x
Your preference has been saved. Remove your saved preference.
You must supply both a username and a password to login.
You must supply a username, password and token to login.
Sign on
Passport secured login icon  
 
Wealth Management
Asset Management
Asset Servicing
Insights & Research
About Northern Trust
Search go
Click to close drop down menu.
 
Click to close drop down menu.
Financial Intermediary
Learn about asset management solutions designed for Retirement Plan Advisors, TAMPs/Outsourcing Providers, Subadvisory Program Sponsors, RIAs/Financial Advisors and Trust Institutions.
Institutional
Learn about asset management solutions including: global index management, active equity and fixed income, target retirement date funds, and manager of manager programs.
Individual
Get answers to your investment challenges with asset management capabilities including alternatives, exchange traded funds, fixed income, mutual funds and tax-advantaged equity.
Click to close drop down menu.
 
Northern Trust Logo
 

Weekly Economic Commentary

 
.
 
 
 
 
 
 
 
 
.
 

Watch the Services Component of Consumer Spending

March 14, 2012

Download PDF Version

Retail sales advanced 1.1% in February, after an upwardly revised gain of 0.6% in January. Excluding gasoline, retail sales moved up 0.8% in February after a 0.5% increase in the prior month. These numbers are encouraging. Excluding gasoline, retail sales have risen 5.5% in the January-February period compared with an 8.8% annualized increase in the 2011:Q4. Consumer spending consists of outlays on goods and services, with services (roughly 65%) making up a large part of consumer spending. Retail sales pertain to the goods component of consumer spending (about 35%). In the past few months, expenditures on services have been soft, partly due to warm weather translating into a reduction of natural gas consumption. Outlays on electricity and natural gas have declined for six straight months (see Chart 2). Continued warm weather across the nation suggests that natural gas and electricity expenditures should post additional monthly declines and offset some of the strength in goods outlays as seen in the retail sales report.


Chart 1 - 03 14 12




Chart 2 - 03 14 12

2011:Q4 Current Account Deficit – Reflects Setbacks in Good, Services, and Income

The current account deficit of the U.S. economy widened to $124 billion in the fourth quarter from $107 billion in the third quarter. Of the major components of the current account, the trade gap in goods widened in fourth quarter (see Chart 3), while the surplus in the service and income components declined in the fourth quarter (see Chart 4).


Chart 3 - 03 14 12

 




Chart 4 - 03 14 12



The current account deficit as a percent of GDP stood at 3.24% in the fourth quarter, up from 2.84% in the third quarter.



Chart 5 - 03 14 12



In related news, import prices rose 0.4% in February, entirely due to higher prices for petroleum and petroleum products (+1.8%). Import prices of imports excluding fuels slipped 0.1%. Overall, the decelerating trend of import prices (see Chart 6) is supportive of the current easy monetary policy of the Fed.


Chart 6 - 03 14 12

 

 

 

 

 

 

 

 

 

 

 

.
The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.
.
 
 
 
 
 
 
 
.