> BLS DAILY REPORT, Monday, May 14, 2001:
>
Held in check by small gains in energy, prices received by producers of
finished goods climbed a modest 0.3 percent in April on a seasonally
adjusted basis, according to figures released May 11 by the Labor
Department's Bureau of Labor Statistics. Although energy prices edged up
only 0.1 percent in April, the rise marked a turnaround from March, when BLS
reported a drop of 2.6 percent in finished energy goods. Both private and
government analysts expect energy costs--particularly for gasoline-- to pick
up sharply over the summer. But for now, inflation remains subdued, with
the so called "core" rate of the producer price index rising 0.2 percent in
April. The core rate tracks changes in prices of finished goods excluding
the volatile food and energy categories (Daily Labor Report, page D-5).
> Retail sales surged 0.8 percent in April, bouncing back from flat sales in
> February and a 0.4 percent decline in sales during March, the Commerce
> Department reported May 11. Analysts, who had expected overall sales to
> improve only 0.2 percent to 0.3 percent, called the strong increase a
> "testimony to the resilence of the American consumer" but warned that
> there are still some signs that consumers are remaining cautious (Daily
> Labor Report, page D-1).
>
> Despite job cuts and constant reminders of a slowing economy, consumers
> have continued to spend with suprising resilence and may continue to do
> so, two reports suggested yesterday. Retail sales rose 0.8 percent in
> April, according to the Commerce Department, much more than forecast and
> the biggest gain in three months. Also, a closely watched gauge of
> consumer sentiment rose unexpectedly, ending a long slide that began last
> year. Some economists said the data indicated that the Federal Reserve
> had accomplished its short term goal of propping up consumer spending to
> carry the economy through its slowdown. But others said Americans had
> been acting on a blind faith, one that is slowly eroding in a manner that
> has tricked the economic barometers (The New York Times, Saturday May 12,
> page B1).
>
> The Federal Reserve has been cutting interest rates furiously for more
> than 4 months now. Results to date: not much. In fact, by some measures,
> the economy has gotten worse since Fed Chairman Alan Greenspan and his
> colleagues made their first emergency rate cut Jan. 3 and followed up with
> three more half-point reductions. With conditions still weak, the Fed is
> widely expected to cut rates again when it meets Tuesday--likely another
> half point, though better-than-expected consumer data Friday renewed talk
> of a quarter-point cut. So far, in the most aggressive rate cutting since
> Greenspan became chairman in 1987, the Fed has undone all the rate
> increases it made over the course of a year in 1999-2000 and sliced 2 full
> percentage points off its target for short-term rates, knocking the
> federal funds rate to 4.5%. What's happened since? In rare and ominous
> back-to-back declines in March and April, the labor market hemorrhaged
> 276,000 jobs. The economy has suffered 2 consecutive months of new job
> losses only 12 times since 1950, and eight times that has signaled the
> onset of a recession, according to First Union economist Mark Vitner (USA
> Today, page 1A).
>
> DUE OUT TOMORROW: Productivity and Costs: Manufacturing Industries,
> 1990-99
>
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