North American Data This Monday Morning

August 30, 2010

The Canadian current account deficit widened 30.2% last quarter to CAD 11.0 billion (equivalent to around 2.6% of GDP) as the trade balance swung into the red for the first time since 3Q09.  After the start of the world financial panic, the current account weakened from a CAD 15.6 billion surplus in 2007 to a surplus of CAD 6.9 billion in 2008 and a deficit of CAD 43.5 billion in 2009.  The first-half of this year’s current account equaled CAD 39.0 billion at an annualized rate.

Canadian producer prices edged up 0.1% in July and were just 1.0% above year-earlier levels.  Canadian dollar appreciation was responsible for a 1.8 percentage point decline of overall PPI inflation over the past twelve months, easily offsetting a 0.7 percentage point increase due to higher prices for petroleum and coal products. The twelve-month increase of the raw material price index rebounded to 6.0% from minus 0.1% in June as mineral fuel prices jumped 1.8% on month and by 7.9% on year.

U.S. personal spending rose 0.4% in July, twice as fast as personal income.  Real disposable income slid 0.1% on month, and the savings rate settled back to 5.9% from 6.2%.  The U.S. savings rate had historically hovered in a 6-8% range but collapsed to zero during the heyday of the property and stock market bubbles.  The core personal spending price deflator edged 0.1% higher last month and advanced only 0.9% at an annual rate between March and July.  This is the Fed’s favorite gauge of inflation, and officials prefer to see such in a range of 1.5% to 2.0%.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.



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