Friday, May 25, 2018
Business

Economy: Deficit, consumer confidence both up, core prices level

WASHINGTON — Several reports released Friday paint a mixed picture of the nation's economy.

While the fiscal-year federal budget deficit once again topped a worrisome level, consumers were more upbeat. And overall wholesale prices increased significantly, although core prices, excluding the volatile food and gasoline components, remained in check.

Here is a summary of Friday's reports:

BUDGET DEFICIT: The federal budget deficit has topped $1 trillion for a fourth straight year. But a modest improvement in economic growth helped narrow the gap by $207 billion compared with last year.

The Treasury Department said Friday that the deficit for the 2012 budget year totaled $1.1 trillion. Tax revenue rose 6.4 percent from last year to more than $2.4 trillion, helping contain the deficit.

The government's revenue rose as more people got jobs and received income. Corporations also contributed more tax revenue than in 2011.

Government spending fell 1.7 percent to $3.5 trillion. The decline reflected, in part, less defense spending as U.S. military involvement in Iraq was winding down.

The government borrowed about 31 cents of every dollar it spent in 2012. The string of $1 trillion-plus deficits has driven the national debt above $16 trillion. The magnitude of that figure has intensified debate in Congress over spending and taxes but with little movement toward compromise.

Many fear the budget deadlock will send the economy over a "fiscal cliff" next year, when tax increases and deep spending cuts will take effect unless a budget deal is reached.

CONSUMER CONFIDENCE: Despite dark clouds in the global and U.S. economies, American consumers are feeling more upbeat than they have at any time since the fall of 2007, according to an unexpectedly strong reading of consumer sentiment from the University of Michigan and Thomson Reuters, released Friday. The report suggests that the holiday shopping season could turn out stronger than previously forecast.

The widely followed index jumped to 83.1 in October — nearly a 5-point gain from the previous month and the highest since September 2007.

Measures of both components of the index — people's assessment of their current financial conditions and future expectations — went up over the month. Sentiment improved for families making more than $75,000, as well as those making less.

WHOLESALE PRICES: A second month of sharp gains in gasoline costs drove wholesale prices higher in September. But outside of the surge in energy, prices were well contained.

Wholesale prices rose 1.1 percent in September after a 1.7 percent gain in August, which had been the largest one-month increase in more than three years, the Labor Department said Friday.

In both months, overall prices were pushed higher by gasoline, which rose 9.8 percent in September after jumping 13.6 percent gain in August.

Core prices, which exclude food and energy, were unchanged in September, the best showing since they held steady in October 2011. In August, core prices rose 0.2 percent.

Food prices, which had jumped 0.9 percent in August, showed a smaller 0.2 percent rise in September.

Information from the Associated Press and McClatchy Newspapers was used in this report.

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