Economic Update

[Adam in CO]

The trade deficit for November declined by 1% to $58.2 billion, the lowest level since July 2005, the Commerce Department said January 10. Despite the improvement, the total 2006 trade deficit is on pace to reach $765.4 billion (December's trade numbers must still be tallied), compared to $716.7 billion in 2005.
Led by robust holiday shopping, retail sales increased 0.9% in December, the strongest showing since a 1.4% increase in July. For 2006, retail sales rose by 6%, a solid showing, but down from a 6.9% increase in 2005.
Despite improving retail sales, U.S. wholesale inventories leapt by 1.3% in November, triple the 0.4% rate of increase predicted by analysts. A broad-based accumulation of stockpiles ranging from cars to farm products to petroleum helped fuel the increase.
Following a dip in interest rates for the first time in five weeks, U.S. mortgage applications soared 16.6% in the first week of the new year (through January 5), the Mortgage Bankers Association (MBA) reported January 10. The MBA's survey covers approximately 50% of all U.S. residential loans.
The number of newly laid-off workers filing unemployment claims fell by 26,000 to 299,000 for the week ending January 5, the Labor Department said January 10. It marked the first time jobless claims had fallen below 300,000 since the week of July 22.
This week look for updates on the Producer Price Index on January 17 and the Consumer Price Index on January 18.