Economist's Commentary: July 11, 2008

Quick Take on the Economy: July 11, 2008

By Harika "Anna" Barlett, Senior Research Analyst, NAR Research

The U.S. Census Bureau announced today that in May, U.S. exports increased more than imports and the nation's international deficit in goods and services decreased to $59.8 billion from a revised $60.5 billion figure of April 2008. May exports were $1.4 billion more than April exports of $156.2 billion. May imports were $0.7 billion more than April imports of $216.7 billion.
After an increase in deficit in April this is a move in a desirable direction. The mild reduction in trade deficit is much better than the assumed widening trade deficit in the month due to very high oil prices. Therefore, GDP growth is ramped up to 1.5% for Q2.

July preliminary results of the University of Michigan consumer sentiment index released today indicated an unexpected slight increase to 56.6 from its final June reading of 56.4, which was the lowest since 1980.
Retail discounts played a role in this unexpected slight increase. However, it was also reported that more consumers complained about higher food and fuel prices and smaller income gains than ever before.

Increases in exports are partially alleviating the negative impact of high oil prices on economic growth.
Fewer consumers express optimistic expectations for the near future. However, consumers are willing to increase their spending with any incentive.

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