Import prices rise in June, fueled by jump in petroleum prices.  The Bureau of Labor Statistics reported that June import prices were 3.2 percent higher than May import prices, but were more than 17 percent below last June’s price level.  The price of imported petroleum was the largest contributor to the June increase, rising 20.3 percent in a month that saw gasoline prices rise from $2.52 per gallon to almost $2.70 per gallon.  While the June numbers reported by the BLS show a rise in the price of crude oil, more recent figures released by the Energy Information Administration show that crude oil prices have been falling in July.  Even at the most recent peak, crude oil prices are still down nearly 50 percent from last June.

Consumer credit continues to fall as households pay off debt.  The amount of consumer credit outstanding fell for the fourth consecutive month in May, declining 0.1 percent to just under $2.52 trillion.  Over the past year, credit outstanding has fallen 1.8 percent, a decline which had previously been surpassed only in November 1991 (post-World War II).  The reduction in credit outstanding, coupled with the absorption of stimulus dollars for non-consumption purposes, suggests that consumers are paying off debt. (Chart) The May personal savings rate, which imputes the amount of income not spent on consumer items, interest payments, and special transfer payments to the government and to the rest of the world, was higher than at any point since 1992.  While consumers are likely to retain these savings given the uncertain economic and job outlook, the evidence suggests that some portion is also being used to whittle down credit card and other debt balances.

Trade deficit narrows by $2.8 billion in May.  The Census Bureau reported the May balance of trade in goods and services to be a deficit of $25.96 billion, a $2.8 billion change from April.  The trade deficit narrowed as a result of both a jump in exports (+$1.9 billion) and a drop in imports (-$928 million).  Among exports, trade volumes increased for industrial supplies, food and consumer items.  Imports declined for a tenth straight month despite an uptick in the oil price.  Demand for foreign products has echoed weak overall consumer spending, as households struggle to shore up their financial situations.

Weekly retail numbers look worse due to previous year’s stimulus effects.  For each of the previous five weeks, the Johnson Redbook Retail Sales Index showed that same-store sales were down over 4 percent, the lowest readings in the 13-year history of the survey.  On its face, these data would suggest that consumer spending had taken a dive in June and the economy was likely worsening.  However, a more complete snapshot of the data would show that the previous June’s same-store sales were up significantly from the year prior to that, corresponding with the deployment of 2008 stimulus checks and related government benefits.  As a result, same-store sales were up 2 to 3 percent versus the same time in 2007 and were more elevated than they otherwise would have been.  By extension, the large retail sales declines recorded in the Johnson Redbook survey are distorted by the previous year’s abnormally high values.