Key Economic Indicators – May 18, 2020

Due to recent events surrounding COVID-19, many businesses are operating on a limited capacity or have ceased operations completely. Advance estimates of retail and food services sales for April were down 16.4% from March but were down 21.6% from April 2019. Excluding motor vehicles & parts, retail sales were down 17.2% from the previous month, and were down 18.8% from a year ago. Year-to-date, retail sales were down 4.3% from the same period a year ago. Sales of clothing & clothing accessories stores were down 89.3% from a year ago, while electronics & appliance stores sales were down 64.8%. Furniture & home furnishing stores sales decreased 66.5% from April 2019, while food services & drinking places sales decreased 48.7%.
Total manufacturing and trade sales for March were down 5.2% from the previous month and were down 4.9% from a year ago. Total business inventories were down 0.2% from February and were down 0.3% from March 2019. The total business inventories/sales ratio was 1.45 in March, compared with 1.38 year ago.
Total Industrial production fell 11.2% in April, its largest drop in the 101-year history of the index, as the COVID-19 pandemic led many factories to slow or suspend operations. This drop in April followed a 4.5% decrease in March. The index was down 15.0% from April of 2019. Manufacturing output dropped 13.7%, its largest decline on record. Capacity utilization for the industrial sector dropped 8.3 percentage points in April to 64.9, a rate that is 14.9 percentage points below its long-run (1972–2019) average.
The federal budget had a deficit of $737 billion in April, compared with a deficit of $119.0 billion in March 2020, and a surplus of $160.3 billion in April 2019, according to U.S. Department of the Treasury. Receipts were $241.9 billion, 54.8% below April 2019 level. Outlays were $979.7 billion, up 161.1% from April 2019. The cumulative deficit for the first half of the fiscal year 2020 was $1,482.3 billion, compared with a deficit of $530.9 billion during the first half of the previous fiscal year. The Treasury Department stated reasons for the large deficit very clearly: “Outlays for April totaled $980 billion, an increase of $604 billion over April 2019, largely due to the release of assistance related to the COVID-19 outbreak including: Economic Impact Payments to individuals and families ($217 billion); Coronavirus Relief Fund payments to state, territorial, local and tribal governments ($142 billion); increases in Medicare and other Department of Health and Human Services programs ($146 billion); and increases in unemployment benefits and other Department of Labor programs ($46 billion). Receipts were $294 billion lower than April 2019 as certain taxes from individuals and corporations were deferred until July, and other provisions in recent legislation impacted receipts.”
U.S. import prices decreased 2.6% in April, according to the U.S. Bureau of Labor Statistics, after decreasing 2.4% in March. Both monthly declines were led by falling fuel prices. The decrease in import prices in April was largest monthly drop since the index declined 3.2 percent in January 2015. Prices for U.S. exports decreased 3.3% in April after a 1.7% decrease in March. Import prices decreased 6.8% over the 12-month period ended in April, while export prices decreased 7.0%. The decrease in import prices was the largest 12-month drop since the index declined 8.3% from December 2014 to December 2015.
The producer price index for final demand (headline index) decreased 1.3% in April, following a 0.2% decrease in the previous month, according to the U.S. Bureau of Labor Statistics. This decrease in April was the largest since the index began in December 2009. In April, over 80% of the decrease in the final demand index can be traced to a 3.3% drop in prices for final demand goods. The index for final demand services moved down 0.2%. The index for final demand less foods, energy, and trade decreased 0.9%, after a 0.2% decrease in March. This was the largest decline since the index was introduced in September 2013. The producer price index for final demand decreased 1.2% for the 12 months ended in April, the largest decline since falling 1.3% for the 12 months ended November 2015. The index for final demand less foods, energy, and trade decreased 0.3% for the 12-months ended in April, the first 12-month decrease.
The consumer price index (headline index) decreased 0.8% in April, following a 0.4% decrease in the previous month. The index for all items less food and energy (the core) index decreased 0.4%, following a 0.1% decrease in the previous month. This is the largest monthly decline in the history of the series, which dates to 1957. A 20.6% decline in the gasoline index was the largest contributor to the monthly decrease in the seasonally adjusted all items index, but the indexes for apparel, motor vehicle insurance, airline fares, and lodging away from home all fell sharply as well. In contrast, food indexes rose in April, with the index for food at home posting its largest monthly increase since February 1974. The consumer price index increased 0.3% for the 12-month period ending in April, the smallest 12-month increase since October 2015. The core index rose 1.4% over the last 12 months, its smallest increase since April 2011.
Real average hourly earnings for all employees increased 5.6% from March to April. This result stems from a 4.7% increase in average hourly earnings combined with a 0.8% decrease in the consumer price index.
The advance figure for initial claims for unemployment insurance decreased 195 thousand to 2,981 thousand in the week ending May 9. The 4-week moving average was 3,616.5 thousand, a decrease of 564 thousand from the previous week’s revised average. The advance number for seasonally adjusted insured unemployment (ongoing) during the week ending May 2 was 22,833 thousand, an increase of 456 thousand from the previous week’s revised level. The 4-week moving average was 19,760 thousand, an increase of 2,729.75 thousand from the previous week’s revised average. It was stated that: “The COVID-19 virus continues to impact the number of initial claims and insured unemployment. This report now includes information on claimants filing Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation claims.”
The number of total separations increased by 8.9 million to a series high of 14.5 million in March, according to the U.S. Bureau of Labor Statistics. Within separations, the quits rate fell to 1.8% and the layoffs and discharges rate increased to 7.5%. Job openings decreased by 813 thousand to 6.2 million on the last business day of March. Job openings fell in total private (-774 thousand), with the largest declines in accommodation and food services (258 thousand) and durable goods manufacturing (82 thousand). The number of job openings decreased in the South, Midwest, and West regions. Over the month, hires declined to 5.2 million. The changes in these measures reflect the effects of the coronavirus (COVID-19) pandemic and efforts to contain it. This release includes estimates of the number and rate of job openings, hires, and separations for the total non-farm sector, by industry, and by four geographic regions.
The unemployment rate for foreign-born persons in the United States was 3.1% in 2019, down from 3.5% in 2018, according to the U.S. Bureau of Labor Statistics. The jobless rate of native-born persons was 3.8% in 2019, down from 4.0% in 2018. In 2019, there were 28.4 million foreign-born persons in the U.S. labor force, comprising 17.4% of the total. Hispanics continued to account for nearly half of the foreign-born labor force in 2019, and Asians accounted for one-quarter. Foreign-born workers were more likely than native-born workers to be employed in service occupations; natural resources, construction, and maintenance occupations; and production, transportation, and material moving occupations. Foreign-born workers were less likely than native-born workers to be employed in management, professional, and related occupations and in sales and office occupations. The median usual weekly earnings of foreign-born full-time wage and salary workers were $800 in 2019, compared with $941 for their native-born counterparts.
The results of Freddie Mac’s Primary Mortgage Market Survey showed that mortgage rates generally hold steady. The 30-year fixed mortgage rate averaged 3.28% for the week ending May 14, up slightly from last week when it averaged 3.26%. A year-ago at this time, the 30-year fixed-rate averaged 4.07%. The 15-year fixed mortgage rate averaged 2.72%, down slightly from last week when it averaged 2.73%. A year-ago at this time, the 15-year fixed-rate averaged 3.53%.
Mortgage applications increased 0.3% from a week earlier, according to data from Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending May 8th.
The University of Michigan Index of Consumer Sentiment inched upward in early May to 73.7, after plunging 17.3 points in April. The Index was 100.0 in May of last year. The Current Economic Conditions Index increased to 83.0 in May, from 74.3 in April. The Index of Consumer Expectations decreased to 67.7 in May, from 70.1 in April.
The Philadelphia FED launched a weekly business outlook survey on COVID-19. The survey (189 firms) for the week ending on May 10^th indicated that more than 64% of all responding firms reported decreases of more than 5% in new orders or sales (up from 60% last week), while 8% reported increases of more than 5% (unchanged from the previous week). More than 81% of the firms reported seeking a Small Business Administration (SBA) Paycheck Protection Program (PPP) loan to address problems arising from the outbreak, and 23% sought out an SBA Economic Injury Disaster Loan. Of the 116 firms that reported seeking a PPP loan, nearly 90% reported having received a loan. Of the 102 firms that reported receiving a PPP loan, similar shares reported that receiving the PPP loan helped them pay bills and/or rent (68%) and prevented furloughs and/or layoffs (67%), and 31% indicated that it allowed for recalling furloughed and/or laid off workers. A larger share of manufacturers reported the loan prevented furloughs/layoffs relative to non-manufacturers, while a larger share of non-manufacturers reported that it allowed for recalling furloughed/laid off workers. More than 63% of the firms reported shifting to telecommuting/work from home in response to COVID-19 impacts, and 38% reported ceasing all hiring.
The May Empire State Manufacturing Survey indicated that business activity continued to deteriorate significantly in New York State. The general business conditions index decreased 29.7 points to negative 48.5 in May, from negative 78.2 in April. The prices paid index decreased 1.7 points to 4.1, while the prices received index increased a point to negative 7.4.
The Chicago Fed Survey of Business Conditions (CFSBC) Activity Index, a survey of business contacts located in the Seventh Federal Reserve District, decreased to negative 69 in April from negative 55 in March, suggesting that economic growth remained well below trend and slowed even further in April.
The Chicago Fed’s National Financial Conditions Index (NFCI) was negative 0.40 in the week ending May 8, down from negative 0.30. Risk indicators contributed negative 0.17, credit indicators contributed negative 0.15, and leverage indicators contributed negative 0.08 to the index in the latest week. The adjusted index (ANFCI), which isolates a component of financial conditions uncorrelated with economic conditions to provide an update on financial conditions relative to current economic conditions, edged down in the latest week to 0.24 from a revised 0.26. Risk indicators contributed negative 0.26, credit indicators contributed negative 0.27, leverage indicators made a neutral contribution, and the adjustments for prevailing macroeconomic conditions contributed 0.78 to the index in the latest week.
The Federal Reserve Bank continues to take measures to alleviate the negative effects of the virus. On May 13^th, the FED Chairman Jerome H. Powell states that among people who were working in February, almost 40 percent of those in households making less than $40,000 a year had lost a job in March. Chairman Powell inidcated that further stimulus is necessary and concluded his speech with the following paragraph: “At the Fed, we will continue to use our tools to their fullest until the crisis has passed, and the economic recovery is well under way. Recall that the Fed has lending powers, not spending powers. A loan from a Fed facility can provide a bridge across temporary interruptions to liquidity, and those loans will help many borrowers get through the current crisis. But the recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems. Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery. This trade-off is one for our elected representatives, who wield powers of taxation and spending.”
According to Federal Reserve Board’s Economic Well-Being of Households, 19% of all adults reported either losing a job or experiencing a reduction in work hours in March. 23% of adults said their income in March was lower than in February. Five percent said their income increased. More than 9 in 10 who lost a job or were told not to work expect to return to the same job, including 14% who were told the date to expect to return or who have already returned to work. “Education is a major determinant of where workers are physically able to do their jobs. Sixty-three percent of workers with a bachelor’s degree worked entirely from home in the last week of March. Sixty-seven percent of workers who never attended college and 60 percent who completed some college, or an associate degree worked entirely outside of their homes.”
As of May 15^th, there are over 4.477 million COVID-19 confirmed cases in the world, 303.389 thousand deaths, and 1,606.796 thousand recovered, according to Johns Hopkins University, Coronavirus Resource Center (access date and time: 5/15/2020, 11:00 EST). In the United States, there are 1.420 million confirmed cases, 85.974 thousand deaths, and 246.414 thousand recovered cases. The world is struggling to control the spread of the virus.

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