.6%)
* Cal. Assn. of Realtors: LA County median home sale price for 5/04: +2.7% to $434,790 (4/04: +8.1% to $423,480)
* Census: US new durable goods orders for 5/04: -1.6% (4/04: -2.6%)
* Census: US durable goods shipments for 5/04: -0.7% (4/04: -0.8%)
* Census: US durable goods inventories for 5/04: +0.4% (4/04: +0.6%)
* Census: US unfilled durable goods orders for 5/04: +0.4% (4/04: +0.7%)
* Census: US new home sales for 5/04: +14.8% to 1.369 million annual units (4/04: -7.9% to 1.192mil.a.u.)
* Conference Board: US Help-wanted Advertising Index for 5/04: 39 (4/04: 38)
* Natl. Assn. of Realtors: US existing home sales for 5/04: +2.6% to 6.80 million annual units (4/04: +2.3% to 6.63mil.a.u.)
* Univ. of Michigan: US Consumer Sentiment Survey for 6/04: 95.6 (5/04: 90.2)
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