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Economic Week in Review: U.S. moving in the right direction

June 13, 2014

The light slate of U.S. economic data released this week was generally positive. Retail sales ticked up, and the buildup in business inventories is a plus for second-quarter gross domestic product.

As for the global economy, the World Bank lowered its growth projection for 2014 to 2.8% from 3.2%. After a "bumpy start," the bank expects global growth to accelerate; its outlook for 2015 and 2016 is broadly unchanged.

For the week ended June 13, 2014, the S&P 500 Index was down 0.7% to 1,936 (for a year-to-date total return—including price change plus dividends—of about 5.8%). The yield on the 10-year U.S. Treasury note was unchanged for the week at 2.60%, for a year-to-date decrease of 44 basis points).

Retail sales rose modestly

Retail sales for May are a case of "more than meets the eye." Although the 0.3% rise in sales was below expectations, it represents growth from April (which was revised from 0.1% to 0.5%). May's growth was fueled by auto sales, but there were modest declines in many other retail businesses—and a notable 1.4% decline in department-store sales after a 1.9% gain in April. Retail sales excluding autos continued their upward trend with a 0.1% gain. Year-over-year growth slowed to 4.3% from 4.6% in April.

"The upward revisions for April partly offset the disappointing sales in May," said Vanguard economic analyst Vytas Maciulis. "We remain optimistic about retail sales given accelerating job growth, improving credit conditions, and the wealth effect resulting from rising home prices and the strong stock market."

Retail sales

Businesses built inventories

The dollar amount of inventories held by manufacturers, wholesalers, and retailers at the end of April increased 0.6% from March, modestly above expectations and the largest increase since October. As businesses look forward to summer sales, growth ranged from 0.4% for manufacturers to 1.1% for wholesalers. April business sales increased 0.7%, a slightly faster pace than the inventory buildup. This kept the inventory-to-sales ratio, which represents how long it would take for inventories to clear shelves, unchanged at 1.29 months (based on revised March data).

Producer prices unexpectedly decreased

The Producer Price Index (PPI), a measure of wholesale prices and a leading indicator of consumer inflation, slipped 0.2% in May as the prices for both goods and services fell. A modest increase had been expected, after the 0.6% increase in April. Core PPI, which excludes the more volatile prices for food and energy, was flat in May compared with April. On a year-over-year basis, PPI increased 2.0%, a slightly more moderate rate of inflation compared with April's 2.1%.

The economic week ahead

Next week's economic reports include industrial production on Monday, the consumer price index and new residential construction on Tuesday, the release of Federal Open Market Committee minutes on Wednesday, and the Conference Board's leading indicators on Thursday.

Summary of major economic reports
Date Report Actual
expected value
10-year note yield S&P 500 Index
June 9       +2 bp +0.1%
June 10     +2 bp 0.0%
June 11       +1 bp –0.4%
June 12 Initial Jobless Claims (week ended June 7)
Source: Labor Department
317,000 310,000 –7 bp –0.7%
  Retail Sales (May)
Source: Commerce Department
+0.3% +0.6%    
  Business Inventories (April)
Source: Commerce Department
+0.6% +0.4%    
June 13 Producer Price Index (May)
Source: Labor Department
–0.2% +0.1% +2 bp +0.3%
  PPI, except food and energy (May)
Source: Labor Department
0.0% +0.1%    
      Weekly change –0.7%

bp=basis points. 100 basis points equal 1%. For example, if a bond's yield rises from 5.0% to 5.5%, the increase is 50 basis points.


  • The economic statistics presented in this report are subject to revision by the agencies that issue them. For more information on the reports mentioned in this article, read our Guide to major U.S. economic reports.
  • All investing is subject to risk, including the possible loss of the money you invest.
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