The Macroeconomic Report Tue sda y ( Ja n u a r y 1 2 ) According to

the U.S. I nt e r n a t ion a l Tr a de

Daniel J. Moser
report, the U.S. trade deficit
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increased 3.2 billion dollars to 36.4
(Week of January 11th, 2010)
billion.

M onda y ( Ja nu a r y 1 1 ) The Pe ople s

Ba nk of China moved to increase
interest rates in the People s Republic
with a significant unwinding of
repurchase agreements and
significant sale of one-year paper.
This is noted to be equivalent to a 50
basis point increase in the commercial
bank deposit reserve requirement,
which would remove approximately
300 billion Yuan in liquidity from the
market. Given the following actions, it
is clear that the Central Bank of China
is actively trying to curb bank lending,
thus cool off the very hot economy,
which has been growing at a record
pace by many different metrics. At
this point most market participants
are expecting the People s Bank to
raise rates to 2 percent in short order.
http://imarketnews.com/node/6948
a
Prior to the current recession, the
trade imbalance was typically a deficit
of 60-65 billion per month. Since the
onslaught of the recession the trade
imbalance has shrunk dramatically.
However, the shrinking trade deficit is
more likely a result of an overall
reduction in trade rather than a
shifting of economic relationships. As
a result the trade deficit is likely to
expand as the economy continues to
recover which we can see occurring

Chine se Aut o Sa le s increased to an

annual rate of 13.6 million units in
2009, an increase of 46.2% from 2008
levels. In 2009, Vehicle sales fell 21%
in the U.S. to an annual rate of 10.4
million units. China is now the largest
vehicle market in the world. Basic
logic suggests this trend should result
in an increase in petroleum products
demanded in China going forward.
http://www.ft.com/cms/s/0/ecb3b538 http://www.census.gov/foreign-
-fed8-11de-a677-00144feab49a.html trade/www/press.html#full

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Wednesday ( Ja n ua r y 13) The
Fe de r a l Re se r ve Be ige Book , a
report which aggregates economic
conditions across the 12 Federal
Reserve Districts, made the case that
while general economic activity
remains at a low level, conditions have
improved modestly further, and those
improvements are broader
geographically than in the last report.
Only 2 of the 12 districts reported
mixed conditions while the other 10
districts reported some increased
activity or improvement in conditions.
According to the report, holiday
spending was slightly greater than
2008, but still far below 2007 levels.
It was also noted that retail inventory
levels remain at very low levels in
nearly all districts. The employment
situation in most districts was said to
be soft with slight increases in hiring
activity in a few districts.
http://www.federalreserve.gov/FOMC/
Beigebook/2010/
According to the M ont hly Tr e a sur y
Statement, the Federal government
ran a budget deficit of 91.854 billion
dollars. This came after the Federal
government shelled out 103.555
billion more than they took in during
November 2009. The government
report highlighted that receipts fell
16.6% while outlays rose 18.2% from
2008 levels. All said and done, the
Federal government ran a budget
deficit of 1.417 trillion dollars during
2009. Is there any reason to expect
the fiscal house to be any different
during 2010?
http://www.fms.treas.gov/mts/index.
html
Thur sda y ( Ja n ua r y 1 3 ) The U.S.
I m por t Pr ice Index was unchanged
in December 2009. The U.S. Ex por t
Pr ice I nde x increased 0.6% in
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December. According to the Bureau
of Labor Statistics report, agricultural
export prices increased 2% on the
back of 4% price increases during
November. All told for 2009, the
agricultural export price index
increased 9.6% during 2009. The
gains in agricultural prices were led by
corn and soybean prices. Non-
agricultural export prices increased
0.5% in December, which comes after
rising 0.6% in November.
On an annual basis, the overall import
price index rose 8.6%, while the
overall export price index rose 3.4%
in 2009.
http://www.bls.gov/news.release/xim
pim.nr0.htm
Seasonally adjusted weekly Jobless
Claims rose 11,000, to 444,000. The
unadjusted initial jobless claims
increased by 156,165 to 801,086.
http://www.dol.gov/opa/media/press/
eta/ui/current.htm
Re t a il Sa le s in December 2009, were
$353 billion, a decrease of 0.3% from
the previous month, however, 5.4%
above December 2008 levels. Total
sales for the 12 months of 2009 were
down 6.2% from 2008. It was noted
that gasoline stations sales were up
33.6% from December 2008.
2
 2009. Over the last 12 months the
CPI Index rose 2.7% before any
seasonal adjustments. On a monthly
basis inflation, when measured by
CPI, appears to be under control
which will support the Fed in
maintaining low interest rates. On an
annual basis, inflation of 2.7% most
likely approaches the Fed s upper
tolerance threshold.

http://www.census.gov/retail/marts/w
ww/marts_current.html

U.S. Tot a l Busine ss Sa le s were up

2% in November 2009 when
compared to October levels.
Comparing to November 2008 levels,
total sales were down 0.4%.
November I nventories were up 0.4%
from October 2009, but down 11.1%
when compared to November 2008 http://www.bls.gov/news.release/cpi.t
levels. oc.htm

The total business inventories/sales The Em pir e St a t e M a nu fa ct ur in g

ratio was 1.28 in November 2009.
This compares to a level of 1.43 in
November 2008.
http://www.census.gov/mtis/www/mti
s_current.html
Fr ida y ( Ja n ua r y 1 5 ) The Consumer
Pr ice I nde x rose 0.1% in December
Survey indicates that the conditions
for the New York manufacturers
improved for the 6th consecutive
month in January. One of the more
notable points is that the employment
indexes advanced into positive
territory, which will hopefully support
better employment data in the coming
months. Additional positive data in
the report was that 44% of
respondents say they plan to increase
capital spending in the next 6-12
months while just 12% anticipate a
decline in capital spending. When the
same question had been asked in
October 2007, 42% of the
respondents said they expected to
increase capital spending, while 19%
said that capital spending would
decline. The most widely cited factors
behind steady or decreased capital

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investment were low capacity Ca pa cit y Utilization edged up to
utilization and low expected sales 72% in December, which was noted to
growth. The logical deduction is that be 8.9% below its long term historical
expected sales growth is starting to average.
become more favorable than it had
been previously.
http://www.newyorkfed.org/survey/e
mpire/empiresurvey_overview.html

http://www.federalreserve.gov/Releas
es/g17/Current/default.htm

Consum e r Se nt im e nt , the final

economic indicator for the week,
increased a very slight amount to
72.8, from December s final reading of
I ndust r ia l Pr oduct ion, in December 72.5. Overall consumer sentiment has
2009, increased 0.6%. The gain was been fairly range bound since
primarily the result of an increase of September, although it has been
5.9% in electric and gas utilities due rising since November.
to unseasonably cold weather.
Jan-10 Dec-09 Nov-09 Oct-09 Sep-09
Manufacturing production edged down
Sentiment 72.8 72.5 67.4 70.6 73.5
0.1%, while mining output rose 0.2%.
Current conditions 81 78 68.8 73.7 73.4
Total industrial production, accounting
Expectations 67.5 68.9 66.5 68.6 73.5
for revisions in October and
1-year inflation 2.8 2.5 2.7 2.9 2.2
November, rose at an annual rate of 5-year inflation 2.8 2.7 3 2.9 2.8
7% in the 4th quarter.
http://uk.reuters.com/article/idUKN15
14588320100115

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