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Industrial Production Shows Strength in Manufacturing

by California Digital News


Here’s How Much The Israel-Ukraine Aid Bill Added To The Deficit

49 minutes ago

There’s a lot more red ink on the federal budget now than there was in February, due in part to large federal spending bills passed in the meantime.

That’s according to a report from the Congressional Budget Office Tuesday, which showed the government will spend $1.9 trillion more than it collects in taxes in 2024, up 27% from the nonpartisan research office’s most recent estimate in February. A major contributor to the deepening shortfall was a $95 billion spending package passed in April sending military aid to Israel, Ukraine, and Taiwan.

A few billion here, a few billion there, and soon it starts to add up: The new budget projections also incorporated estimates for how much President Joe Biden’s proposed student loan forgiveness program will cost ($145 billion); new spending from the bipartisan budget bill passed in March ($60 billion). The office also upwardly increased its estimate for how much Medicaid will spend this year ($50 billion) and the fact that the Federal Deposit Insurance Corporation isn’t being paid back as quickly as the CBO anticipated for all the money it spent to bail out depositors last spring after a string of bank failures. 

Taking the longer view, the federal deficit will be 10% higher by 2034 than it looked like it would be back in February.

Industrial Production Shows Strength in Manufacturing

4 hr 22 min ago

U.S. industrial production had its largest increase in a year, jumping in May on signs of renewed strength in the manufacturing sector.

Federal Reserve data showed industrial production rose 0.9% in May, higher than the 0.4% increase that economists surveyed by the Wall Street Journal and Dow Jones Newswire. Capacity utilization also came in a tick over expectations by increasing 78.7%. 

Manufacturing led the gains in production, followed by increases in consumer goods and business equipment, noted BMO Capital Markets Senior Economist Sal Guatieri, who said the report suggested that “the economy hasn’t lost all of its resiliency.”

However, Wells Fargo economists Shannon Seery Grein and Tim Quinlan noted the industrial sector still faces several headwinds, like elevated borrowing costs from high interest rates and lower consumer demand. 

“While there have been some recent signs of life in the manufacturing sector, we continue to expect only a gradual recovery to unfold,” the Wells Fargo economists wrote. “Inventory dynamics are always a challenge to assess in real-time, and despite the potential for some inventory building in May, we don’t believe manufacturers are overstocked today.”

Meanwhile, U.S. business inventories increased 0.3% in April, coming after a slight dip in March, according to Census Bureau data released Tuesday. The results were in line with economist projections.

-Terry Lane

Retail Sales Fall Short of Expectations in May

6 hr 25 min ago

Stores have been doing less business as U.S. consumers’ budgets strain to keep up with inflation and high interest rates.

Retail sales rose 0.1% in May from April, the Census Bureau said Tuesday.1

 That was less than the 0.2% increase that forecasters had expected according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. On top of that, April’s sales figures were downwardly revised to a 0.2% decline rather than staying flat as the bureau initially reported in May.

It could be the beginning of a reversal in the strong consumer spending that has buoyed the economy during the pandemic recovery.

“Overall, the May retail sales data are consistent with a consumer that is only gradually losing its swagger,” wrote Wells Fargo economists Tim Quinlan and Shannon Seery Grein.

Read more about the retail sales report here.



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