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See this week's numbersFriday, April 15, 2016

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Retail Sales Disappoint

Any hopes economists had for a rebound in consumer shopping fell apart with the March retail sales report. Overall sales fell 0.3 percent, bringing the year-to-date tally down 0.2 percent. The main contributor to the surprise drop was a 2.1 percent decline in auto sales. This was the largest decrease in auto sales since February 2015. Clothing stores, restaurants and Internet shopping also posted negative sales. Nine categories posted sales gains, but the increases were not enough to counteract the weakness in the auto sector. The sectors with the highest sales included building and garden materials, personal care stores and gasoline stations. Since retail sales data does not adjust for price increases, the increase at gasoline stations was due primarily to the higher cost of fuel. Overall sales were up 1.7 percent from a year ago. Even as the labor market continues to improve and appear more stable, the consumer remains more cautious when spending money.

Other Key Indicators this Week:

Inflation – This week called into focus three key inflation indicators the Federal Reserve monitors: imports, wholesale and consumer prices. To summarize the data, inflation continues to move in the right direction, but in a slow and choppy manner. Import prices rose 0.2 percent, much less than economists were expecting. Year-over-year prices fell 6.2 percent. An overhang of both the strong dollar and low oil prices is holding down prices. Analysts speculate that prices could move higher in April to reflect the recent increase in the price of oil and the softening dollar.

Wholesale prices declined by 0.1 percent in March, the second consecutive month of falling prices. Prices are down 0.1 percent from a year ago. The bulk of the decline came from a 1.9 percent drop in margins at machinery and equipment wholesalers. The cost of services fell 0.2 percent, the first decline since October. Energy costs rose 1.8 percent, the steepest increase since May 2015.

Consumer prices rose half as much as expected, increasing 0.1 percent. The core year-over-year rate backed off a seven-year high to 2.2 percent. Gasoline prices rose 2.2 percent after a 13 percent decrease in February. Areas with the most significant declines included apparel, autos and airline prices.

Manufacturing – This sector not only continues to perform under par, but also remains difficult to measure fully. The Empire Index, which measures manufacturing activity in the New York area, surged by 9.6 percent in March. New orders and shipments both registered significant improvement. However, the manufacturing component of industrial production fell 0.3 percent, the most in more than a year. Including activity in mining and utilities, overall industrial production slipped 0.6 percent for the second month in a row. Overall capacity utilization at manufacturers fell to 75.1 percent, the weakest level in almost two years.

Between the Numbers:

Today is tax day, but relax – you still have three days to complete what Albert Einstein or his accountant referred to as "the hardest thing in the world to understand." April 15 was set as the official Tax Day in 1995 to give the IRS more time to process all the forms it created. The date of Tax Day changes if the 15th falls on a weekend or a holiday in the District of Columbia. So, due to a relatively obscure holiday known as Emancipation Day in the District of Columbia, Tax Day 2016 has been moved to Monday, April 18.

Sarina Freedland – Senior Investment Officer


Although this information has been obtained from sources we believe to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. This is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. All herein listed securities are subject to availability and change in price. Past performance is not indicative of future results. Changes in any assumption may have a material effect on projected results.

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