- Final 1Q Personal Consumption rose 3.6% versus estimates of 3.6% and a prior estimate of 3.6%.
- Final 1Q GDP Price Index rose 2.9% versus estimates of a 3.2% increase and a prior estimate of 3.2%.
- Summary of Weekly Petroleum Data for the Week Ending June 24, 2005.
- The EIA reported that crude inventories rose 1.1M barrels vs. estimates of a 1.4M barrel fall. Gasoline inventories rose 310K barrels vs. estimates of a 190K barrel decline. Distillate inventories rose 1.64M barrels vs. estimates of a 1.5M barrel rise.
BOTTOM LINE: The US economy grew more than originally thought in the first three months of the year as the trade deficit narrowed and home construction increased more than initially estimated. Without adjusting for inflation, GDP rose 6.7%, the strongest in a year. The Core PCE Price Index rose 2.0%, substantially below recent measures of income growth. Current-production cash flow, or the internal funds available to companies for investment, increased 8.4% in the first quarter, the biggest rise since the second quarter of 1978, Bloomberg reported. The pace of first-quarter growth was faster than the 3.0% average of the last 3 decades. The last time growth exceeded 3% for eight or more quarters was from January-March 1983 to the first three months of 1986, according to Bloomberg. The US economy remains the strongest of all major industrialized nations. Growth this year is forecast at 3.5% versus projections of 1.4% growth in Europe. This would be the 13th year out of 14 US growth has exceeded that of Europe.
Crude oil is down modestly on the energy inventory news. According to the Dept. of Energy, crude supply is up 7.76% over the last year, while API implied crude demand has declined 5.65% during this same period. I would expect further declines in oil later today.
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