GDP

The figure was less than the initially reported GDP rise of a 3.2% annual rate, which the government announced on April 30.

It was also less than economists were expecting. The revised GDP was forecast to have risen at a 3.3% rate in the first quarter, according to a consensus of economist opinion from Briefing.com.

The Commerce Department said personal spending, investment and export activity were fueling the economy. However, the government said these gains were offset by "negative contributions from state and local government spending and residential fixed investments," as well as increases in import activity. 

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Manufacturing (ISM)

The reading came in slightly higher than the decrease to 59.4 economists had expected, according to a Briefing.com consensus survey.

Levels higher than 50 signal manufacturing growth, while readings below 50 indicate contraction.

"All in all, this is a very good sign for the overall economy and suggests sustainable growth in the manufacturing sector in the U.S.," said John Silvia, chief economist at Wells Fargo.

May's manufacturing activity was largely driven by an uptick in employment and continued strength in production and new orders, said ISM chairman Norbert Ore in a prepared statement.

Inventory drop: The slight slowdown in manufacturing growth from the previous month was due to a sharp decrease in inventory levels, said Silvia.

ISM's inventory index fell for a second consecutive month to 45.6 in May from 49.4 in April, with eight out of the 18 industries surveyed reporting drops in inventory.

"What happened is the inventory number came down, so inventory rebuilding is falling, which is part of a correction to an inventory buildup," he said. "But everyone was worried that with the inventory reduction, everything else would come down too, so the fact that that's not the case is a very good sign."

Of the 18 industries surveyed, the only sector that reported a slowdown in growth in May was the petroleum and coal products industry, the report showed.

Sixteen of the 18 industries reported expansion. Growth in the paper products, wood products, transportation equipment and electrical equipment industries increased the most in May.

New orders and production: ISM's index of new orders remained steady at 65.7 in May, marking the eleventh month of growth, while the institute's production index edged lower to 66.6 in May from 66.9 in April.

While the production index was lower, it still marked the 12th consecutive month of growth, and 15 industries reported expansion, led by the wood and paper products sector.

Employment: The employment index ticked up to 59.8 in May from 58.5 in April, the index's sixth month of growth.

Twelve of the 18 industries surveyed reported increased employment in May, led by the petroleum and coal products, paper products, transportation equipment and fabricated metal products sectors.

Given the overall trend of manufacturing growth over the past 10 months, and with May's increase in employment, Silvia said he expects activity in the sector to continue to expand.

"We should definitely see continued growth as the economy improves," said Silvia. "It may not move ahead as fast as some people would like, but its getting there."

The monthly report surveys ISM members, who are purchasing managers in the manufacturing industry. The index tracks new orders, production, employment, supplier deliveries, inventories, customers' inventories, backlog of orders, prices, new export orders, imports and buying policies. 

TN faces a slow economic recoveryManufacturing (ISM)

Half of all loan modifications delinquent again within year

Only 40.7% of loans modified in the second quarter last year were delinquent after nine months, compared to 51.6% of those adjusted at the end of 2008, according to the report, published by the Office of Thrift Supervision and Comptroller of the Currency.

The quarterly report covers 64% of all mortgages outstanding in the United States -- some 34 million loans totaling nearly $6 trillion in principal balances. It offers one of the most comprehensive looks at the state of mortgages in America.

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And modifications made under President Obama's foreclosure prevention program, known as HAMP, also had lower redefault rates than non-government modifications. Some 7.7% of HAMP modifications were delinquent after three months, compared with 11.3% of all modifications.

Under the HAMP program, borrowers' monthly payments are reduced to no more than 31% of their pre-tax income. Borrowers also receive incentives for making timely mortgage payments.

Interest rate reductions were the most common method that servicers used to reduce monthly payments in the first quarter, implementing them in 85.9% of all modifications. Term extensions were used in 46.8% of modifications, while principal reduction was utilized only 1.9% of the time.

Many experts say that servicers must do more principal reduction if they want to halt the foreclosure tidal wave. Homeowners are more likely to walk away if they owe much more than the home is worth, a situation about 1 in 4 borrowers find themselves in.

The report also found that delinquency rates dropped for both mortgage made to credit-worthy and to subprime borrowers. The number of newly initiated and completed foreclosures, however, increased by nearly 19% each.

Short sales increased by 9.2% for the quarter, but 120.4% for the year.

Still, servicers are working with borrowers to help them stay in their homes, the report found. There were 1.7 times as many modifications and payment plans initiated in the first quarter as new foreclosures. 

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Inflation (CPI)

"Inflation continues to be a non-issue," said Anika Khan, Wells Fargo economist, in a research note.

On a monthly basis, CPI fell by 0.1% in April. Economists surveyed by Briefing.com expected a 0.1% jump. The decline was largely due to a 1.4% drop in the energy index, the report said.

Despite its April decline, the energy index has soared 18.5% over the last year.

The small overall CPI increases "should continue to allow the Fed to keep short-term interest rates low," Khan said.

Core CPI: The even more closely watched core CPI, which excludes volatile food and energy prices, rose 0.9% on an annual basis and was unchanged over the month.

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Index-by-index: The food index jumped 0.5% on an annual basis. It rose 0.2% in April, the same increase as the previous month.

The indexes for recreation, new and used motor vehicles, and medical care also posted increases in April. Other sectors declined, including apparel and household furnishings.

CPI is based on prices of goods and services that people buy for day-to-day living. Prices are collected each month in 87 urban areas across the country, from about 4,000 residences and 25,000 stores. 

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Manufacturing (ISM)

The reading came in slightly higher than the decrease to 59.4 economists had expected, according to a Briefing.com consensus survey.

Levels higher than 50 signal manufacturing growth, while readings below 50 indicate contraction.

"All in all, this is a very good sign for the overall economy and suggests sustainable growth in the manufacturing sector in the U.S.," said John Silvia, chief economist at Wells Fargo.

May's manufacturing activity was largely driven by an uptick in employment and continued strength in production and new orders, said ISM chairman Norbert Ore in a prepared statement.

Inventory drop: The slight slowdown in manufacturing growth from the previous month was due to a sharp decrease in inventory levels, said Silvia.

ISM's inventory index fell for a second consecutive month to 45.6 in May from 49.4 in April, with eight out of the 18 industries surveyed reporting drops in inventory.

"What happened is the inventory number came down, so inventory rebuilding is falling, which is part of a correction to an inventory buildup," he said. "But everyone was worried that with the inventory reduction, everything else would come down too, so the fact that that's not the case is a very good sign."

Of the 18 industries surveyed, the only sector that reported a slowdown in growth in May was the petroleum and coal products industry, the report showed.

Sixteen of the 18 industries reported expansion. Growth in the paper products, wood products, transportation equipment and electrical equipment industries increased the most in May.

New orders and production: ISM's index of new orders remained steady at 65.7 in May, marking the eleventh month of growth, while the institute's production index edged lower to 66.6 in May from 66.9 in April.

While the production index was lower, it still marked the 12th consecutive month of growth, and 15 industries reported expansion, led by the wood and paper products sector.

Employment: The employment index ticked up to 59.8 in May from 58.5 in April, the index's sixth month of growth.

Twelve of the 18 industries surveyed reported increased employment in May, led by the petroleum and coal products, paper products, transportation equipment and fabricated metal products sectors.

Given the overall trend of manufacturing growth over the past 10 months, and with May's increase in employment, Silvia said he expects activity in the sector to continue to expand.

"We should definitely see continued growth as the economy improves," said Silvia. "It may not move ahead as fast as some people would like, but its getting there."

The monthly report surveys ISM members, who are purchasing managers in the manufacturing industry. The index tracks new orders, production, employment, supplier deliveries, inventories, customers' inventories, backlog of orders, prices, new export orders, imports and buying policies. 

TN faces a slow economic recoveryManufacturing (ISM)

GDP

The figure was less than the initially reported GDP rise of a 3.2% annual rate, which the government announced on April 30.

It was also less than economists were expecting. The revised GDP was forecast to have risen at a 3.3% rate in the first quarter, according to a consensus of economist opinion from Briefing.com.

The Commerce Department said personal spending, investment and export activity were fueling the economy. However, the government said these gains were offset by "negative contributions from state and local government spending and residential fixed investments," as well as increases in import activity. 

Stocks slide on weak jobs reportGDP

Consumer Confidence

Economists were expecting the index to increase to 58.3, according to a Briefing.com consensus survey. The figure, which is based on a survey of 5,000 U.S. households, is closely watched because consumer spending makes up two-thirds of the nation's economic activity.

The Conference Board said the survey cutoff date was May 18, meaning that the data took into account such events as the "flash crash" of May 6 and the ongoing European debt crisis. It would not have included some of the events that have roiled markets in recent days, such as the tensions in Korea.

"Consumer confidence posted its third consecutive monthly gain, and although still weak by historical levels, appears to be gaining some traction," said Lynn Franco, director of the Conference Board, in a statement. "Consumers apprehension about current business conditions and the job market continues to dissipate.

The overall index has been recovering slowly since reaching a record low of 25.3 in February 2009, but was still far from a reading above 90, which indicates the economy is stable, and 100 or above, which indicates strong growth.

The expectation index, which measures consumers' outlook over the next few months, rose to 85.3, the highest level since August 2007, when it came in at 89.2.

"The improvement has been fueled primarily by growing optimism about business and labor market conditions." Franco said.

The percentage of Americans expecting business conditions to pick up increased to 23.5% from 19.7% last month, and fewer expected circumstances to worsen.

The percentage of those expecting the job market to improve also edged higher to 20.4% from 17.7% the previous month. Last month, employers added the most jobs since March 2006, and economists expect payrolls to increase by 500,000 jobs this month, which would be the most since September 1997.

Those expecting a rise in their incomes improved modestly to 11.3% from 10.5%.

"The Consumer Confidence Index tends to reflect consumer impressions of the direction of the jobs market," said Jim Baird, partner and chief investment strategist for Plante Moran Financial Advisors, in a research note. "The recent marked improvement in the pace of job creation is clearly lifting spirits."

But as spooked investors remain fixated on debt problems in Europe and growing tensions in Korea, Baird said the market's recent turmoil "will undoubtedly weigh" on consumer sentiment.

"We do not expect discretionary spending to return to pre-recession levels for some time," Baird said. "Nonetheless, should we see continued improvement in the jobs market as anticipated in the months ahead, improving personal income should be supportive of spending growth." 

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