Trade will lift Q4 GDP est, import prices up again

The 1st UoM confidence reading of the month was 74.2, 1.7 pts above expectations, up from 71.6 in Nov and is the best since June when it was at 76. Both Current Conditions and the Economic Outlook moved higher and the Current component in particular rose to the best since Jan ’08. Because the state of the labor market is such a large component of one’s consumer confidence, maybe the jobs picture, while not great, is not as soft as Friday’s Nov figure implied. One year inflation expectations ticked down .1% to 2.9% from last month’s highest # since May. With the average gallon of gasoline less than .03 from $3.00 according to AAA last night, we’ll see how much longer inflation expectations remain tame.

The Oct Trade Deficit was $38.7b, well below expectations of $43.8b and the lowest since Jan. Positively, exports led the way as they rose 3.2% while imports fell .5%. A sharp drop in the imports of crude kept a lid on the import component. A 4.2% rise in the export of goods led the rise in the export component while services rose .9%. The much lower than expected trade figure may raise Q4 GDP estimates by .4-.5% of a pt and US Treasuries have traded to the low of the morning in response. Nov Import Prices rose 3.7% y/o/y and 1.3% m/o/m, higher than forecasts of a rise of 2.8%. Import prices ex petro rose .7% m/o/m, the biggest one month gain since June ’08. To compare the 3.7% rise in overall import prices, the 10 yr average is 2.7%.

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