President Obama and congressional leaders met again on Thursday, but only for an inconclusive little while, and no meeting was slated for Friday. Still, hints of some kind of deal were in the air, especially one involving a last-ditch Rube Goldberg-like mechanism by which Congress lets the debt ceiling rise without actually approving such a thing. Desperate times call for convoluted measures, presumably.
Meanwhile, not far away on Capitol Hill, Federal Reserve Chairman Ben Bernanke, in his second day of testimony on monetary policy before Congress, used the word “calamitous” to describe the prospect of default by the United States. For a central banker–for whom recessions are merely “unfavorable circumstances”–that’s the equivalent of smashing a bottle of whisky in a barroom and waving the jagged glass in the air to get everyone’s attention.
Also on Thursday, Standard & Poor’s warned of “at least a 1-in-2 likelihood” of a downgrade of the current AAA debt rating of the United States, “owing to the dynamics of the political debate on the debt ceiling.” Even China–which holds about $1 trillion in U.S. debt–called on Congress to act “responsibly” on the matter.
Retail sales inch upward in June
Retail sales were up in June, according to the U.S. Department of Commerce on Thursday, but it was a hiccup of a rise, only 0.1 percent. Still, that was better than the slight dip of 0.1 percent in May, which was the first decline in retail sales in nearly a year.
For one thing, the disruptions to the supply of autos and auto parts from Japan is very nearly a thing of the past, so car sales were up 0.8 percent month-over-month. The likes of Wal-Mart and Target (general merchandise, to use government parlance) saw a 0.4 percent increase in sales for the month. So-called “core sales”–which don’t count gas or food–rose 0.2 percent in May compared with the month before, according to Commerce.
PPI moves downward in June on gas-price drop
The Producer Price Index for finished goods decreased 0.4 percent in June, the Bureau of Labor Statistics reported on Thursday. The decline followed increases of 0.2 percent in May and 0.8 percent in April.
The main driver in the drop for finished goods was energy–gasoline, for the most part. The index for finished energy goods fell 2.8 percent in June, the largest drop since a 4.7 percent decrease in July 2009, back when gasoline really bottomed out. In June, prices for gasoline moved down 4.7 percent and accounted for two-thirds of the monthly decline.
Wall Street was fairly nervous on Thursday, with the Dow Jones Industrial Average dropping 54.49 points, or 0.44 percent. The S&P 500 declined 0.67 percent, while the Nasdaq went negative by 1.22 percent.