Planned Giving News Magazine

IRS Warns Taxpayers of New E-mail Scams
The Internal Revenue Service today alerted taxpayers to the latest versions of an e-mail scam intended to fool people into believing they are under investigation by the agency's Criminal Investigation division. The e-mail purporting to be from IRS Criminal Investigation falsely states that the person is under a criminal probe for submitting a false tax return to the California Franchise Board. The e-mail seeks to entice people to click on a link or open an attachment to learn more information about the complaint against them. The IRS warned people that the e-mail link and attachment is a Trojan Horse that can take over the person's computer hard drive and allow someone to have remote access to the computer. The IRS urged people not to click the link in the e-mail or open the attachment. The IRS does not send out unsolicited e-mails or ask for detailed personal and financial information. Additionally, the IRS never asks people for the PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts.
5/31/07 IR-2007-109

Tax Agency Reviews Lease Donations
The Internal Revenue Service says it is investigating a possible tax scam involving charities that accept donations of a type of property lease.
In a letter to Sen. Max Baucus, the Montana Democrat who chairs the Senate Finance Committee, the tax agency says it has identified 48 companies, mostly in New York, whose investors have claimed about $271-million in charitable deductions involving questionable donations of interest in real-estate leases. The arrangement being reviewed involves a group of investors who form a company to buy a so-called "remainder" lease for a piece of property. The lease is appraised at a value the IRS considers to be inflated. The investors then donate their interest in the lease to a charity, and each investor writes off a share of the donation on his or her income-tax return.
The charity benefits when the investors later buy back the lease, usually paying the charity far less than the amount the donors claimed it was worth when calculating their deductions. The IRS says it is looking at all deductions from 2003 and later to see whether more entities participated in such arrangements, and is examining the role charities may have played.
5/31/07 Chronicle of Philanthropy

Impact of Early Retirement on Social Security Spousal Benefits
According to the Social Security Administration, of the total aggregate income received by retired Americans, Social Security benefits provide the lion's share: 42.5 percent. Because of the primacy of this income source in retirement, making educated choices regarding the benefit is critical.
An article in the May 2007 issue of the Journal of Financial Service Professionals, entitled "Social Security Spousal Benefit Considerations in Early Retirement," asks the important question: 'what are the implications of early retirement for married couples who will be receiving the spousal benefit?'
Author Clarence C. Rose, PhD notes that for two out of three Americans, Social Security provides at least half of their retirement income. He then enumerates the eligibility requirements for spousal benefits, which generally can be said to accrue to the spouse of a worker when the spouse's income is less than half of the workers, if a variety of other conditions are met. For those couples for which the Social Security spousal benefit is part of their retirement income, the long-term financial implications of early retirement are generally negative.
Rose uses a number of approaches to illustrate this finding. First, a table shows the substantial reduction in monthly Social Security benefits for both the covered worker and his or her spouse when they choose early retirement.
A second table illustrates the combined percentage reduction in benefits for a husband and wife opting for retirement at age 62 whose combined benefits would have been $3,000 per month at full retirement age. Those taking early retirement in 2007 would effectively lose $800 per month. Alternatively, they could be said to receive only 73.33 percent of their full monthly benefit.
Table 3 illustrates the approximate Social Security benefits based upon the covered worker's annual average income during the 35-year time period considered for determining benefits for a husband and wife using the spousal benefit. Again, opting for early retirement is shown to dramatically reduce the combined benefits for a married couple receiving the spousal benefit.
Finally, the author addresses the argument that by receiving smaller checks for an additional four years (the period of time between age 62 and 66), the ultimate benefit "evens out" over time. A present value analysis shows that, although no one can predict for certain how long they or their spouse will live in retirement, delaying Social Security benefits is likely to yield a greater sum for most couples.
May, 2007 Journal of Financial Service Professionals

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THE ECONOMY: SEVEN INDICATORS - From CNN Money (as of 7/27/07)

The Indicator	What It's Telling Us	Next Update
Consumer Confidence	Drops to 10-month low	July 31
Retail sales	Worst drop in 2 years	Aug 13
Leading Economic Indicators	More strength ahead	Aug 20
Manufacturing Activity (ISM)	Surprising strength in June	Aug 1
Industrial Production	increased slightly more than expected	Aug 15
Job Growth	Past months revised higher	Aug 3
Inflation (CPI)	Tame in June	Aug 15

Recent Economic News

U.S. second-quarter GDP rises 3.4% - 7/27/07 MarketWatch
After hitting a pothole in the first quarter, the U.S. economy rebounded in the second quarter, growing at an annual rate of 3.4%, the fastest pace since the first quarter of 2006, the Commerce Department said Friday. The improvement in the second quarter was concentrated in a stronger trade performance, better investment in structures, faster government spending and a rebuilding of inventories after significant reductions in the past two quarters. Business investment was strong, led by the fastest growth in spending on nonresidential structures in 13 years. These offset a sharp slowdown in consumer spending and a decline in investments in homes. The increase in real gross domestic product was slightly below market expectations for a gain of 3.6%, according to a survey of economists conducted by MarketWatch.

Weekly jobless claims dip slightly - 7/26/07 AP on MSNBC.com
The number of newly laid off workers filing claims for unemployment benefits fell slightly last week. The Labor Department reported Thursday that applications for jobless benefits fell to 301,000 last week, a drop of 2,000 from the previous week. The performance was slightly better than economists had been expecting. They had been forecasting that jobless claims would rise by about 2,000.

June Durable Goods Orders Rose 1.4 Percent - 7/26/07 NYTimes (Reuters)
New orders for long-lasting U.S-made manufactured goods rose 1.4 percent in June on a big rise in orders for nondefense aircraft, a Commerce Department report on Thursday showed. Economists in a Reuters poll taken ahead of the report were expecting durable goods orders to increase by a somewhat bigger 1.8 percent. Economists had been looking for a 2.5% increase in total orders, according to a survey conducted by MarketWatch. June's increase came after a 2.3 percent decrease the prior month, a decline that had been driven by a drop in aircraft orders. U.S. Treasury debt prices rose on Thursday, stretching to new session highs, after the weaker-than-expected data on durable goods suggested flagging business growth in the latter part of the second quarter. The dollar fell to a two-and-a-half month low against the yen and was little changed against the euro.

U.S. new-home sales drop 6.6% to 834,000 in June - 7/26/07 MarketWatch
Sales of new homes declined 6.6% in June to a seasonally adjusted annual rate of 834,000, the Commerce Department estimated Thursday. Sales are now down 22.3% compared with June 2006. The sales pace in June was the lowest since March's 830,000, which was the lowest since 1999. Economists were expecting sales to fall to an 890,000 annualized pace in June. Sales dropped in three of four regions. Sales in the West fell 22.5% to the lowest level in 12 years. Inventories of unsold homes were unchanged at 537,000. The median sales price was $237,900, down 2.2% compared with June 2006.

Existing home sales fell in June - 7/25/07 Reuters on NY Times
The pace of existing home sales in the United States fell in June to a lower-than-expected 5.75 million unit annual rate while prices and inventories showed signs of stabilizing, the National Association of Realtors said in a report Wednesday. Sales were off 3.8 percent in June and hit their lowest level since November 2002 when it was 5.73 million unit pace. Economists polled by Reuters were expecting home resales to fall to a 5.88 million-unit pace from the 5.99 million-unit rate initially reported for May. Sales were revised in May to 5.98 million units. The inventory of homes for sale fell 4.2 percent to 4.196 million units at the end of June, which represents an 8.8 months' supply. The median home price in June was $230,100 which represents a 0.3 percent increase from their year-ago levels and is the first such increase in 11 months.

Inflation tame in June -7/18/07 CNNMoney
Prices paid by consumers rose in June, but when food and energy prices were stripped out the government's key inflation measure was in line with Wall Street expectations. Overall, prices at the retail level rose 0.2 percent in the month, compared to a 0.7 percent gain in May, according to the Labor Department's Consumer Price Index. Economists surveyed by Briefing.com had forecast a 0.1 percent rise in June. An increase of 0.5 percent in food prices contributed to the rise in total prices. Meanwhile, energy prices fell 0.5 percent last month.

Home builders' confidence plunges again in July - 7/17/07 MarketWatch
With interest rates moving higher, a glut of homes sitting unsold, and the problems in the subprime mortgage market worsening, U.S. home builders' confidence in the housing market plunged further in July, according to a monthly survey released by the National Association of Home Builders. The NAHB/Wells Fargo housing market index dropped four points to 24 in July, the lowest since the 20 recorded in January 1991 and the third lowest reading in the 22-year history of the survey. The index was at 39 a year ago and peaked at 72 in June 2005, when nearly three-fourths of builders were upbeat about the market. The decline in the home builders' index mirrors the massive slump in home building and home sales seen in the past two years. Starts of single-family homes are down 36% from the peak, while sales are down 20%. Economists surveyed by MarketWatch were expecting the builders' index to fall to 27 in July.

U.S. June industrial production rises 0.5% - 7/17/07 MarketWatch
Output at the nation's factories, mines and utilities rebounded in June, another sign that the factory sector had recovered from six months of weakness. U.S. industrial production rose 0.5% last month after falling a revised 0.1% in May, the Federal Reserve reported Tuesday. Read full Fed survey. Capacity utilization rose to 81.7% in June, the highest level since last October, from a revised 81.4% in the previous month. Economists had been looking for June's production to rise 0.6%, according to a survey by economists sponsored by MarketWatch.

U.S. Overall Producer Prices Fall in June - 7/17/07 NYTimes (Reuters)
A big drop in gasoline prices pulled U.S. producer prices down in June but a closely watched measure of core inflation rose at a pace likely to keep concerns about inflation on policy-makers' minds. Separately, the Federal Reserve said on Tuesday that output by U.S. factories, mines and utilities increased by 0.5 percent, bouncing back from a 0.1 percent May decline partly on a surge in production of new cars and trucks. Analysts said the production data was a heartening sign that the manufacturing sector was picking up some of the slack from a slump in the housing sector that is casting a pall over other parts of the economy. Producer prices are a gauge of costs at the wholesale level. The producer price index published by the Labor Department that measures prices paid at the farm gate and factory door fell 0.2 percent in June after soaring 0.9 percent in May, the first drop since January.

U.S. July UMich consumer sentiment 92.4 vs 85.3 in June - 7/13/07 MarketWatch
Consumer sentiment rebounded in July, according to a monthly survey released Friday by Reuters and the University of Michigan. The consumer sentiment index rose to 92.4 in July from 85.3 in June. The increase was above the consensus forecast of Wall Street economists who had expected sentiment to improve to 86.5.

Retail sales fall 0.9%, largest drop since 2005 - 7/13/07 MarketWatch
With weak demand for durable goods and falling gas prices, U.S. retail sales dropped 0.9% in June, the largest decline since August 2005, the government said Friday. The decline was much larger than the 0.3% drop estimated by economists canvassed by MarketWatch. Revisions to May and April data were also negative on balance. Read the full government report. Excluding auto sales, retail sales dropped 0.4%, the largest decline since last September. Economists were expecting a 0.2% gain excluding autos.

U.S. trade gap widens to $60 billion in May - 7/12/07 MarketWatch
The U.S. trade deficit widened in May by 2.3% to $60 billion as expected, on record trade flows across U.S. borders to meet rising demand at home and abroad, the Commerce Department reported Thursday. Reflecting a strong global economy, exports from the United States increased 2.2% to a record $132 billion, but imports of goods and services into the United States grew faster at 2.3%, rising to a record $192.1 billion. The growth in imports in May was led by industrial materials and supplies, particularly crude oil. The biggest increases in exports came in capital goods, notably civilian aircraft. The increase in the trade gap was largely driven by higher prices for imports, not higher volumes.

May wholesale inventories rise 0.5% - 7/10/07 MarketWatch
Inventories at U.S. wholesalers rose a modest 0.5% in May, held in check by a drop in petroleum inventories, the Commerce Department reported Tuesday. Wholesale petroleum inventories fell by 3.4% after a revised increase of 12% during April, according to the data. Wholesale sales outpaced inventories in May, the Commerce Department said. Sales rose by 1.3% in May, with petroleum sales leading the way with a 5.3% increase. Wholesale petroleum sales are 16% above year-ago levels. By contrast, wholesale petroleum inventories are up 0.1% in the past year. The figures are seasonally adjusted but are not adjusted for price changes. The inventory-to-sales ratio slipped to 1.11 in May, down slightly from 1.12 in April and from 1.13 in May 2006. Economists surveyed by MarketWatch had anticipated monthly wholesale inventories would rise 0.3% for April.

Employment Stays the Course - 7/7/07 Washington Post
The unemployment rate held steady last month at 4.5 percent and wages rose moderately, the Labor Department said yesterday, indicating that the job market remains solid despite the slumping housing market and struggling auto industry. The figures strengthened many analysts' belief that economic growth picked up in the spring after slowing to a crawl in the first three months of the year. Job growth was particularly strong, as it has been all year, in health care and education. Employers in both fields are scrambling to expand their services to meet growing demand while losing experienced workers to retirement.

Payrolls rise 132,000 as expected; jobless rate at 4.5% - 7/6/07 MarketWatch
The U.S. economy continued to add jobs at a healthy pace in June, with nonfarm payrolls rising by 132,000, the Labor Department reported Friday. The unemployment rate remained at a very low 4.5% in June, while average hourly wages and the number of hours worked rose. Payroll gains in June were very close to the 130,000 forecast by economists surveyed by MarketWatch, but big revisions in April and May totaling 75,000 put total employment above expectations. Average hourly earnings rose 0.3% in June after an upwardly revised 0.4% gain in May. Hourly wages are up 3.9% in the past year.

US jobs market shows strength, but jobless claims rise - 7/5/07 Reuters
The U.S. jobs market showed some signs of strength in June as private employers added more jobs than expected and planned layoffs decreased, but initial claims for unemployment insurance edged up last week, reports showed on Thursday. Another report, by a global online careers and recruiting firm, showed a gauge of U.S. online recruiting dipped in June, suggesting that a seasonal summer hiring slowdown may have come earlier than normal. First-time applications for state unemployment insurance benefits rose to 318,000 in the week ended June 30 from an upwardly revised 316,000 the prior week, the Labor Department said. Wall Street analysts had forecast a rise in claims to 315,000 from an initial reading of 313,000 in the week ended June 23. The closely watched four-week moving average, which flattens the more volatile weekly fluctuations, rose for the sixth straight week to its highest level since April 28. The four-week average rose to 318,500 from 316,750.

Services expanding at best pace in more than year - 7/5/07 MarketWatch
More nonmanufacturing companies in the United States were growing in June than at any time since last April, according to a survey of companies released Thursday by the Institute for Supply Management. The ISM nonmanufacturing index rose to 60.7% from 59.7% in May. It's the highest since 61.1% in April 2006. Readings over 50% in the diffusion index indicate more firms are expanding than contracting. In June, 40% of companies were growing faster than in May, while just 11% reported slower business. The index has been above 50% for 51 straight months. On Monday, the group reported that the ISM manufacturing index also rose in June to the highest level since April 2006.

More Americans fall behind on debts - 7/4/07 LA Times
The rate of late payments, including on home equity loans, is the highest since 2001, a bankers' group says. Slow job growth and declining home prices are causing financial problems for more Americans, who are falling behind on consumer debt, including home equity loans, at the highest rate since 2001, the American Bankers Assn. said Tuesday. Credit counselors said consumers were paying the price for reckless attitudes about debt fostered by years of easy credit, particularly in the mortgage market. During the housing boom, home equity loans gave many consumers a ready source of cash as the value of their property shot up. But with prices declining borrowers have less equity available to cash out by selling their houses or refinancing their home equity loans. As a result, late payments on such loans rose to 2.15% in the first quarter, up from 1.94% a year earlier and the highest in nearly two years. On home equity lines of credit, the delinquency rate was 0.6%, the highest since mid-2003. Those jumps helped push the delinquency rate on all consumer loans to 2.42% from 1.94% in the first quarter of last year. The latest rate was the highest since 2001, when the technology bust and the 9/11 attacks led the economy into recession.

U.S. workers' confidence falters in June - 7/3/07 Reuters
U.S. workers' confidence in the labor market fell in June to its lowest level in nine months as more employees worried about financial security and fewer expected hiring to increase, a private survey showed on Tuesday. The Hudson Employment Index slipped to 101.2 in June from 106.9 in May and 102.4 a year ago. After hovering between 32 percent and 33 percent for four straight months, the number of workers who said their employer had plans to hire declined to 30 percent in June, the Hudson survey said. Meanwhile, the number of workers anxious over losing their jobs edged up 1 percentage point to 19 percent, the highest level since last September, according to the survey.

U.S. May factory orders down 0.5% - 7/3/07 MarketWatch
Driven by durable goods, orders for U.S.-made factory goods fell 0.5% in May, the Commerce Department estimated Tuesday. Economists were looking for a fall of about 1.2% in factory orders, according to a survey conducted by MarketWatch. It was the first drop in factory orders in four months. Excluding the transportation sector, orders for factory goods rose 0.7% in May. Excluding the defense sector, orders were down 0.6%. Shipments of factory goods rose 1.0% in May. Inventories increased 0.3%, while unfilled orders rose 0.9%. Orders for durable goods fell a revised 2.4% in May, up from the initial estimate of a 2.8% drop. Orders for nondurable goods increased 1.6%.

Factory sector strengthens further in June - 7/2/07 MarketWatch
The nation's manufacturing firms were growing at a brisk pace in June, further evidence that the economy has brushed off a temporary setback caused by excessive inventories of unsold goods, according to a closely followed survey of top executives released Monday. The Institute for Supply Management index rose to 56.0% from 55.0% in May, above the 55.1% expected by economists surveyed by MarketWatch.

U.S. May construction spending jumps 0.9% - 6/29/07 MarketWatch
Spending on U.S. construction projects jumped 0.9% in May, the most since February 2006, the Commerce Department reported Friday. The gain was driven by a 4.1% increase in spending on federal projects and a 2.7% increase in outlays for private nonresidential construction. Outlays on private residential projects fell by 0.8% in May, following a decline of 0.4% in April. Analysts surveyed by MarketWatch were expecting construction spending to rise by just 0.1% in May.

Core inflation stays within Fed's comfort zone - 6/29/07 MarketWatch
Core consumer prices increased just 0.1% in May, the Commerce Department reported Friday, leaving core inflation within the Federal Reserve's comfort zone for a second straight month. Core prices -- which exclude food and energy costs -- are up just 1.9% in the past 12 months, just inside the central bank's unofficial target range of 1% to 2%. It's the first time in three years that the core personal consumption price index has risen less than 2%. Core inflation had risen 2% in the 12 months through April. The decline in the core year-over-year rate to 1.9% was a surprise following upward revisions to first-quarter data released on Thursday.

Fed not convinced inflation has been whipped - 6/28/07 MarketWatch
The Federal Reserve kept interest rates steady Thursday and said it's not convinced that inflation has been whipped for good. The Federal Open Market Committee cited moderate economic growth and still-high inflationary pressures in its statement following a two-day meeting behind closed doors.

Growth, inflation revised higher in first quarter - 6/28/07 MarketWatch
U.S. economic growth in the first quarter was a little bit stronger than previously believed, but so was inflation, the Commerce Department reported Thursday. The U.S. economy grew at a 0.7% real annual pace in the first three months of the year, the slowest growth in four years, compared with the 0.6% estimate reported last month. Final sales increased 1.7% annualized. Core consumer prices rose at a 2.4% annual pace in the quarter, revised up from a 2.2% pace. Core prices - which exclude food and energy -- are up 2.3% in the past year, revised up from 2.2% earlier. The upward revision to gross domestic product was largely due to larger exports, offsetting downward revisions to consumer spending, business investment and residential investments. Economists surveyed by MarketWatch were expecting a revision to 0.8%.

Demand drops for business-investment goods - 6/27/07 MarketWatch
Demand for U.S.-made investment goods dropped 3% in May, halting a brief surge in businesses' capital spending, the Commerce Department reported Wednesday. Orders for all durable goods fell 2.8% in May, led by a hefty 22.7% drop in orders for civilian aircraft. Orders for all sorts of durable goods were weak in May; only electronic and defense goods recorded an increase. Orders excluding transportation fell 1%, also the largest decline since January.

Consumer confidence falls to 10-month low in June - 6/26/07 MarketWatch
U.S. consumers are "subdued" about the economy and the job market, the Conference Board said Tuesday. The consumer confidence index fell to 103.9 in June from 108.5 in May. It's the lowest since August. Economists were expecting a pullback to 105. The present situation index fell to 127.9 from 136.1; it's the lowest since November. The expectations index fell to 87.9 from 90.1, matching March's low. "Looking ahead, consumers remain rather subdued about short-term economic prospects," said Lynn Franco, director of the research group's consumer research center. The number of Americans who say jobs are plentiful fell to 27% from 29.1%, while the number who said jobs are hard to get rose to 21.1% from 19.7%.

Inventory of homes for sale hits 15-year high - 5/25/07 MarketWatch
The inventory of previously owned homes up for sale in May rose to the highest level in relation to sales in 15 years, a real-estate trade group said Monday. Sales of existing homes fell 0.3% last month to a seasonally adjusted annual rate of 5.99 million, down from the upwardly revised 6.01 million in April, the National Association of Realtors reported. Still, May's sales were stronger than the 5.90 million pace that economists surveyed by MarketWatch had been expecting. Inventories of homes on the market rose by 5% to a record 4.43 million, representing an 8.9-month supply at the May sales pace. That's the biggest overhang of inventory since June 1992, at the tail end of the last housing bust. The inventory figure compared with 8.4 months in April and 7.4 months in March. Home builders have their own inventories of unsold homes to contend with. High levels of inventories should keep prices flat or falling in coming months.

U.S. economy's weathered the worst, index shows - 6/21/07 MarketWatch
Leading indicators of U.S. economic activity increased 0.3% in May, suggesting the economy may have weathered the storm of the housing slump and rising gas prices, the Conference Board said Thursday. Economists had been anticipating a 0.2% increase, according to a survey conducted by MarketWatch. And a revision pointed to the leading indicators not as weak in April as first indicated. The leading index fell a revised 0.3% in April, up from a 0.5% decline reported last month. In May, the coincident indicator, which measures where the economy is at present, rose 0.2%, the fourth straight monthly increase. Over the past six months, the coincident index rose at a 1.6% annual rate. By comparison, the leading index is up at a 0.6% annual rate.

Housing starts fall 2.1% to 1.47 million pace - 6/19/07 MarketWatch
Starts of new homes in the United States fell by 2.1% to a seasonally adjusted annual pace of 1.47 million in May, as building permits for new construction rose 3% to 1.50 million on a jump in multifamily dwellings, the Commerce Department estimated Tuesday. The figures were slightly stronger than expected by economists surveyed by MarketWatch. Both starts and permits were forecast to fall to 1.46 million. Completions of housing units fell 0.5% to a seasonally adjusted annual rate of 1.534 million, the lowest total in six years. Construction of single-family homes weakened further in May, while building of multifamily buildings strengthened. Home builders' confidence falls to 16-year low - 6/18/07 MarketWatch The outlook for U.S. home building is the worst in 16 years, the National Association of Home Builders reported Monday. The builders' housing market index fell by two points to 28 in June, the lowest since February 1991. The decline was in line with expectations of economists surveyed by MarketWatch.

Energy Costs Continue To Swell - 6/16/07 Washington Post
Energy costs continued to surge in May, but underlying inflation remained tame -- positive news for policymakers worried about the corrosive effect of rising prices in a slower-growing economy. New Labor Department data showed energy prices jumped 5.4 percent in May from the previous month. That pushed the consumer price index up 0.7 percent on a seasonally adjusted basis, the largest monthly increase in nearly two years. The index grew 0.4 percent on a seasonally adjusted basis in April. Core inflation, which excludes volatile food and energy costs, rose just 0.1 percent, seasonally adjusted, and over the past year has risen a modest 2.2 percent. In contrast to quickly rising energy costs, prices for clothing fell 0.3 percent, while prices for housing showed a modest 0.2 percent increase, reflecting the country's soft real estate market.

Consumer sentiment fades to 83.7 in early June - 6/15/07 MarketWatch
U.S. consumer sentiment eased in early June, according to a monthly survey released Friday by Reuters and the University of Michigan. The consumer sentiment index fell to 83.7 from 88.3 in May. Economists were expecting the index to fall to 87.0. The current conditions index dropped to 100.2 from 105.1. The expectations index fell to 73.0 from 77.6. Inflation expectations over the next five years fell to 3% from 3.1%, while inflation expectations for the next year rose to 3.5% from 3.3%.

CPI running hot, but core rate remains cool - 6/15/07 MarketWatch
Higher energy prices drove the U.S. consumer price index up by 0.7% in May, its largest increase since Hurricane Katrina and the second largest in 16 years, the Labor Department reported Friday. But while consumer inflation was scorching hot, the core rate of inflation -- which excludes food and energy costs -- rose just 0.1%. Core inflation has thus risen at a 2.2% rate in the past 12 months, the smallest gain in more than a year and close to the Federal Reserve's target range. After peaking at a 2.9% annualized rate in September, core inflation has risen at annual clip of just 1.6% in the past three months. By contrast, the CPI including all items is up 2.7% in the past year.

Producer prices rise 0.9% on energy - 6/14/07 MarketWatch
Led by another big gain in energy prices, wholesale prices rose a greater-than-expected 0.9% in May, the Labor Department reported Thursday. Wholesale food prices fell 0.2%, the first decline in seven months. Energy prices jumped 4.1%, the biggest increase in six months. Wholesale gasoline prices rose 10.2%. The core producer price index, which excludes volatile food and energy prices, rose 0.2%, the first increase in three months. Economists surveyed by MarketWatch were looking for smaller increases of 0.6% on the headline PPI and a 0.1% increase for the core PPI.

Retail sales jump 1.4%, biggest gain in 16 months - 6/13/07 MarketWatch
U.S. retail sales rose by 1.4% in May, the largest seasonally adjusted gain in 16 months, the Commerce Department reported Wednesday. Sales rose for all categories of spending, from gasoline and autos to building supplies and clothing. The gains were much better than expected by economists on Wall Street, who were looking for a 0.7% increase. The report should reassure markets and policymakers that consumers are regaining their footing after a very weak start to the spring. Economists had thought consumers would slow their pace of spending in the second quarter in the face of much higher gasoline prices. Estimates for second-quarter growth will be pushed higher than the current 3% median forecast. Lehman Bros. bumped its estimate to 4% from 3.6%. April's sales were revised higher by a tenth to a 0.1% decline.

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