SIMPLY ECONOMICS Fed, Fed, and More Fed Econoday Simply Economics 12/14/12 By R. Mark Rogers, Senior U.S.

Economist No, the fiscal cliff problem has not gone away. However, the Feds FOMC met and i t was one of the four meetings that occur in the third month of the quartermeanin g that not only is there the policy statement but also new economic forecasts fr om the Fed and also the chairmans press conference. Andin contrast to CongressFed officials apparently are actually talking to each other because they got a lot d one at this meeting, including some policy innovations. Recap of US Markets STOCKS Equities were up Monday after McDonald s posted stronger than expected sales res ults and technology shares climbed higher on rumors that investor Carl Icahn is building a stake in the company. Earlier in the day, news out of China was favo rable on that countrys industrial production and retail sales. Stocks jumped sig nificantly Tuesday on news of significant gain in German investor confidence. G erman has Europes largest economy. Also, traders increased bets that the Fed wou ld announce the next day new policy initiatives to boost the economy. Stocks were up most of Wednesday, including after the Fed did announce new polic y measures just after Noon ET, after new Fed forecasts, and even during early po rtions of Fed Chairman Ben Bernankes press conference. But equities declined aft er Bernanke said that the Fed does not have the tools to offset the impact of th e fiscal cliff on the economy should that occur. Thursday, equities were down notably despite a drop in initial jobless claims an d a moderately healthy gain in retail sales. Lack of progress on resolving the fiscal cliff weighed on markets as rhetoric between lawmakers heated up. At wee ks end, a rise in industrial production and a decline in consumer prices (on lowe r energy costs) were not enough to offset market worries about the clock ticking down on when the fiscal cliff kicks in on January. Also, a downgrade on Apple by an analyst also pushed stocks downespecially in the tech sector. Equities were mostly down this past week. The Dow was down 0.2 percent; the S&P 500, down 0.3 percent; the Nasdaq, down 0.2 percent; and the Wilshire 5000, down 0.3 percent. The Russell 2000 was up 0.2 percent; For the year-to-date, major indexes are up as follows: the Dow, up 7.5 percent; the S&P 500, up 12.4 percent; the Nasdaq, up 14.1 percent; the Russell 2000, up 11.2 percent; and the Wilshire 5000, up 12.3 percent. Markets at a Glance Weekly percent change column reflects percent changes for all components except interest rates. Interest rate changes are reflected in simple differences. BONDS Treasury yields ended the week mixed as short rates eased while longer maturity yields rose. After a quiet Monday, rates firmed Tuesday on improved hope for re solution of the fiscal cliff and as funds flowed into equities. At mid-week, bo nd tradersever sensitive to inflation trendsbecame nervous about possibly increasi ng inflation pressures down the road after the Fed announced more quantitative e

asing in part to replace Operation Twist which ends December 31. Bond traders a lso were not happy that the Fed switched to indicator based guidance on exceptio nally low rates instead staying date based. Some see the Fed focusing more on u nemployment and not enough on constraining inflation. On Thursday, bond traders apparently paid more attention to the economic news th an worrying about the fiscal cliff. Yields firmed on a drop in initial jobless claims and boost in retail sales. Also, the 30-year bond auction did not go wel l. At weeks close, rates eased, primarily due to soft readings on consumer price inflation. For this past week Treasury rates were mixed as follows: the 5-year note, up 6 b asis points; the 7-year note, up 9 basis points; the 10-year note, up 8 basis po ints; and the 30-year bond, up 5 basis points. The 3-month T-bill declined 6 ba sis points while the 2-year note edged down 1 basis point. OIL PRICES The spot price of West Texas Intermediate ended the week up only slightly. Addi tionally, daily swings in prices were almost non-existent with the largest daily swing being a gain of 85 cents per barrel on Wednesday. This rise was due to t he Feds new policy initiatives and due to the International Energy Agency increas ing its demand forecast after economic news out of China has grown a little more positive. Net for the week, the spot price for West Texas Intermediate firmed 82 cents per barrel to settle at $86.86. The Economy The latest data showed improvement in manufacturing and consumer spending. Mean while, overall inflation fell. Retail sales rebound after Hurricane Sandy Retail sales made a moderate comeback in November despite a drop in gasoline pri ces weighing on the nominal headline figure. Autos were up as well as was the k ey core component. Total retail sales in November rebounded 0.3 percent, follow ing a 0.3 percent decline the prior month. Motor vehicle sales rebounded 1.4 percent after a 1.9 percent decrease in Octobe r. Earlier in the month, unit new motor vehicle sales pointed to an even strong er increase but the Commerce Departments sample size is not as good and PCE spend ing may be even stronger. Ex-auto sales were unchanged, following a flat figure for October. Gasoline sal es dropped 4.0 percent in November, following a 1.0 percent rise the prior month . Excluding both autos and gasoline components, sales gained a healthy 0.7 perc ent, following a 0.1 percent decline in October. Core components were mostly positive with some subcomponents notably strong. Le ading the sales less autos and less gasoline component were nonstore retailers, up 3.0 percent; electronics & appliance stores, up 2.5 percent, and building mat erials & garden equipment, up 1.6 percent. Also gaining were furniture & home f urnishings, health & personal care, clothing, sporting goods & hobby & books, mi scellaneous store retailers, and food services & drinking places. On the downside within the core, general merchandise fell 0.9 percent while food & beverage stores declined 0.3 percent.

Even though the headline number fell short of expectations due to a sharp drop i n gasoline prices, the report is actually notably favorable. Auto sales were up and sales excluding autos and excluding gasoline were quite healthy. It looks like retailers (except department stores) are doing well this holiday season. E conomists are likely to nudge up their forecasts for fourth quarter GDP. And PC Es spending may be stronger than retail sales as they are based on a variation o f unit new motor vehicle sales instead of the retail sales auto component. Industrial production rebounds in November but still soft Industrial production rebounded in November with notable help from recovering fr om Hurricane Sandy and a boost in auto assemblies. Industrial production rebou nded 1.1 percent, following a decline of 0.7 percent in October (originally down 0.4 percent). The market consensus was for a 0.3 percent gain. In November, the manufacturing component increased 1.1 percent after dropping 1. 0 percent in October. Analysts expected a 0.4 percent boost. According to the Fed, nearly all the decline in factory output in October is estimated to have be en related to Hurricane Sandy, and the increase in November reflects a post-hurr icane rebound in production as well as the solid advance in the output of motor vehicles and parts. Within manufacturing, increases were widespread in November across both durable and nondurable goods industries. The bright spot in manufacturing for November was motor vehicles & parts, which jumped 4.5 percent after no change the month before. Excluding motor vehicles, manufacturing output rebounded 0.8 percent after a 1.0 percent drop in October. The output of utilities jumped 1.0 percent in November, following no change the prior month. Production at mines advanced 0.8, following a 0.3 percent rise in October. Capacity utilization for total industry rose to 78.4 percent from 77.7 percent i n October. The bottom line is that manufacturing has seen sharp swings over the last two mo nths due to Hurricane Sandy. But net for the period, this sector is still soft. The clearly positive news is that consumers are out shopping for new cars. Th at is good news for manufacturing. And it suggests that while consumers are in a bad mood about the pending fiscal cliff, potential tax increases, and perhaps even their view of the outcome of the presidential election, they are spending d espite survey recorded glum views. Markit flash PMI for December suggests improvement in manufacturing The first half of December has been very good for the nation s manufacturers bas ed on the PMI flash index which rose to 54.2, up a solid 1.4 points from the fin al index for November. A reading over 50 indicates monthly growth in business ac tivity and a reading over the prior reading indicates a greater rate of growth. Details were solid across the report led by monthly acceleration in new orders w hich were up 1.2 points to 54.8. A special highlight is the index for new export orders which, following a long streak under 50, first popped over the breakeven mark last month and is now at 52.8. This suggests that foreign demand is on the mend. Other readings include a strong and sustainable rate for output and -- in a spec ial positive -- a strong and increasing rate of employment where the index is at 54.4.

The PMI in recent months has been a little more positive than the ISM manufactur ing index, although both have not strayed far from breakeven in recent months. The PMI has a larger sample size than ISM. Business inventories still under control The other good news for manufacturing is that businesses have kept a tight rein on inventory levels. Inventory growth slowed in October but not enough given a negative reversal in sales. Business inventories rose 0.4 percent in October for the lowest rise since June. Business sales, however, fell 0.4 percent to end th ree straight months of gains. The mismatch pushes the stock-to-sales ratio to 1. 29 versus September s 1.28. Nonetheless, the inventory-to-sales ratio is still low and businesses will not require much adjustment to stocks on the shelves. A nd early evidence is that sales are healthy and will take care of backroom shelv es. U.S. international trade shrinks in October Yes, the trade gap widened but trade shrankpossibly on weakness abroad. The U.S. trade balance in October widened somewhat on higher oil imports and on slippage in the services surplus. Weakness in Europe and Japan is hitting the shores of the U.S. as the decline in exports was widespread. The trade deficit worsened to $42.2 billion from $40.3 billion in September. Exports fell 3.6 percent in O ctober, following a 3.1 percent rebound the month before. Imports fell 2.1 perc ent after gaining 1.5 percent in September. The widening in the trade gap was led by the petroleum deficit which increased t o $24.6 billion in October from $21.6 billion in September. However, the non-pe troleum goods shortfall shrank to $33.8 billion from $35.2 billion for the previ ous month. The services surplus slipped to $16.9 billion from $17.0 billion in September. It is becoming clearer that sluggishness in manufacturing is significantly due t o a decline in global trade. Weakness in goods exports showed up in all major e nd-use categories, led by a $2.9 billion drop in industrial supplies, including a subcomponent fall of $0.9 billion in nonmonetary gold. Other declines were fo r capital goods excluding autos, down $1.9 billion; automotive, down $0.4 billio n; consumer goods, down $0.1 billion; and foods, feeds & beverages, down $1.4 bi llion. On the import side, all major end-use categories were down except for industrial supplies which rose $0.4 billion. However, the crude oil subcomponent worsened $2.1 billion. Also, on the downside consumer goods dropped $3.6 billion, automo tive dipped $0.5 billion, and capital goods excluding autos declined $0.4 billio n. Weakness in global growth may be cutting into both exports and imports. U.S. ma nufacturers clearly are suffering in part to recession in Europe and Japan. Als o, U.S. businesses may be a little skeptical about consumer demand. Consumer price inflation weakens in November Consumer price inflation dropped in November on lower energy costs and the core rate softened. The consumer price index in November fell 0.3 percent, followin g a 0.1 percent increase the month before. Excluding food and energy, the CPI r ose 0.1 percent, following a boost of 0.2 percent in October. By major components, energy fell a monthly 4.1 percent after dipping 0.2 percent

in October. Gasoline dropped a monthly 7.4 percent in November, following a d ecline of 0.6 percent the prior month. Food prices increased 0.2 percent, match ing the pace in October. Within the core, softness was led by declines in prices for apparel and also use d cars & trucks. Year-on-year, overall CPI inflation came in at 1.8 percent versus 2.2 percent in October (seasonally adjusted). The core rate eased to 1.9 percent in November f rom 2.0 percent the prior month. On an unadjusted year-ago basis, the headline CPI was up 1.8 percent, compared to 2.2 percent in October. The core was up 1.9 percent versus 2.0 percent the month before, not seasonally adjusted. The November report clearly was favorable toward the Fed continuing extremely lo ose monetary policy. The year-ago rates were below the Feds long-term goal of 2 percent inflation and well below the newly announced trigger of 2.5 percent for unwinding loose policy. Producer prices decline on energy Inflation continued to weaken at the producer level in November on lower energy costs. Overall PPI inflation dropped 0.8 percent after falling 0.2 percent in O ctober. The core rate, which excludes both food and energy, rebounded a modes t 0.1 percent, following a decline of 0.2 percent in October. Food inflation jumped 1.3 percent after rising 0.4 percent in October. Energy c osts at the producer level dropped a sharp monthly 4.6 percent in November, foll owing a 0.5 percent rise the prior month. Gasoline declined 10.1 percent, follo wing a decrease of 2.2 percent in October. Within the core, higher prices for passenger cars and light trucks led the Novem ber gain, increasing 0.5 percent and 0.2 percent, respectively. For the overall PPI, the year-ago rate in November came in at 1.4 percent, compa red to October at 2.3 percent (seasonally adjusted). The core rate in November was 2.2 percent versus 2.1 percent month before. On a not seasonally adjusted b asis for November, the year-ago headline PPI was up 1.5 percent, while the core was up 2.2 percent. The Fed mixes it up with latest FOMC decision Despite substantial technical changes from the latest FOMC decision, the Fed is essentially finding new ways of maintaining loose monetary policy and apparently expanding the balance sheet further. Among the key points, the Fed left polic y rates unchanged and exceptionally low with the fed funds target still at a ran ge of zero to 0.25 percent. Guidance was changed from a timing target to an e conomic indicator trigger for change in policy. Operation Twist (which ends Dec ember 31) is being replaced with another purchase program that is closely compar able in magnitude to Operation Twist. Guidance from recent FOMC statements has been in terms of timinghow long the Fed expected policy rates to be exceptionally low. At the October meeting, guidance was that rates would be exceptionally low through at least mid-2015. With this past weeks statement, the Fed switched to guidance based on unemployment and inf lation indicators. Now, the Fed says that exceptionally low rates will be approp riate at least as long as the unemployment rate remains above 6-1/2 percent, inf lation between one and two years ahead is projected to be no more than a half pe rcentage point above the Committees 2 percent longer-run goal, and longer-term in

flation expectations continue to be well anchored. The Fed emphasized that it is focusing on both portions of its policy mandate. This appears to be intended to calm markets that constraining inflation is still important. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment a nd inflation of 2 percent. The Fed is going to implement additional quantitative easing to replace Operatio n Twist which expires December 31. To support a stronger economic recovery and to help ensure that inflation, over t ime, is at the rate most consistent with its dual mandate, the Committee will co ntinue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will purchase longer-term Treasury securit ies after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially at a pace of $45 bill ion per month. The Committee is maintaining its existing policy of reinvesting p rincipal payments from its holdings of agency debt and agency mortgage-backed se curities in agency mortgage-backed securities and, in January, will resume rolli ng over maturing Treasury securities at auction. Regarding the status of the economy, the Fed stated that economic activity and em ployment have continued to expand at a moderate pace in recent months, apart fro m weather-related disruptions. Although the unemployment rate has declined somew hat since the summer, it remains elevated. Inflation has been running somewhat below the Committees longer-run objective, apa rt from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable. There was one dissent on the policy vote. Richmond Fed President Jeffrey M. Lac ker voted against, opposing the asset purchase program and the characterization of the conditions under which an exceptionally low range for the federal funds r ate will be appropriate. The bottom line is that the Fed is keeping monetary policy extremely loose. Qua ntitative easing will keep downward pressure on long-term rates, including mortg age rates. The marginal impact of Fed policy has declined but probably is still positive. The housing sector has been a key beneficiary of current policy and this is probably the biggest recent impact with unemployment benefitting only ma rginally. Low rates likely are providing some lift to asset prices in general. At Chairman Bernankes press conference, the Fed chairman noted that conditions in the jobs market represent an enormous waste. It also became apparent that the Feds switch on forward guidance from timing (mid-2015) to economic indicators on unemployment and inflation is broader than initially interpreted from the statem ent. The labor market benchmark is not just the unemployment rate but that comb ined with other related indicators such as hourly earnings, hours worked, the im pact of changes in discouraged workers, and the participation rate. Bernanke em phasized that the 6.5 percent unemployment rate is a potential trigger and not a goal. He sees this trigger rate being reached about mid-2015. Bernanke stated that the Fed will take a balanced approach, watching both labor market conditio ns and inflation. Markets generally likely the FOMC statement and even the chairmans press conferen ceuntil Bernanke discussed the pending fiscal cliff. The Fed chairman warned tha t Fed support cannot fully offset the downside risks presented by the fiscal cli

ff. Bernanke expects Congress to reach a deal, but noted that its inaction has a lready resulted in a troubling drop in business confidence. The bottom line The economy is bumping along on a low but positive trajectory. The consumer sec tor somehow keeps showing more life than you might expect. Manufacturing is slu ggish but not negative. And the Fed has been extremely creative in keeping rate s low and liquidity in the financial markets. Still, resolution of the fiscal c liff is neededpreferably by Christmas but many would be happy to merely beat the January 1 deadline. Looking Ahead: Week of December 17 through 21 Upcoming news is loaded with data on manufacturing, housing, and the consumer. Hurricane Sandy has caused sharp down and up swings in production numbers but ne t still soft. So, regional Fed manufacturing news from New York, Philadelphia, a nd Kansas City will garner attention. Housing has been on a moderate uptrend an d traders want to see housing keep the recovery going. Updates are posted for h ousing starts and permits, and existing home sales. The consumer sector recentl y has been mixed with spending moderately healthy but sentiment dropping, sugges ting spending is at risk. This weeks updates include personal income and outlays and consumer sentiment. Monday The Empire State manufacturing index was little affected by Hurricane Sandy but the index in November nonetheless remained in contraction mode, posting at minus 5.22 versus minus 6.16 in October. But key details showed improvement, especia lly shipments which surged to a very strong 14.59 and new orders which at 3.08 s howed their first monthly increase since June. But there were also negatives in the report, including a big contraction for employment at minus 14.61. Empire State Manufacturing Survey Consensus Forecast for December 12: 0.0 Range: -7.0 to 8.5 Tuesday NAHB housing market index for October was up a very sharp five points to 46 for the highest reading in 6-1/2 years. Regional data showed only an incremental slo wing in the Northeast and showed evenly distributed and very strong gains across other regions. By components, November s gain was strongly centered in current sales which points to strength for new home sales and for housing starts. The s ix-month outlook for sales showed a modest gain while customer traffic, perhaps reflecting a lack of additional buyers, was flat. The report notes that declinin g inventory of distressed homes is a plus for builders who however continue to c omplain about tight credit conditions. NAHB housing market index Consensus Forecast for November 12: 47 Range: 45 to 49 Wednesday Housing starts jumped a sharp 15.0 percent in September to an annualized pace of 0.872 million units and was up 34.8 percent on a year-ago basis. The latest in crease was led by the multifamily component which jumped 25.1 percent, following a 3.2 percent dip in August. However, the single-family component also improve d, gaining a notable 11.0 percent in September after a 7.3 percent increase the prior month. Housing permits jumped 11.6 percent in September to an annualized pace of 0.894 million, which was up 45.1 percent on a year-ago basis.

Housing starts Consensus Forecast for October 12: 0.865 million-unit rate Range: 0.840 million to 0.940 million-unit rate Housing permits Consensus Forecast for October 12: 0.875 million-unit rate Range: 0.845 million to 0.914 million-unit rate Thursday GDP growth for the third quarter was revised up significantly but the compositio n deteriorated. The Commerce Department put the second estimate at 2.7 percent annualized, compared to the advance estimate of 2.0 percent and second quarter r ate of 1.3 percent. But the composition shifted toward inventory investment an d away from demand components. Final sales of domestic product rose 1.9 percent versus the advance figure of 2.1 percent and second quarter growth of 1.7 percen t. Final sales to domestic producers (which exclude net exports) were revised to 1.7 percent from the advance estimate of 2.3 percent and compared the prior qua rter s 1.4 percent. Headline inflation for the GDP price index remained strong in the third quarter, revised down marginally to 2.7 percent from the initial 2. 8 percent reading and following 1.6 percent in the second quarter. But when exc luding food and energy, inflation pressure is softer as the revised second quart er figure came in at 1.3 percent, compared to the initial estimate of 1.5 percen t and the second quarter s 1.4 percent. Real GDP Consensus Forecast for third estimate Q3 12: +2.8 percent annual rate Range: +2.6 to +3.0 percent annual rate GDP price index Consensus Forecast for third estimate Q3 12: +2.7 percent annual rate Range: +2.7 to +2.8 percent annual rate Initial jobless claims for the December 8 week posted a 29,000 decline as jobles s claims continued to unwind effects from Hurricane Sandy which caused a giant 9 0,000 spike in the November 10 week. Data since then show four straight weeks of major declines that total 108,000. Continuing claims show the same patterna str ing of declines following a surge in early November immediately following the st orm. Continuing claims for the December 1 week fell 23,000 to 3.271 million whic h is the lowest rate since the November 3 week. Jobless Claims Consensus Forecast for 12/15/12: 359,000 Range: 345,000 to 395,000 Existing home sales in October bounced up 2.1 percent to a 4.79 million annual r ate following a revised 2.9 percent decline in the prior month. Sales in the Nor theast, which was hit at month end by Hurricane Sandy, fell 1.7 percent. The rep ort s other three regions, led by the West, all showed gains. Continuing to hol d down sales is lack of supply, down from 5.6 months in September to 5.4 months for the lowest rate in 6-1/2 years. The number of homes on the market, at 2.14 m illion, is the lowest in 10 years. Existing home sales Consensus Forecast for November 12: 4.90 million-unit rate Range: 4.60 to 4.96 million-unit rate The general business conditions index of the Philadelphia Fed s Business Outlook Survey took a hit in November as Hurricane Sandy definitely had a major impact on manufacturing data from the Philly Fed. The general business conditions inde x swung a severe 16.4 points lower to minus 10.7. Negatives swept the Philly Fe

d report including new orders which declined 4.0 points to minus 4.6. Philadelphia Fed survey Consensus Forecast for December 12: -2.0 Range: -12.4 to 15.0 The FHFA purchase only house price index advanced 0.2 percent in September, foll owing a 0.5 percent gain in August. Year-on-year, the index was up 4.3 percent, compared to 4.5 percent in August. Regionally, prices were mixed as only three of the nine Census regions were up in August, three flat, and three down. For the nine census divisions, seasonally adjusted monthly price changes for Septemb er ranged from minus 1.0 percent in the New England division to plus 0.8 percent in the Middle Atlantic division. FHFA purchase only house price index Consensus Forecast for October 12: +0.3 per cent Range: 0.0 to +1.5 percent The Conference Board s index of leading indicators rose 0.2 percent in October p ointing to modestly expanding economic activity ahead. Trends showed improvement for housing and finance which are offsetting weakness in consumer/jobs and manu facturing. The Conference Board, which publishes the report, noteed that Hurrica ne Sandy had no effect on the data, at least not in October. But they suspect No vember may show adverse impact on consumer spending and home building. Leading indicators Consensus Forecast for November 12: -0.2 percent Range: -0.3 to +0.2 percent Friday Quadruple Witching Durable goods orders in October gained 0.5 percent after rebounding 9.1 percent September and after a massive 13.1 percent fall in August. The transportation c omponent tugged down on October data. Excluding transportation, orders rose 1.8 percent after gaining 1.7 percent in September. The transportation component f ell 2.3 percent after a 29.7 percent surge in September. Outside of transportat ion, strength was widespread. Numbers reflect revisions from the more recent to tal factory orders report. New orders for durable goods Consensus Forecast for November 12: +0.5 percent Range: -1.5 percent to +2.2 percent New orders for durable goods, ex-trans., Consensus Forecast for November 12: +0. 2 percent Range: -1.0 percent to +0.7 percent Personal income in October was flat for the month, following a 0.4 percent boost in September. Notably, the important wages & salaries component fell 0.2 perc ent after gaining 0.3 percent in September. The Commerce Department indicated t hat Hurricane Sandy weighed down on private wages and salaries. Hurricane Sandy also dumped on spending. Consumer spending for the latest month declined 0.2 p ercent, compared to a 0.8 percent surge in September. Turning to inflation, the headline PCE price index eased to 0.1 percent from a sizeable 0.3 percent jump in September. The core rate held steady at 0.1 percent. Looking ahead, privat e aggregate earnings rose 0.3 percent, suggesting a moderate rise in the private wages & salaries component in personal income. PCE inflation is likely to soft

in October as the CPI for the month fell 0.3 percent and the core CPI edged up 0.1 percent Personal income Consensus Forecast for November 12: +0.3 percent Range: -0.1 to +0.8 percent Personal consumption expenditures Consensus Forecast for November 12: +0.4 perce nt Range: +0.2 to +0.7 percent PCE price index Consensus Forecast for November 12: -0.2 percent Range: -0.3 to +0.2 percent Core PCE price index Consensus Forecast for November 12: +0.1 percent Range: 0.0 to +0.2 percent The Chicago Fed National Activity Index fell to minus 0.56 from zero in Septembe r. The production component fell to minus 0.45 from September s minus 0.06 refle cting Hurricane Sandy s big hit to the industrial production report. The compone nt for consumption & housing, dragged down by a decline in housing permits, fell to minus 0.19 from minus 0.17. Consensus forecasts are not currently available. The Reuter s/University of Michigan s consumer sentiment index fell a very steep 8.2 points to 74.5 for the initial reading for December. This was the lowest r eading since August. Weakness was centered squarely in the expectations compone nt which plunged 13 points to 64.6. A separate reading on 12-month economic expe ctations was especially down, falling a whopping 22 points to 75. Consumer sentiment Consensus Forecast for final December 12: 75.0 Range: 64.9 to 82.0 The Kansas City Fed manufacturing index slipped to minus 6 in November from minu s 4 in October. This marked the first time the composite index has been negativ e for two straight months since mid-2009. Manufacturing slowed at durable goods -producing plants, while nondurable factories reported a slight uptick in activi ty, particularly for food and plastics products. Kansas City Fed manufacturing index Consensus Forecast for December 12: -3 Range: -5 to 0 R. Mark Rogers is the author of The Complete Idiots Guide to Economic Indicators, Penguin Books, 2009. Econoday Senior Writer Mark Pender contributed to this article.

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Actual Data Source: Haver Analytics | Consensus Data Source: Econoday