Economy Watch: Sales, Mortgage, Gas

ShopperTrak Retail Sales Data
For the week ended August 22, 2011, ShopperTrak's National Retail Sales Estimate rose 1.2% to $95.863 billion from the week before of $94.760 billion, but was down 4.2% from the same period last year. With only one week left for Back to School, ShopperTrak expects diminishing returns.

ICSC Retail Sales Data
The International Council of Shopping Centers and Goldman Sachs reported its chain-store sales index for the week ending on August 20, 2011 posted a decline of 1.0% from the previous week, the fourth consecutive week of decline. Year-over-year increase was 3.0%.

Mortgage Rates Drop Again
Bankrate.com reported that the average conforming 30-year fixed mortgage rate fell to 4.41% from last week's 4.45%, according to its weekly national survey ending August 24, 2011. This is the lowest rate since Bankrate started its weekly mortgage survey in September 1985. It also reported that the average 15-year fixed mortgage rate rose to 3.63% from 3.58% last week. The Mortgage Bankers Association reported mortgage applications were down 2.4% compared to the week earlier, with 79.8% of mortgage loans going toward refinancing rather than home purchases.

Gas Prices
The Energy Department announced that for week ending August 15, 2011, the average price of US gasoline fell to $3.581 a gallon from $3.604 per gallon week earlier.

Diesel prices fell to $3.81 from $3.84 last week.

Of note, US ethanol exports rose as the market for blending ethanol into gasoline reached its saturation point

Nearly all fuel ethanol currently used in the US is consumed as a blend with gasoline in volumes containing up to 10 percent ethanol (E10), and that market is reaching saturation despite a waiver system to push the blend to 15% ethanol (so-called E15) for vehicles produced after 2000. However, concerns over potential mis-fueling, associated liabilities, and other issues continue to pose significant near-term barriers to the marketing of E15, so producers turned to exports. The use of high-ethanol fuels (E85, for example) is limited in the US. According to the EIA, ethanol imports went from a high of about 130 million gallons in autumn 2006 to a current low of near zero, while exports went from near zero in autumn 2006 to current rate of under 80 million gallons after peaking in the spring 2011 at 120 million gallons.

Looking forward, prospects for US ethanol exports will depend in part on the ability of the US market to absorb additional volumes of ethanol in the form of E15 and/or E85. All else equal, E15 is likely to be a more economically attractive market to domestic ethanol producers. Future developments in agricultural markets for corn and sugar will continue to impact the direction and magnitude of ethanol trade flows. Oil market developments will also be a factor, reflecting the fact that Brazil and some other important global markets allow consumers to choose between renewable and non-renewable motor fuels based on economic criteria.