Economic data suggest a stall
Food prices may stay high in 2012
WASHINGTON — Jobs are scarce and food prices are likely to stay high through next year, according to new data that reinforce evidence the US economy is stuck in a weak patch.
There was some good news in a spate of reports released yesterday: The US trade deficit narrowed in April after companies sold more goods overseas and imports fell.
But many economists downplayed the smaller trade gap. They said it was mostly because of temporary factors.
“There is a significant slowdown going on,’’ said Paul Dales, senior US economist at Capital Economics. “The economy is unlikely to grow at a decent rate any time in the next year or two.’’
Yesterday’s data showed:
■The number of people seeking unemployment benefits hardly changed for a second straight week, ticking up 1,000 to a seasonally adjusted 427,000 last week. Applications had been declining all winter.
■A wet spring will probably cut the size of this fall’s corn harvest and keep food prices high through 2012, the Agriculture Department said.
■Exports of goods and services rose to a record $175.6 billion; imports declined to $219.2 billion, the Commerce Department reported. But a key reason was a 25.5 percent decline in imports from Japan, which is recovering from the March 11 earthquake and tsunami.
■Wholesale companies added to their stockpiles in April for a 16th straight month, Commerce said. That boosted inventories to the highest level since October 2008, a sign that businesses in early spring were expecting stronger sales. But more recent data suggest high gas prices have since weakened demand for manufactured goods.
Employers added only 54,000 net new jobs in May, the labor Department said last week. That was much slower than the average gain of 220,000 per month in the previous three months. The jobless rate rose to 9.1 percent.
Neil Dutta, an economist at Bank of America Merrill Lynch, said hiring will probably rebound to a pace of about 150,000 new jobs per month. But that would be barely enough to reduce the unemployment rate.
Recent data suggest employers have lost some confidence in the economic recovery, Dutta said. He pointed to gas prices; the crises in Japan, which have led to a parts shortage; and the inability of Congress to agree on a plan to raise the $14.3 trillion debt ceiling as the main reasons. Food prices are also straining household budgets.
Yet US companies sold more computers, heavy machinery, and telecommunications equipment abroad in April. That pushed exports to a record high for the second straight month.