Retail sales continue to decline.  The Census Bureau reported that retail sales and food services declined 0.4 percent (seasonally adjusted) in April and are off 10.1 percent since April 2008.  Retailers in the auto and housing sectors continue to hurt, with motor vehicles and parts dealers (-20.7) and furniture and home furnishing stores (-14.2) experiencing the largest year-over-year declines.   Sales at gasoline stations are more than 30 percent lower than in April 2008, but much of that change is due to significantly lower gasoline prices.

Industrial production declines 0.5 percent in April.  The Federal Reserve reported that industrial production fell 0.5 percent in April after declining 1.7 percent in March.  Declines in output have been spread throughout most industries and most major market groups, though manufacturing as an industry and construction as a group have suffered considerable declines on their own.  Output in the manufacturing industry is now 16 percent below its peak in December 2007 and the industry is operating at 65.7 percent capacity, the lowest reading since the survey began in 1948. (See Chart)  Further, these underutilization rates suggest that it will be some time before businesses invest in new capacity.  Construction output had been declining since June 2007 and is now 24.4 percent below that level, though much of that decline is due to particularly significant deterioration during the past 8 months.  Even though the rate of monthly decline has moderated some, continued downsizing may further imperil recovery efforts with more layoffs adding to the cycle of job loss and reduced consumer spending.

Core consumer prices increase, easing fears of deflation.  The Bureau of Labor Statistics announced that the Consumer Price Index remained unchanged in April with the core index (less food and energy) rising 0.3 percent over the month.  Overall consumer prices are 0.7 percent lower than they were 12 months ago, due largely to lower energy prices (-25.2 percent).  Though some economists are concerned about price deflation, the last few months of data instead demonstrate a pattern of moderate price increases (discounting the volatility of food and energy prices).  That said, forty percent of the increase in the core-CPI was due to an increase in federal excise taxes on cigarettes, signaling that the increase in the overall price level was in fact more muted.

U.S. trade deficit increases but remains below 2008 levels.  The Census Bureau published its monthly trade balance report showing that the U.S. trade deficit increased by $1.5 billion in March to $27.6 billion.  Though the deficit widened over the month, trade volumes for both imports and exports have declined considerably. Since March 2008, exports declined $26.0 billion (-17.4 percent) and imports fell $55.9 billion (-27.0 percent).  Lower prices and demand for petroleum products have been a significant factor in reducing the volume of imports.  In the first 3 months of 2008, petroleum goods comprised roughly half of the $213 billion trade deficit.  In comparison, petroleum goods comprised only about one-third of the $122 billion deficit in the first 3 months of 2009.