Your Monthly Update in U.S. Economic Trends
May / June 2007

Growth in Jobs Falls 50 Percent

According to the Labor Department, unemployment rose to 4.5% in April. The nation’s job growth dropped by 50% in April, with only 88,000 jobs added compared to 177,000 added in March. This is the smallest gain in two years. A 0.4% drop in the average number of hours worked and a wage gain decrease of 0.2% will likely cut into consumer spending over the next few months, according to economists. – May 5, 2007

Gas Prices Hit Record High

Self-serve regular gas hit an all-time record high at $3.07 per gallon, according to a Lundberg survey, an independent market research company, and is 12 cents higher than a year ago. The publisher of the Lundberg survey reported that after inflation was factored in, gas prices are not too far off from the all-time high of $1.35 reached in March 1981, equal to $3.13 a gallon in April 2007. Prices at the pump were scheduled to decrease; however, accidents at the refineries caused some to shut down. At the same time, other refineries began scheduled maintenance, causing a decrease in oil supply. This caused an increase in the nation’s gas prices. In addition, U.S. drivers are gearing up for summer travel, increasing the demand for fuel. – May 7, 2007

Manufacturing Sector Surges in April

Prices for fuel, metals and corn-based products increased as the nation’s manufacturing sector index registered at 54.7 in April, up from 50.9 in March, according to the Institute for Supply Management (ISM). This was the highest reading in 11 months. A reading above 50 indicates growth for the sector. The growth in the manufacturing sector was driven by new orders, production and employment. – May 1, 2007

Consumer Confidence Crumbled in April

The consumer confidence index for April fell to its lowest level since August 2006, when it hit at 100.2. According to the Conference Board, the index fell to 104.0 in April, down from 108.2 in March. As gasoline prices continue to rise, many consumers are starting to spend less. Consumer spending accounts for two-thirds of all U.S. economic activity. The present situation index, which measures how shoppers feel about economic conditions, fell to 131.3 in April, down from 138.5 in March. The expectations index, which measures consumers’ outlook on economic conditions in the next six months, also declined to 85.8 in April, down from 87.9 in March. – April 24, 2007

Trade Deficit Widens More Than Forecasted

According to the Commerce Department, the trade deficit rose 10.4% to $63.9 billion. The price of foreign goods increased for the fourth straight month due to higher fuel prices, reported the U.S. Department of Labor. Economists speculate that the government will revise the economic growth to 0.9%, down from the 1.3% economists originally reported in the first quarter. – May 10, 2007

Wage Growth and Productivity Slow, Keeping Inflation in Check

Productivity and wage growth in the U.S. rose at an annual rate of 1.7% in the first quarter of 2007, down from 2.1% in the last quarter of 2006, according to the U.S. Department of Labor. The slowing economy is helping keep inflation down, slowing further interest rate increases. – May 3, 2007

Services Growth Jumps, Productivity Solid

The non-manufacturing index rose to 56.0 in April, up from 52.4 in March, according to the ISM. The service sector represents 80% of U.S. economic activity, covering everything from restaurants and hotels to banks and airlines. – May 3, 2007

Fed’s “Hands-Off” Interest Rate Policy Could Last All Year

Short-term interest rates are expected to remain unchanged for 2007 at 5.25%, according to a survey by USA Today. Short-term interest rates have remained unchanged for seven consecutive meetings by the federal government after 17 raises between 2004 and 2006. The last time interest rates remained unchanged for an entire year was in 1993. – May 10, 2007

Import Prices Rise More Than Expected

The Labor Department reported the price of U.S. imports rose 1.3% in April, following March’s increase of 1.5%. Imported petroleum increased to 6.5% in April, 1.6% less than March’s increase; however, imported petroleum prices have fallen 1.8% over the past year. In April, prices for non-petroleum products increased by 0.2%, down 0.1% from March, according to the report. – May 10, 2007

U.S. Retailers’ April Sales Dip on Earlier Easter

 The coldest April temperatures in a decade and an earlier Easter than in 2006 caused a sales decline. Gift purchases for Easter that normally start in April began in March and caused U.S. retailers to have the biggest sales decline on record, according to economists. The world’s largest retailer, Wal-Mart, reported their sales decreased 3.5% from March. The International Council of Shopping Center’s (ICSC) reported that combined sales from 51 U.S. retail chains were down 2.3%. This ICSC report shows the largest decline since the 1970s. – May 10, 2007

Economic Trends is a publication of Express Services, Inc., Oklahoma City, Oklahoma. © 2006.