Q1 is off to a weak start at the consumer end:
U.S. Light Vehicle Sales Ease Further
Total sales of light vehicles during February slipped 0.5% (-2.2% y/y) to 17.08 million units (SAAR), following a 3.9% January fall to 17.16 million units, according to the Autodata Corporation. Last month’s sales compared to an 18.57 million September high and were at the lowest level in six months.
Light truck sales eased 0.4% (+3.9% y/y) to 11.35 million units after a 3.1% January drop. Sales of domestically made light trucks fell 1.6% (-0.9% y/y) to 9.08 million units after a 4.0% January decline. Imported light truck sales rose 4.6% (28.7% y/y) to a record high 2.27 million units.
Trucks’ share of the U.S. vehicle market rose slightly to a record 66.5% in February, up from 63.2% during all of last year and from 47.3% in 2009. (…)
Imports’ share of the U.S. vehicle market rose to 22.6% last month from a 19.9% low during all of 2015. (…)
Powell Bullish on Economy, but Sees No Signs of Overheating
(…) “Nothing in that suggests to me that wage inflation is at a point of acceleration,” he said. Mr. Powell said the Fed sees the potential for positive and negative economic surprises as roughly balanced. (…)
Mr. Dudley said tariffs could boost domestic inflation, forcing the Fed to re-evaluate its interest-rate forecasts, though he declined to comment specifically on any current White House plans.
While increased global trade since the turn of the century took a sharper toll on certain U.S. communities than economists had anticipated, Mr. Powell said there were better ways to support those hurt by competition from imports than to impose tariffs that could impose costs more broadly across the economy.
“The tariff approach is not the best approach,” he said, while declining to comment specifically on Mr. Trump’s plans.
Tariffs Could Ripple Through U.S. Economy Plans for steep tariffs on imported steel and aluminum raise concern among American industries about higher costs and retaliation
(…) The impact on metals-consuming industries will also hinge on whether the administration grants exemptions to some exporting nations.
Some industries are already lining up for those exemptions. The Beer Institute, a trade group, called for “cansheet” aluminum to be excluded from any new trade barriers. “Imported aluminum used to make beer cans is not a threat to national security,” said Jim McGreevy, the group’s president. (…)
Remy Nathan, vice president for international affairs at the Aerospace Industries Association, said higher costs and retaliatory measures could disrupt global supply chains and hit exports, denting the aerospace and defense industries’ $86 billion trade surplus last year. (…)
Caterpillar executives have said tariffs could drive up prices for domestic steel and make it costlier for it to produce mining trucks, bulldozers and other equipment.
Steel is the largest input cost for big machinery producers, accounting for around 65% of raw material expenses at Caterpillar, with aluminum adding another 10%, according to JPMorgan analyst Ann Duignan. She estimates agricultural equipment makers such as Deere are even more exposed to raw material inflation, unless they can claw back costs through higher sale prices. (…)
Some auto makers and parts suppliers reacted to Thursday’s announcement with alarm. The Motor Equipment Manufacturers Association, the chief automotive components supplier trade group, said the new tariffs would endanger jobs and raise costs. (…)
Meanwhile, farm groups feared Mr. Trump’s move would invite retaliation against U.S. crop exports, after China recently raised the prospect of tariffs on sorghum, a grain used in livestock feed. (…)
“The agriculture sector knows from experience that our ag exports are the first to be hit by retaliation,” Mr. Kuehl said.
(…)“More workers in the U.S. make products that are made from steel, than make steel itself.” (…) “A trade deficit doesn’t subtract from growth — only a growing trade deficit subtracts from growth, and our trade deficit is about where it was over a decade ago,” Zandi said. “It could be disastrous if it our trading partners decide to respond in kind or worse.” (…)
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Asia may face steel, aluminum glut with Trump’s tariff plan
(…) South Korea is the third-biggest steel supplier to the United States after Canada and Brazil and would be the hardest hit by the tariffs. Other Asian suppliers are Japan, Taiwan and India.
China, the world’s biggest steel producer, accounted for only about 2.9 percent of U.S. steel imports, data compiled by Wood Mackenzie showed. The world’s top steel-buying nation, the United States imported a total 35.6 million tonnes last year. (…)
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Trade Worries Hit Stocks in Europe and Asia Stocks in Europe and Asia fell, echoing losses on Wall Street, as worries grew over an escalation of trade protectionism.
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EU considers ‘safeguard’ import tariffs in response to US Trade commissioner says Trump’s move could have ‘dangerous domino effect’
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Trump Says Trade Wars Are ‘Easy to Win’ as Tariff Anger Spreads
(…) “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump said in an early morning tweet on Friday. (…)
With Lumber in Short Supply, Record Costs Set to Juice Home Prices
Lumber prices started rising last year after fires destroyed prime forests and a trade dispute between the U.S. and Canada restricted supplies. Now a shortage of railcars and trucks is forcing builders to pay even more. (…)
Marc Towne of Classic Homes, which builds midrange to high-end houses in Colorado Springs, Colo., said he is spending $8,500 more on lumber for a typical home than a year ago, an increase of almost 40%. The company’s passing on about half the cost to buyers for now while it waits to see if lumber prices fall. (…)
Material prices now rival labor shortages as builders’ main concerns, a National Association of Home Builders survey showed in January. Prices for common building varieties like spruce and southern pine are at or near records, according to price-tracking publication Random Lengths. March-dated lumber futures at the Chicago Mercantile Exchange hit a record of $532.60 per 1,000 board feet last week after climbing more than 50% in 14 months.
That run-up began with a trade dispute between the U.S. and Canada, which provides about a third of U.S. timber, leaving many dealers hesitant to restock at elevated prices. The Trump administration eventually instituted tariffs of 20% or more on Canadian sawmills. (…)
Meanwhile, food costs are rising. Last 2 months:
- Wheat: +28%
- Corn: +9%
- Soybean: +12%
- Bloomberg Ag Index: +9%
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California Fruit ‘Is Going to Die on the Vine’ After ICE Raids
Japan’s Jobless Rate at Quarter-Century Low
P&G Contends Too Much Digital Ad Spending Is a Waste World’s biggest advertiser slashed digital ad spending by $200 million last year
(…) Once armed with more measurement data, P&G discovered that the average view time for a mobile ad appearing in a news feed, on platforms such as Facebook , was only 1.7 seconds. The Cincinnati-based company also realized some people were seeing P&G ads far too many times. (…)
The company said it hasn’t reduced its overall advertising spending and has shifted those digital dollars into other areas including TV, streaming services such as Pandora MediaInc., and e-commerce giants such as Amazon.com Inc. and China’s Alibaba. (…)