US ECONOMY & POLITICS

High Gasoline Prices Take Up Big Share of March Retail Spending Increase – Wall Street Journal, 4/14/2022

• High gasoline prices accounted for a big share of a March increase in U.S. retail sales as inflation took up a larger part of consumer spending.
• Consumers increased retail and restaurant spending by 0.5% in March compared with the previous month, the Commerce Department said Thursday, down from the revised monthly increase of 0.8% in February.
• Sales at gas stations accounted for much of the increase with an 8.9% jump over the previous month, reflecting sharply higher fuel prices related to the Ukraine war. Excluding gasoline sales, retail sales fell by 0.3%.
• Declines in online shopping and auto sales held back spending totals.
• Overall retail sales would have been even higher if not for a 1.9% monthly auto sales decline.
• Auto companies struggled with a vehicle shortage during the pandemic due to supply disruptions, pushing prices up sharply.
• Sales also declined sharply at online retailers, a 6.4% drop over February.
• Retail sales aren’t adjusted for inflation; on an adjusted basis, retail sales fell by 0.7% last month, according to the Federal Reserve Bank of St. Louis and economist estimates.

Unemployment Claims Rose Slightly Last Week – Wall Street Journal, 4/14/2022

• New applications for U.S. unemployment benefits rose last week, but remained near historically low levels as employers held on to workers in a tight labor market.
• Initial jobless claims, a proxy for layoffs, rose to 185,000 during the week that ended on April 9, compared with a revised 167,000 the week prior, the Labor Department said Thursday.
• New claims had fallen to the lowest point since 1968 in early April.
• Continuing claims, a proxy for the total number of people receiving payments from state unemployment programs, decreased slightly to 1.48 million for the week ended April 2 from the previous week’s total.

U.S. Consumer Sentiment Unexpectedly Rises to Three-Month High – Bloomberg, 4/14/2022

• U.S. consumer sentiment unexpectedly rose to a three-month high in early April as optimism about job growth and wage expectations more than outweighed decades-high inflation.
• The University of Michigan’s sentiment index increased to 65.7 from 59.4 in March, data released Thursday showed.
• The figure exceeded all estimates in a Bloomberg survey of economists, which had a median forecast of 59.
• The survey’s measure of future expectations climbed to 64.1, the highest since January.
• The monthly increase of almost 10 points was the largest since 2006. A gauge of current conditions increased to 68.1.
• Consumers still expect inflation to rise 5.4% over the next year, and their expectations for price increases in the next five to 10 years remained at 3%. That’s a good sign that they don’t see inflation worsening much more.

U.S. business inventories beat expectations in February – Reuters, 4/14/2022

• U.S. business inventories increased more than expected in February amid a moderation in sales, data showed on Thursday.
• Business inventories rose 1.5% after climbing 1.3% in January, the Commerce Department said. Economists polled by Reuters had forecast inventories rising 1.3%.
• Inventories jumped 12.4% on a year-on-year basis in February.
• Retail inventories increased 1.2% in February, instead of 1.1% as estimated in an advance report published last month.
• That followed a 2.0% rise in January.
• Motor vehicle inventories rose 0.9% as estimated last month. They increased 2.7% in January.
• Retail inventories excluding autos, which go into the calculation of GDP, climbed 1.4%, rather than 1.2% as estimated last month.
• Wholesale inventories increased 2.5% in February. Stocks at manufacturers gained 0.6%.
• Business sales rose 1.0% in February after rebounding 4.1% in January.
• At February’s sales pace, it would take 1.26 months for businesses to clear shelves, down from 1.25 months in January.

U.S. import prices accelerate in March on petroleum – Reuters, 4/14/2022

• U.S. import prices accelerated by the most in 11 years in March as Russia’s war against Ukraine boosted petroleum prices, another sign that high inflation could persist for a while.
• Import prices jumped 2.6% last month, the largest rise since April 2011, after increasing 1.6% in February, the Labor Department said on Thursday. Economists polled by Reuters had forecast import prices, which exclude tariffs, increasing 2.3%.
• In the 12 months through March, prices raced 12.5%, the largest gain since September 2011, after advancing 11.3% in February.
• Imported fuel prices jumped 14.6% last month after rising 10.0% in February.
• Petroleum prices shot up 16.1%, while the cost of imported food edged up 0.1%.
• Excluding fuel and food, import prices accelerated 1.2%.
• These so-called core import prices increased 0.7% in February. They jumped 7.1% on a year-on-year basis in March.
• The report also showed export prices soared 4.5% in March, the largest since the monthly series started in January 1989, after advancing 3.0% in February.
• Prices for agricultural exports surged 4.7%.
• Nonagricultural export prices vaulted 4.5%.
• Export prices jumped 18.8% year-on-year in March.
• That was the largest increase on record and followed a 16.5% increase in February.

Fed’s Waller Endorses Half-Point Rate Increase This Spring – Wall Street Journal, 4/14/2022

• A Federal Reserve official endorsed raising interest rates by a half percentage point at the central bank’s policy meeting next month as part of a strategy to raise rates to a level designed to ease economic growth by the end of this year.
• Since last month’s meeting, Mr. Waller has said employment, inflation and other economic data support the case for larger rate rises this spring and summer. “I prefer a front-loading approach, so a 50-basis-point hike in May would be consistent with that, and possibly more in June and July,” he said.
• Mr. Waller said that Tuesday’s inflation report could represent the peak for 12-month inflation readings, but he said it was likely the Fed would need to continue raising rates this year above an estimated neutral setting that neither spurs nor slows economic growth.

Mexican Truck Exports Plunge 80% in Just Days as U.S. Border Blockade Persists – Bloomberg, 4/14/2022

• Mexican semi-truck exports to the U.S. have slumped 80% in a matter of days as a border blockade to protest Texas Governor Greg Abbott’s stepped-up vehicle inspections drags on.
• U.S.-bound cargoes are backed up for almost 9 miles (14 kilometers) at some border crossings, strangling shipments of the tractor units that power 18-wheelers, said Miguel Elizalde, head of the Association of Heavy Vehicle Producers.
• Mexican truckers began blockading a key border bridge on Monday after Abbott ordered state troopers to begin checking northbound vehicles for safety defects, a move that caused massive delays.
• Since state troopers began the checks last week, about 25% of inspected vehicles have been deemed unsafe and removed from service, according to the governor.

Texas Governor to Halt Some Truck Inspections on Border Snarl – Bloomberg, 4/14/2022

• Texas will halt some vehicle inspections at the U.S.-Mexico border after Governor Greg Abbott’s crackdown provoked protests that halted crucial food and equipment shipments.
• Abbott said Wednesday that the state government of Nuevo Leon in northern Mexico agreed to conduct safety inspections before U.S.-bound trucks reach the border.
• The inspections will continue in other sectors of the U.S.-Mexico line. Abbott said they’re needed because of what he called U.S. President Joe Biden’s failure to repel undocumented migration and drug smuggling.

EUROPE & WORLD

ECB Sticks to Speedier Stimulus Exit as War Fans Inflation – Bloomberg, 4/14/2022

• The European Central Bank renewed its pledge to end bond-buying in the coming months, as record inflation raises the odds it will also lift interest rates for the first time in more than a decade before the year is out.
• The Governing Council reiterated Thursday that it will halt net asset purchases in the third quarter — an accelerated timeline agreed on last month with consumer prices now surging at almost four times the 2% target.
• It reaffirmed that “gradual” rate hikes will follow “some time after.”
• Money markets trimmed ECB tightening bets, pricing quarter-point rate hikes in September and December.
• German bonds rose, sending the 10-year yield one basis point lower to 0.75% after earlier climbing to 0.83%.

One of Africa’s Busiest Ports Disrupted by Major Flood Damage – Bloomberg, 4/14/2022

• South Africa’s heaviest rains in more than six decades shuttered operations at its main port, with resultant flooding damaging key logistics arteries for the continent.
• Operations at the Port of Durban, sub-Saharan Africa’s biggest container hub, were suspended Monday night after the eastern city received 307 millimeters (12.1 inches) of rainfall within 24 hours.
• Durban’s port handles about 60% of South Africa’s shipments, and it also transports goods and commodities to and from nations in the region as far north as the Democratic Republic of Congo.
• As the port gradually re-opens — state-owned rail and port operator Transnet SOC began resuming operations Wednesday morning — authorities have prioritized evacuating cargo including food, medical supplies and petroleum products. Shipping will only resume when it’s deemed safe for marine craft and vessel navigation.

China’s Central Bank Likely to Cut Interest Rate for Second Time – Bloomberg, 4/14/2022

• China’s central bank is expected to cut its key policy interest rate for the second time this year on Friday and reduce the reserve requirement ratio within days to help bolster a faltering economy under strain from Covid lockdowns.
• Sixteen of the 22 economists surveyed by Bloomberg predict the People’s Bank of China will lower the interest rate on one-year policy loans — 12 of them forecast a 10 basis-point reduction to 2.75% and four expect a 5-point drop. The rest see no change.
• The PBOC is also likely to reduce the RRR — the amount of cash that banks must hold in reserve — after the State Council, China’s cabinet, hinted strongly on Wednesday of a cut, saying it would lower the ratio “at an appropriate time.”
• The two previous RRR cuts, in July and December last year, came days after a similar signal from either the State Council or Premier Li Keqiang.

Volkswagen warns of cloudy outlook as commodity hedges boost profit – Reuters, 4/14/2022

• Volkswagen on Thursday warned that it had started to feel the impact of the war in Ukraine on supply chains and raw materials prices in the first quarter, with the longer-term effects on its business difficult to predict.
• The company indicated an 8.5 billion euro ($9.27 billion) operating profit for the first three months of the year, but noted that 3.5 billion euros of that was attributable to commodity hedges amid soaring raw material prices.
• Its operating return on sales jumped to 13.5% in the first quarter, according to the preliminary figures, from 7.7% in the same period of 2021 when the COVID-19 pandemic and semiconductor shortages were weighing heavily on results.
• Volkswagen Group deliveries were down 21.9% in January to March, totaling just over 1.89 million vehicles, with brand deliveries down 25.6%.
• Still, deliveries of all-electric vehicles grew 65% to 99,100, with the biggest increase in China.

Uniqlo owner sees big profit drop in China, sounds alarm on yen – Reuters, 4/14/2022

• The owner of Japanese clothing brand Uniqlo on Thursday flagged a big profit drop in China due to COVID-19 restrictions, while its chief executive sounded alarm about the weakening yen’s potential to drive up costs.
• The company reported a record half-year profit on Thursday, buoyed by sales growth in North America, Europe, and other parts of Asia, while revenue and profit declined in Japan and China.
• Operating profit climbed 18% to 189 billion yen ($1.51 billion) in the six months through February from a year earlier.
• Sales in the Greater China region, which includes Hong Kong and Taiwan, were hit in March, as up to 133 stores were temporarily shut.
• Fast Retailing said it expects revenue declines and a large drop in profit in its Greater China segment in the second half and for the whole of fiscal 2022 due to COVID restrictions.
• The company maintained its full-year profit forecast at 270 billion yen. That compares with a consensus forecast for annual profit to total 278 billion yen, according to a Refinitiv poll of 11 analysts.

Thyssenkrupp puts 1,300 steel workers on short working hours – Reuters, 4/14/2022

• Thyssenkrupp is cutting working hours for 1,300 of its steel workers, the German conglomerate said on Thursday, responding to the impact of the war in Ukraine on the automotive sector and raw material prices.
• Last month, Thyssenkrupp suspended its cash flow outlook and said it would announce shortened working hours for steel workers in April due to the military conflict’s impact on the economy, though it did not specify how many employees would be affected.

Factmonster – TODAY in HISTORY

• The first pony express rider reached his destination of San Francisco. He left St. Joseph, Mo., on April 3. (1860)
• Abraham Lincoln was assassinated by John Wilkes Booth. (1865)
• Titanic hit the iceberg that would sink her the next morning. (1912)
• In a record breaking night at the Academy Awards, a tie between Katherine Hepburn and Barbra Streisand resulted in the two sharing the Best Actress Oscar and Hepburn broke the record as the only actress to win three Best Actress Oscars. (1969)
• Hugo Chávez returned as president of Venezuela after being forced out of office two days previously. (2002)
• An explosion in the Eyjafjallajokull volcano in Iceland results in a volcanic ash plume in the atmosphere over northern and central Europe. Air travel in the region is halted for several days. (2010)