Follow us:
  1. Home
  2. News
  3. Finance News
  4. Inflation

Consumer Goods Prices and Inflation

Recent Articles

Sort by:

New Fed Chair says rates will rise as needed to fight inflation

The fairly obvious statement sent the stock market into tailspin

Newly installed Federal Reserve Chairman Jerome Powell says he and other Fed members are watching inflation closely and will hike interest rates as needed this year to keep it under control.

The stock market took that to mean that there is a possibility of four or more rate hikes in 2018, not the three that have been priced into stocks.

As Powell made those comments to the House Financial Services Committee, stocks plunged in a broad sell-off, with the Dow Jones Industrial Average closing down nearly 300 points.

Powell's comments might have spooked investors, but they held some good news for consumers. The new Fed Chairman said the economy is doing very well -- so well that rates might have to rise a little more than anticipated.

Brake pedal on the economy

The Federal Reserve uses its discount rate as sort of a brake pedal on the economy. When the economy begins to heat up, prices tend to rise. While some inflation is good, the Fed will raise rates to keep inflation from rising too much.

"The economic outlook remains strong," Powell told lawmakers. "The robust job market should continue to support growth in household incomes and consumer spending, solid economic growth among our trading partners should lead to further gains in U.S. exports, and upbeat business sentiment and strong sales growth will likely continue to boost business investment."

But Powell says the new tax law, passed in December, is adding stimulus to an already healthy economy. That could make the economy grow even faster and make inflation more of a threat. If it does, he says the Fed will respond accordingly.

Rates rise slowly

When the Fed hikes its discount rate, it does so slowly. Since it began the process at the end of 2016, it has raised the rate by 25 basis points, or a quarter of a percent, each time. The current rate is at 2 percent, which is still very low on a historical basis.

The stock market reacted badly to the possibility that the rate might rise 1 percent this year instead of 0.75 percent because even slightly higher borrowing costs can make a company less profitable.

But the discount rate also directly affects consumers, since it is used to set a bank's prime rate and is the basis for variable rate consumer credit, including credit cards.

The average credit card rate is already at or near record highs, so consumers carrying a large balance could see their interest charges rise, albeit slightly, later this year.

Newly installed Federal Reserve Chairman Jerome Powell says he and other Fed members are watching inflation closely and will hike interest rates as needed...

Consumer prices head higher in September

The increase means a bump in 2018 Social Security benefits

The cost of living moved upward in September, due in large part to rising gasoline costs.

According to the Bureau of Labor Statistics (BLS), the Consumer Price Index (CPI) rose a seasonally adjusted 0.5 percent last month and is up 2.2% over the last 12 months.

Because of that year-over year bump, more than 66 million people on Social Security will see their benefits rise 2.0 percent next year.

Information on Medicare changes for 2018 will be announced later.

Energy costs soar

Energy prices surged 6.1 percent last month on top of August’s 2.8 percent jump. The driving force was an increase of 13.1 percent in the cost of gasoline -- the largest monthly increase since June 2009. Fuel oil prices posted a gain of 8.2 percent, while electricity was unchanged and natural gas prices fell 0.8 percent.

Over the year ending in September, energy prices are up a sharp 10.1 percent, the largest 12-month increase since the period ending this past March.

Food prices barely budge

Food costs inched up just 0.1 percent in September, the same as in August, with grocery prices (food at home) holding steady and restaurant prices up 0.3 percent.

At the supermarket, consumers paid more for nonalcoholic beverages (+0.4 percent), cereals & bakery products, and so-called "other food at home."

Prices were lower for dairy & related products (-0.6 percent), meats, poultry, fish, and eggs (-0.4 percent), and fruits and vegetables (-0.2 percent).

Over the last 12 months, grocery prices rose 0.4 percent, with the overall food category up 1.2 percent.

Core inflation

The core rate of inflation, which strips out the volatile food and energy segments, was up just 0.1 percent in September and 1.7 percent over the past 12 months.

Within that, the cost of shelter, auto insurance, and education increased 0.3 percent. Prices for recreation, wireless phone services, and alcoholic beverages also rose.

Prices fell for new vehicles, household furnishings & operations, used cars and trucks, medical care, and clothing.

The complete report is on the BLS website.

The cost of living moved upward in September, due in large part to rising gasoline costs.According to the Bureau of Labor Statistics (BLS), the Consume...

Wholesale prices on the rise

The surging cost of gasoline was a huge factor

Wholesale prices pushed higher in August, with rising gasoline costs figuring strongly in the mix.

The Bureau of Labor Statistics (BLS) reports its Producer Price Index (PPI) for final demand shot up a seasonally adjusted 0.4 percent in September after rising 0.2 percent in August and dipping 0.1 percent in July.

For the 12 months ended in September, the PPI was up 2.6 percent, the sharpest increase since the year ended in February 2012.

Goods prices head higher

The cost of goods jumped 0.7 percent last month, the biggest advance since a 1.0 percent increase in January.

Two-thirds of the September increase can be attributed to the price of gasoline, which soared 10.9 percent due likely to reduced refining capacity in the Gulf Coast area because of Hurricane Harvey. All told, energy prices climbed 3.4 percent.

Other commodities showing increases were jet fuel, motor vehicles, diesel fuel, fresh & dry vegetables, and chicken eggs. Prices for young chickens, on the other hand, fell 4.7 percent with the costs of electric power and integrated microcircuits also lower.

A hike in services prices

The cost of services was up 0.4 percent in September, the largest rise since April. Roughly 30 percent of that was for machinery, equipment, parts, and supplies wholesaling, which jumped 1.3 percent.

Also advancing were prices for clothing, footwear & accessories retailing; health, beauty, and optical goods retailing; truck transportation of freight; deposit services; and food and alcohol wholesaling

The cost of residential real estate loans fell 2.6 percent, with prices for automobiles & automobile parts retailing and for clothing wholesaling also declining.

The core rate of inflation, which strips out the volatile foods and energy was up 0.3 percent.

The complete report is on the BLS website.

Wholesale prices pushed higher in August, with rising gasoline costs figuring strongly in the mix.The Bureau of Labor Statistics (BLS) reports its Prod...

Consumer prices head higher in August

Gasoline and housing costs were the main culprits

Rising gasoline and shelter costs sent the Bureau of Labor Statistics's (BLS) Consumer Price Index (CPI) higher during August.

The latest government tally shows the CPI was up 0.4% last month, and 1.9% on a year-over-year basis.

Hurricane Harvey had a very small effect on survey response rates, according to DOL, with price collection late in the month disrupted in just two of the 87 collection areas.

Soaring gasoline prices

Energy costs jumped 2.8%, the largest monthly increase since January. The price of gasoline surged 6.3% after holding steady in July, while natural gas fell 0.5% on top of the previous month's 2.3% decline. Electricity was unchanged from the month prior.

Over the past 12 months, energy prices have risen 6.4%, with gasoline up 10.4%, natural gas gaining 5.4%, and electricity advancing 2.3%.

Food prices moderate

Food prices inched up just 0.1% in August, with the “food at home” category -- groceries -- down 0.2%. Five of the six major grocery store food group indexes fell, with dairy & related products and nonalcoholic beverages both down 0.4%. Additionally, meats, poultry, fish, & eggs, and fruits & vegetables both dropped 0.2%, while the “other food” category was down 0.1%. The only major grocery store food group to rise -- cereal & bakery products -- was up 0.3%.

For the year ended in August, grocery prices are up 0.3%.

The “food away for home,” or restaurant prices, rose 0.3% last month, and are up 2.2% over the last year. Overall, food costs for the past 12 months have risen 1.1%.

Core inflation

Prices for all items excluding the volatile food and energy the so-called “core rate” of inflation rose 0.2% in August, with housing the main contributor with a rise of 0.5%. Other increases came in motor vehicle insurance, recreation, medical care, clothing, alcoholic beverages, and household furnishings & operations.

On the other hand, airline fares, used cars & trucks, tobacco, education, wireless telephone services, and personal care all declined.

New vehicle prices were unchanged.

Over the past 12 months, the core rate of inflation is up 1.7%.

The complete report is available on the BLS website.

Jobless claims

There was a sizable drop last week in first-time applications for state unemployment benefits.

According to the Department of Labor (DOL), initial jobless claims were down by 14,000 in the week ending September 9 -- a week affected by Hurricanes Harvey and Irma -- to a seasonally adjusted 284,000. Claims soared by 62,000 the week before.

The four-week moving average totaled 263,250, the highest level since August 13, 2016, an increase of 13,000 from the previous week.

Many economists consider the four-week moving average a more accurate gauge of the labor market due to it's relative lack of volatility.

The complete report is available on the DOL website.

Rising gasoline and shelter costs sent the Bureau of Labor Statistics's (BLS) Consumer Price Index (CPI) higher during Augu...

Wholesale prices on the rise in August

Rising energy costs were a major factor

Inflation on the wholesale level, one step shy of what consumers pay for goods and services, edged higher in August.

What the Department of Labor (DOL) calls the Producer Price Index (PPI) for final demand was up a seasonally adjusted 0.2% last month after declining 0.1% in July and rising 0.1% in June.

For the 12 months ended in August, the PPI is up 2.4%.

Goods and services

A 0.5% increase in the cost of goods accounts for three-quarters of the advance in August, while services prices were up a tiny 0.1%

Most of the rise in the price of goods came from a 3.3% surge in the cost of energy. In that category, gasoline prices shot up 9.5%.

Food prices were down 1.3%, with meat costs down 3.4% and fresh vegetables also coming in lower.

The “core rate” of wholesale inflation, which excludes the volatile food and energy categories, rose 0.2%

The increase in prices for services can be laid to consumer loans (+1.7%) along with higher costs for outpatient care, machinery and equipment wholesaling, truck transportation of freight, and food retailing.

On the other hand, declines were seen in fuels and lubricants retailing costs (-6.8%), along with prices for chemicals and allied products wholesaling, guestroom rental, and airline passenger services.

The complete report is available on the DOL website.

Inflation on the wholesale level, one step shy of what consumers pay for goods and services, edged higher in August.What the Department of Labor (DOL)...

A hint of consumer inflation in July

A rise in food prices was a factor

Inflation on the consumer level as measured by the Department of Labor's (DOL) Consumer Price Index (CPI) inched up a seasonally adjusted 0.1% in July as the costs of food, housing, and medical care all headed higher.

For the last 12 months, prices are up 1.7%.

Food prices on the rise

The cost of food rose 0.2% last month following no change in June. Grocery store prices (food at home) were up 0.2%, thanks to rising costs for fish and eggs (both +0.7), fruits & vegetables (+0.5) and dairy & related products (+0.3%).

On the other hand, cereals & bakery products were down 0.4% and nonalcoholic beverage costs fell 0.3%. So-called “other food at home” was unchanged. For the year ending in July, grocery store prices are up 0.3%, the first 12-month increase since the period ending November 2015.

The food away from home category -- which includes restaurant prices – rose 0.2% in July and 2.1% over the past year.

The overall cost of food has gone up 1.1% in the 12 months ending in June.

Energy costs slip

Energy prices were down for a third straight month in July, dipping 0.1%. The main reason for that was a 2.3% decline in the cost of natural gas -- the sharpest since April 2015. Gasoline prices were unchanged, while the cost of electricity ticked up 0.4%.

Energy prices are up 3.4% over the last year.

Core inflation

The cost of living for all items excluding the volatile food and energy categories, rose 0.1% in July, the fourth month in a row it increased by that amount.

Within that category, costs were up for housing (+0.1%), medical care (+0.4%), recreation (+0.3%), clothing (+0.3%), and airline fares (+0.7%).

In contrast, declines were posted for new vehicles (-0.5%) -- the largest decline since August 2009 -- wireless phone services (-0.3%), used cars and trucks (-0.5%), and household furnishings and operations (-0.2%).

Over the past 12 months, this “core” rate of inflation is up 1.7%.

The complete July inflation report is available on the DOL website.

Inflation on the consumer level as measured by the Department of Labor's (DOL) Consumer Price Index (CPI) inched up a seasonally adjusted 0.1% in July as t...

A dip in July wholesale prices

First-time jobless claims were on the rise

The cost of the things we buy edged lower on the wholesale level.

What the Bureau of Labor Statistics (BLS) calls the Producer Price Index (PPI) for final demand inched down a seasonally adjusted 0.1% in July after rising 0.1% in June and holding steady in May.

For the 12 months ended in July, the PPI is up 1.9%.

Services and goods prices drop

The cost of services dropped 0.2% last month, accounting for over 80% of the decline in the July PPI. It's the first decrease since February.

On the other hand, prices for traveler accommodation services, apparel wholesaling, and hospital outpatient care also increased.

Goods prices were down 0.1% last month after rising 0.1% in June.

Gasoline prices were down 1.4% leading to an overall decline of 0.3% in energy costs. Food costs were unchanged, as declines in the costs of beef and veal outweighed increases in pork and grain prices.

The “core” rate of wholesale inflation -- less the volatile food and energy categories -- declined 0.1%. It's up 1.8% for the year ending in July.

The complete report may be found on the BLS website.

Jobless claims

Initial jobless claims rose last week for the first time in five weeks.

The Department of Labor (DOL) reports first-time applications for state unemployment benefits totaled a seasonally adjusted 244,000 in the week ending August 5. That's an advance of 3,000 from the previous week's level, which was revised higher by 1,000.

What economists see as a more accurate gauge of the labor market for its relative lack of volatility -- the four-week moving average -- fell by 1,000 from the previous week to 241,000.

The full report is available on the DOL website.

The cost of the things we buy edged lower on the wholesale level.What the Bureau of Labor Statistics (BLS) calls the Pro...

Consumer inflation on hold in June

Falling energy costs and steady food prices get the credit

A break from inflation to kick off the summer.

The Labor Department (DOL) reports its Consumer Price Index (CPI was unchanged in June, thanks to a drop in energy costs and no movement in food prices.

Over the last 12 months, the CPI is up 1.6%.

Energy down, food unchanged

The 1.6% decline in energy costs was spearheaded by a drop of 2.8% in the price of gasoline, following May's plunge of 6.4%. Electricity and natural gas costs were also lower, falling 0.6% and 0.2% respectively.

Energy costs have risen 2.3% over the last year.

Food prices held steady last month, with the food at home category -- grocery store prices -- down 0.1% and the cost of restaurant meals -- food away from home -- unchanged.

Five of the six major grocery store food groups declined, with nonalcoholic beverages down 0.6%, and dairy & related products off 0.5%. Other food at home was down 0.3%, while cereals & bakery products, and fruits & vegetables both dipped 0.1%.

Meats, poultry, fish & eggs, meanwhile, rose 0.6%, led by a 2.9% surge in the price of beef.

Food costs are up 0.9% for the 12 months ended in June.

Core inflation

The “core” rate of inflation, excluding the volatile food and energy categories, was up 0.1% the third straight increase. Advances came in car insurance (+1.0%), medical care (+0.4%) -- the largest increase since last August, education (+0.3) and housing (+0.2).

Declines were registered in airline fares (-2.7%), cell phone service (-0.9%), used cars and trucks (-0.7%) and new cars and trucks (-0.3%).

Over the last 12 months, the core rate of inflation is up 1.7%.

The full report is available on the DOL website. 

A break from inflation to kick off the summer.The Labor Department (DOL) reports its Consumer Price Index (CPI was unchanged in June, thanks to a drop...

Wholesale prices up moderately in June

The cost of services rose for a fourth straight month

The prices of goods and services one step shy of the consumer level -- the Producer Price Index (PPI) for final demand -- barely budged last month.

The Bureau of Labor Statistics (BLS) reports the inflation gauge inched up a seasonally adjusted 0.1% in June following no change in May and an 0.5% surge in April.

For the 12 months ended in June, the PPI was up 2.0%.

Services prices on the rise

The cost of services was responsible for 80% of the increase with an advance of 0.2% -- the fourth consecutive increase.

A major factor was prices for securities brokerage, dealing, investment advice, and related services (+0.4%). Costs for machinery and equipment wholesaling, loan services (partial), insurance, inpatient care, and truck transportation of freight also rose, while apparel, footwear and accessories retailing prices fell 3.7%.

The cost of goods

Goods prices edged 0.1% higher in June following a 0.5% decline a month earlier.

The advance was led by meat prices which shot up 5.5%. Pharmaceutical preparations, light motor trucks, young chickens, potatoes, and butter also rose. Gasoline, on the other hands, fell 1.1% with fresh vegetables (except potatoes), plastic resins and materials, and unprocessed finfish also dropping.

The “core” rate of wholesale inflation, which strips out food, energy, and trade services, was up 0.2%. For the 12 months ended in June, it rose 2.0%

The complete report may be found on the BLS website.

Jobless claims

In a separate report, the Labor department (DOL) says initial jobless claims were lower last week.

The number of people filing first-time applications for state unemployment benefits totaled 247,000 in the week ending July 8, down 3,000from the previous week's level which was revised upward by 2,000.

The less volatile 4-week moving average rose 2,250 from the previous week's upwardly revised average to 245,750.

The full report is available on the DOL website.

Photo (c) sakkmesterke - FotoliaThe prices of goods and services one step shy of the consumer level -- the Producer Price Index (PPI) for final deman...

A step back for consumer inflation

Falling energy costs kept prices in check

A drop in energy costs helped put the brakes on inflation on the consumer level in May.

The Labor Department (DOL) reports its Consumer Price Index (CPI) fell a seasonally adjusted 0.1% last month, bringing the rise in consumer prices over the last 12 months to 1.9%.

Energy and food costs

The price of energy fell 2.7% following April's increase of 1.1%. The biggest factor last month was gasoline, which plunged 6.4%. That offset increases in natural (+1.9%) and electricity (+0.3%) . Over the past 12 months, energy prices have gone up 5.4%.

Food prices were up 0.2% in May -- the fifth monthly increase in a row. The cost of food at home, or groceries, inched up 0.1%.

Within that category, nonalcoholic beverages & beverage materials jumped 1.1%, meats, poultry, while fish & eggs, dairy & related products and cereals & bakery products each rose 0.3%.

Decliners included fruits & vegetables (-0.6%) and other food at home (-0.1).

Grocery prices over the past year are down 0.2%, due largely to a drop of 2.1% the cost meats, poultry, fish and eggs. Restaurant prices, or food away from home, rose 0.2% in May and are up 2.3 percent over the last 12 months. Overall food costs over the past year are up 0.9%.

Core inflation

The “core” rate of inflation, which excludes the volatile food and energy categories, was up 0.1% -- the same as April. Over the post 12 months, it's up 1.7%.

Areas outside of food and energy that saw costs increase include housing (+0.2%) and motor vehicle insurance (+1.1%). Prices for communication, new vehicles, and used cars and trucks all dipped 0.2%. Clothing and alcoholic beverage costs also declined.

The price of medical care index was unchanged in May.

The full report is available on the DOL website.

A drop in energy costs helped put the brakes on inflation on the consumer level in May.The Labor Department (DOL) reports its Consumer Price Index (CPI...

Wholesale inflation on hold in May

Services prices rose, while the cost of goods moved lower

The cost of goods and services one step shy of the retail level held steady in May.

According to the Bureau of Labor Statistics (BLS), its Producer Price Index (PPI) for final demand was unchanged last month following a surge of 0.5% in April and a 0.1% dip in March.

For the 12 months ended in May, the PPI is 2.4%

Goods and services

The cost of goods fell 0.5% last month the biggest decline since a drop of 0.6% in February 2016. Most May's decline was in energy prices, which plummeted 3.0%, thanks to a slide of 11.2% in gasoline prices.

Food prices dipped 0.2%. Fresh & dry vegetables and fresh fruits & melons were lower, while beef prices rose.

The “core” inflation rate for goods, which strips out food and energy, edged 0.1%.

Services prices were 0.3% in May on top of April's 0.4% advance. Roughly half of the increase was due to a 16.1% run-up in the cost of fuels and lubricants retailing. Prices for clothing, shoes and accessories retailing; machinery and equipment wholesaling; residential real estate loans (partial); automobiles & automobile parts retailing; and food wholesaling also moved higher.

Hotel room prices fell 5.2%, with airline passenger services and food retailing also dropping.

The services core inflation rate -- less trade, transportation, and warehousing -- fell 0.1%.  

The complete report may be found on the BLS website.

The cost of goods and services one step shy of the retail level held steady in May.According to the Bureau of Labor Statistics (BLS), its Producer Pric...

Consumer prices edge higher in April

Energy costs were a major contributor

A smidgeon of inflation in April.

The Labor Department (DOL) reports its Consumer Price Index rose a slight 0.2% on a seasonally adjusted basis in April, and is up 2.2% over the last 12 months.

Energy and Food costs rise

The price of energy shot up 1.1% last month after falling in March and February. Gasoline which was down 6.2% in March, jumped 1.2%, while natural gas was up 2.2% and electricity rose 0.6%.

Over the past 12 months, gasoline is up 14.3%, natural gas has surged 12.0%, while electricity posted a more modest advance of 2.4%.

The cost of food was up just 0.2%, but it was the fourth increase in a row.

The grocery prices component was up 0.2%, with fruits and vegetables costs up 2.2%, thanks to a 5.1% surge for fresh vegetables -- the largest increase since February 2011.

Four of the five remaining major grocery store food groups fell including meats, poultry, fish, & eggs (-0.6%), cereals & bakery products (- 0.3%), nonalcoholic beverages (-0.3) and dairy (-0.2%). The “other groceries” category increased 0.1%.

Grocery prices have fallen 0.8% over the past year, while the cost of restaurant meals, which was up 0.2% in April, posted a year-over year gain of 2.3%.

Core inflation

The cost of all items excluding the volatile food and energy categories -- the “core” rate of inflation -- rose 0.1% in April after

declining in March. Increased costs were registered for housing (+0.3%) and tobacco (+4.2), along with alcoholic beverages, education and personal care.

Areas that saw declines included communication, with prices for wireless phone service down 1.7%, along with medical care (-0.2%), used cars and trucks (-0.5) and clothing (-0.3%).

The core rate of inflation rose 1.9% over the last 12 months compared with an average annual increase 1.8% over the past decade.

The full report may be found on the DOL website.

A smidgeon of inflation in April.The Labor Department (DOL) reports its Consumer Price Index rose a slight 0.2% on a seasonally adjusted basis in April...

Wholesale prices shoot higher in April

Weekly jobless claims were on the decline

Wholesale prices, or what the government calls the Producer Price Index (PPI) for final demand, headed higher last month as the cost of services rose.

According to the Bureau of Labor Statistics (BLS), the PPI was up a seasonally adjusted 0.5% in April after dipping 0.1%. For the 12 months ending in April, the PPI is up 2.5%, the largest increase since a 2.8% gain in the year ended February 2012.

Almost two-thirds of April's can be attributed to prices for services, which were up 0.4%. Goods prices climbed 0.5%.

The breakdown

More than a quarter of the advance services came from prices for securities brokerage, dealing, investment advice and related services, which shot up 6.6%. Costs of guestroom rental; loan services (partial); machinery, equipment, parts, and supplies wholesaling; portfolio management; and airline passenger services were also on the rise.

On the other hand, prices for fuels and lubricants retailing plunged 14.6%, with food & alcohol retailing and deposit services (partial) costs also declining.

The increase in the cost of goods came as food and energy prices climbed 0.9% and 0.8%, respectively. Cigarette prices were up 2.2%, while the costs of gasoline, fresh & dry vegetables, fresh fruits & melons, residential natural gas and pharmaceutical preparations were higher as well.

Conversely, the price of jet fuel fell 6.1%, and costs for carbon steel scrap and oilseeds also declined.

The “core” rate of inflation on the wholesale level, which excludes the volatile food and energy categories, was 0.4%. On a year-over-year basis, the core rate is up 1.9%

The full report may be found on the BLS website.

Jobless claims

Another decline in weekly applications for state unemployment benefits.

The Labor Department reports in initial jobless claims were down by 2,000 in the week ending May 6 to a seasonally adjusted 236,000 after plunging 19,000 a week earlier.

The 4-week moving average considered a more accurate barometer of the job market due to its lack of volatility inched up 500 to 243,500.

The complete report is available on the DOL website.

Wholesale prices, or what the government calls the Producer Price Index (PPI) for final demand, headed higher last month as the cost of services rose.A...

Inflation takes a holiday

Consumer prices fell during March

Falling gasoline prices helped push the cost of living lower in March.

Figures released by the Bureau of Labor Statistics (BLS) show the Consumer Price Index (CPI) was down a seasonally adjusted 0.3% last month, the first one-month decline since February 2016.

The March decrease held price increases to 2.4% over the last 12 months.

Falling energy costs

Energy prices were down 3.2% in March following February's drop of 1.0%. Gasoline led the decline, plunging 6.2%, followed by natural gas (-0.8%) and electricity (-0.1%).

Over the last year, energy prices rose 10.9%, with gasoline surging 19.9%, natural gas up 10.3%, and electricity gaining 1.6%.

Food prices rise

The cost of food was up 0.3%, with grocery prices rising 0.5% following a 0.2% increase in February.

Four of the six major grocery store food groups rose, with fruits and vegetables gaining 1.6%, and cereals & bakery products and meats, poultry, fish & eggs both up 0.3%. In contrast, the cost of dairy and related products fell 0.6% and nonalcoholic beverage prices slipped 0.1%.

Core inflation

The “core” inflation rate, which strips out the volatile food and energy categories was down 0.1% last month, and up 2.0% over the past 12 months.

The March decline came as communication prices fell 3.5%, along with drops in the costs of used cars and trucks (-0.9%), new vehicles (-0.3%), and clothing (0.7%).

Price increases were registered in housing (+0.1%), medical care (+0.1%), motor vehicle insurance (+1.2%), tobacco (+0.5%), airline fares (+0.4%), and alcoholic beverages (+0.2%).

Recreation, education, and household furnishings & operations costs were unchanged.

The complete report is available on the BLS website

Falling gasoline prices helped push the cost of living lower in March.Figures released by the Bureau of Labor Statistics (BLS) show the Consumer Price...

Wholesale prices on the decline in March

Initial jobless claims inched downward last week

Prices on the wholesale level or -- in governmentese -- the Producer Price Index (PPI) for final demand fell last month.

The Bureau of Labor Statistics (BLS) reports a decline of 0.1% following advances of 0.3% in February and 0.6% in January pushed the PPI up 2.3% for the 12 months ended March 2017 -- the sharpest increase since a 2.4% gain during the 12 months ended March 2012.

Three-fourths of last month's decline came in prices for services, which fell 0.1%. More than half of that was the result of a 0.1% dip for services less trade, transportation, and warehousing. Costs for trade services also edged 0.1% lower.

Final demand goods prices were down 0.1% as well, led by a 2.9% drop in energy costs. On the other hand, food prices were up 0.9%.

The complete report is available on the BLS website.

Jobless claims

From the Department of Labor (DOL), news that initial applications for state unemployment benefits were lower in the week ending April 8. The decline of 1,000 from the previous week put the total number of first-time jobless claims at a seasonally adjusted 234,000. The previous week's level was revised up by 1,000.

The less volatile four-week moving came in at 247,250 -- down 3,000 from the previous week's average, which was revised up by 250.

The full report may be found on the DOL website.

Prices on the wholesale level or -- in governmentese -- the Producer Price Index (PPI) for final demand fell last month....

Consumer prices post tiny gain in February

Falling gas prices offset increases elsewhere

The Department of Labor's (DOL) Consumer Price Index (CPI) posted its smallest advance since last July -- rising just 0.1% in February. That put the gain over the last 12 months at 2.7%.

The slight monthly increase came as gasoline costs fell, partially offsetting increases in other categories including food, housing, and recreation.

Energy down, food on the rise

Energy prices fell 1.0%, in February, its first decline since last July, with gasoline costs down 3.0%. Other major components were up, with natural gas rising 1.5% and electricity increasing 0.8% -- its first advance in four months. Over the past year, energy costs are up 15.2% with all of its major components rising.

Food costs were up 0.2% following January's 0.1% increase. Grocery prices, or food at home, rose 0.3% -- the sharpest advance since June 2015. Four of the six major grocery store food groups were higher: nonalcoholic beverages (+1.5%), dairy and related products (+0.8%), fruits and vegetables (+0.7%), and meats, poultry, fish & eggs (+0.2%). Cereals and bakery products and other food at home both fell 0.4%. Over the last 12 months, grocery prices are down 1.7%.

Food away from home (restaurant prices) rose 0.2% last month after an increase of 0.4% in January. Over the last 12 months, food away from home is up 2.4%, leaving the overall price of food unchanged.

Core inflation

Prices for all items, excluding the volatile food and energy categories, were up 0.2% in February, with the costs of housing, recreation, clothing, airline fares, motor vehicle insurance, education, and medical care among those that increased. Decliners included communication, used cars & trucks, new vehicles, and household furnishings and operations.

For the 12 months ending in February, this “core” rate of inflation was up 2.2% -- the 15th straight month it's been in the range of 2.1-2.3 percent. 

The complete report is available on the DOL website.

The Department of Labor's (DOL) Consumer Price Index (CPI) posted its smallest advance since last July -- rising just 0.1% in February. That put the gain o...

The rate of wholesale inflation slows in February

Energy costs played a big part in the increase

The cost of living one step shy of the consumer level -- referred to by the Bureau of Labor Statistics (BLS) as the Producer Price Index (PPI) for final demand -- rose at a seasonally adjusted rate of 0.3% last month.

For the 12 months ended February 2017, wholesale prices were up 2.2%, the largest advance since an increase of 2.4% in the 12 months ended March 2012.

Services and goods on the rise

Over 80% of the February advance was due to a 0.4% increase for services, the sharpest since last June. A major factor in the increase was the 4.3% surge in the price of traveler accommodation services. Costs for chemicals and allied products wholesaling; legal services; apparel wholesaling; health, beauty, and optical goods retailing; and architectural and engineering services also moved higher.

Offsetting those increases was a 10.0% plunge in the price of automotive fuels and lubricants retailing, along with declines in the costs of wireless telecommunication services and for securities brokerage, dealing, and investment advice.

Prices for goods were up 0.3%, the sixth consecutive rise. Over half of that was due to energy costs, which were up 0.6% with electricity prices surging 1.6%.

Prices for fresh and dry vegetables, jet fuel, liquefied petroleum gas, pharmaceutical preparations, and residual fuels also rose.

Gasoline costs were down 2.5%, while prices for beef and veal, and for search, detection, navigation & guidance systems, and equipment also decreased.

The core rate of inflation, which excludes the volatile food and energy categories, rose 0.3%.

The complete report is available on the BLS website.

The cost of living one step shy of the consumer level -- referred to by the Bureau of Labor Statistics (BLS) as the Producer Price Index (PPI) for final de...

Inflation showing up in online sales

Adobe's Digital Price Index shows big late-year price hikes

The government's latest measure of inflation at the wholesale level saw a significant jump in January.

While the Labor Department has yet to report on the latest inflation number at the consumer level, Adobe's Digital Price Index (DPI) suggests consumers are paying more for things than they were last year, at least when they shop online.

The DPI tracks $7.50 out every $10 spent online with the top 500 U.S. retailers. In the last two months it started tracking prices for five new categories -- alcoholic beverages, auto parts, tools and home improvement products, personal care products, and pet products.

In January, Adobe reports finding higher than expected inflation in consumer goods. Despite holiday sales, December prices were up significantly over December 2015 data.

Trend continues in January

Adobe reports the trend continued into January, with prices increasing 0.05%, which resulted in a 1.2% cumulative inflation rate over just the last three months.

Again, despite intense competition among retailers for holiday dollars, Adobe found that TVs cost 7.8% more than they did a year ago, the cost of appliances was up 6%, and tablets were up 5.4% from a year ago.

So what are we to make of these numbers?

“The inflation we’re seeing is really interesting because the American economy has been struggling with deflation in the last few years, especially in durable goods like computers and appliances," said Luiz Maykot, data science analyst for the Adobe DPI. "But here we’re seeing people out buying TVs and computers, spending their disposable income, and that’s generally a good sign for the economy."

Didn't slow consumer spending that much

Rising prices are never good for the consumers, but Maykot points out that it means businesses are able to raise their prices a bit, which will help keep them in business. And the extent of the price rise didn't seem to bother consumers, who kept spending.

"It’s too soon to tell if this will continue, but it’s an important trend to watch,” Maykot said.

In the new category of alcoholic beverages, Adobe says beer prices rose the most year over year. But it says online wine sales were very strong, suggesting that could become a growing opportunity for online retailers.

Inflation has been largely non-existent since the financial crisis, which is the reason the Federal Reserve has kept interest rates near zero. But after a small hike in December, Fed Chair Janet Yellen, testifying before Congress this week, said there are signs that the economy is beginning to grow faster, suggesting another rate hike next month could be in the cards.

The government's latest measure of inflation at the wholesale level saw a significant jump in January.While the Labor Department has yet to report on t...

Wholesale inflation jumps 0.6% in January

Rise was propelled mostly by gasoline costs

The government reports inflation at the wholesale level surged in January, rising 0.6%. That reflects an increase in costs before goods go on sale to consumers. At some point, however, consumers should expect to pay at least some of those costs.

Most of the January increase was for food, energy, and trade services. When those categories are stripped out, the Producer Price Index rose just 0.2%.

Prices for what are known as final demand goods moved up 1.0% in January, the largest rise since a 1.0% gain in May 2015. Final demand reflects the final stage of the process when a good or service is offered to retailers.

In January, most of the final demand increase can be traced to energy, which was 4.7% higher. Oil and gasoline prices moved up early in the year on the belief that production cuts by OPEC would reduce supply. So far, the evidence on that has been sketchy.

Gasoline was the big driver

When you drill down deeper into the energy category, you see that gasoline was the big driver there. The Labor Department's Bureau of Labor Statistics reports the gasoline index surged 12.9% in January, even though prices have remained more stable at the retail level.

Costs associated with drug production, iron and steel scrap, home heating oil and natural gas, and pork also moved higher. Their rise was partially offset by a 7.2% decline in beef and veal prices.

Since the financial crisis of 2008, the U.S. inflation rate has remained largely non-existent. The reduction in demand for goods and services actually created a deflationary effect.

The Federal Reserve has kept interest rates near 0% for years in an effort to produce a little inflation in the economy. While high inflation, such as what the U.S. experienced in the 1970s, can be very bad for consumers, economists say some inflation is needed to give businesses the ability to raise prices over time.

The government reports inflation at the wholesale level surged in January, rising 0.6%. That reflects an increase in costs before goods go on sale to consu...

Consumer prices on the rise in December

Gasoline costs were sharply higher

A 3.0% spike in the cost of gasoline sent consumer prices higher last month.

The Bureau of Labor Statistics (BLS) reports the December Consumer Price Index (CPI) rose 0.3% and is up 2.1% for all of 2016.

Energy and food

Energy costs shot up 1.5% in December -- the fourth straight increase -- led by a 3.0% increase in the price of gasoline. Electricity was unchanged and the price of natural gas dipped 0.4%, its second straight decline following four months of increases.

Food prices were unchanged, with grocery store prices falling 0.2% -- the eighth consecutive decline. Four of the six major grocery store food groups fell in December: fruits and vegetables (-1.1%); meats, poultry, fish, and eggs (-0.4%); nonalcoholic beverages (- 0.3%); and cereals and bakery products (-0.1%). Dairy and related products rose 0.4% while other food at home was up 0.3%). Food away from home, or restaurant prices, were up 0.2%.

The “core” rate of inflation, which excludes the volatile food and energy categories, was up 0.2% in December and up 2.2% for all of 2016.

In December, housing costs were up 0.3%, car insurance prices jumped 0.8%, medical care rose 0.2%, and airline fares shot up 1.9%.

The complete report is available on the BLS website.

A 3.0% spike in the cost of gasoline sent consumer prices higher last month.The Bureau of Labor Statistics (BLS) reports the December Consumer Price In...

Wholesale prices up again in December

Jobless claims head higher

Wholesale prices, or what the Bureau of Labor Statistics (BLS) calls the Producer Price Index (PPI) for final demand, rose for the third time in four months in December.

Last month's seasonally adjusted increase of 0.3% follows an advance of 0.4% in November and no change in October. For all of 2016, wholesale prices were up 1.6% after falling 1.1% the year before.

Almost 80% of the December increase came from an increase of 0.7% in prices for goods. Within that category, energy prices were up 2.6%, with gasoline costs surging 7.8%. In addition, prices for light motor trucks, jet fuel, iron and steel scrap, chicken eggs, and liquefied petroleum gas also increased. The cost of fresh fruits and melons plunged 13.6%.

The cost of services inched up 0.1%. Roughly 70% of that can be attributed to prices for services less trade, transportation, and warehousing, which rose 0.2 percent. Prices for transportation and warehousing services, on the other hand, dipped 0.4%.

Prices for final demand less foods, energy, and trade services -- the “core” rate of inflation -- was up 0.1% in December. For the year as a whole, the core jumped 1.7% following an increase of 0.3% in 2015.

The complete report may be found on the BLS website

Initial jobless claims

The year got started with a surge in the number of first-time applications for state unemployment benefits.

The Department of Labor (DOL) reports initial jobless claims jumped by 10,000 in the week ending January 7 to a seasonally adjusted 247,000.

Even with that increase, the initial claims total has remained under 300,000 for 97 consecutive weeks -- the longest streak since 1970.

The four-week moving average, considered by may economists to be a more accurate gauge of the labor market because of its lack of volatility, was down 1,750 to 256,500.

The full report is available on the DOL website.

Wholesale prices, or what the Bureau of Labor Statistics (BLS) calls the Producer Price Index (PPI) for final demand, rose...

Is Wall Street getting ahead of itself?

Some economists suggest the pace of economic growth will remain slow

Since the day after election day, Wall Street has been on a tear, with the major stock averages moving into record territory day after day.

Analysts say much of the advance has been due to a change in economic outlook. A Trump administration is expected to spend more on infrastructure and lower the corporate tax rate. That, in turn, is expected to spur economic growth.

Treasury Secretary-designate Steve Mnuchin is on record predicting sustained economic growth of 3% or more.

But the euphoria may be a bit premature, some analysts caution. The stock market, specifically, has already priced in the economic growth that has yet to be achieved. And the economic advancement might not be as easy as it sounds.

Contrarian view

John Connaughton, an economist at the University of North Carolina (UNC) Charlotte takes a somewhat contrarian view. He expects the same slow pace of economic growth to continue for a while.

“During the first half of 2016, the North Carolina economy seemed to experience slower growth than during the previous 18 months,” he said. “What has been happening in North Carolina during the first half of 2016 is not dissimilar to what has happened in the U.S. It seems that after seven years of economic expansion, the economy has begun to slow.”

Many consumers who are struggling to keep up may be surprised to learn that the U.S. economy has been expanding for 89 months. It's just been at a very slow pace.

But Connaughton says the current economic expansion is the fourth-longest on record, going back to 1854. And despite the post-election rise in business and consumer confidence, he doesn't expect much to change, in the way of economic growth, in the coming year. Economic headwinds, he says, include falling productivity and the retirement of the Baby Boomer generation.

Economists largely skeptical

An early December poll by Reuters found the Trump bump that has boosted the stock market hasn't really changed economists' outlook, who note that recessions are regular occurrences, even if the expansion has been less than robust.

The economists in the poll correctly predicted the Federal Reserve's decision this week to hike short term interest rates. Fed Chair Janet Yellen held out the prospect of three additional hikes in 2017, suggesting a more optimistic outlook for economic growth.

But at the same time, Yellen left herself some wiggle room, suggesting the Fed could always hold off on normalizing rates if economic growth doesn't measure up to rosy expectations.

Since the day after election day, Wall Street has been on a tear, with the major stock averages moving into record territory day after day.Analysts say...

Rising housing and gas costs send consumer prices higher in November

Food prices held steady

Consumer prices edged higher in November, due largely to upticks in the cost of housing and gasoline.

The Department of Labor (DOL) reports its Consumer Price Index (CPI) was up a seasonally adjusted 0.2% last month, putting the rate of inflation for the last 12 months at 1.7%.

Energy and food costs

The cost of energy was up 1.2% in November following a surge of 3.5% the month before. A big chunk of that was the result of gasoline costs which were up 2.4%. Electricity prices were unchanged, while the cost of natural gas fell 0.4%. Over the past year, energy prices are up 1.1% -- the largest 12-month increase since July 2014.

Food prices were unchanged for the fifth month in a row during November,, with grocery prices down 0.1% and restaurant prices up 0.1%. The cost of dairy products fell 0.6%, fruits and vegetables costs were down 0.2%, the category called “other food at home” was off 0.3%, and prices for meats, poultry, fish, and eggs dipped 0.1%. Nonalcoholic beverage prices rose 0.3%, while the cost of cereals and bakery inched 0.1% higher percent. Grocery prices over the past year are down 2.2% , while restaurant prices, in contrast, were up 2.3% over the past 12 months.

Core inflation

The cost of goods less the volatile food and energy categories -- the “core rate” of inflation - was up 0.2% in November and 1.7% for the 12 months ending November.

For the month, housing costs rose 0.3%, motor vehicle prices jumped 1.0%, and education prices increased 0.2%. Medical care prices were unchanged in November, with the cost of physicians' services up 0.6% and prescription drug prices down 0.6%. Clothing costs, prices for household furnishings and operations, and airline fares all fell.

The complete report may be found on the DOL website.

Consumer prices edged higher in November, due largely to upticks in the cost of housing and gasoline.The Department of Labor (DOL) reports its Consumer...

The Federal Reserve is raising interest rates. Should you care?

The impact on most consumers should be slight

As was widely expected, the Federal Reserve Open Market Committee announced Wednesday that it is raising its short term interest rate a quarter percentage point.

It's only the second interest rate hike in a year and the second in a decade. Yet when Fed Chair Janet Yellen said at a news conference the Fed could hike rates as many as three times in 2017, the stock market swooned.

The Dow Jones Industrial Average, which was fewer than 70 points away from crossing the 20,000 level for the first time, closed 118 points lower. Investors took the comments to mean that the era of cheap money was finally ending.

But what's it mean to the average consumer who isn't a stock market investor? Should you care that the Fed is finally “normalizing” interest rates?

Maybe, but just a little.

First, the Fed's action is most likely to affect consumers who carry a credit card balance. Lenders peg their credit card rates to the Fed's short term rate, and within an hour of the Fed's announcement, US Bank said it is raising its Prime Rate a quarter point, to match the Fed's increase.

Credit card rates will rise

If the Fed hikes rates three more times next year at a quarter-point at a time, you could expect your credit card interest rate to go up a full percentage point, when you factor in the quarter-point increase announced Wednesday.

Mortgage rates are already going up, but not because of the Fed's action. Rather, the bond market is producing higher yields on U.S. Treasury bonds because of the belief that the incoming Trump Administration's policies will cause inflation to rise while spurring economic growth. Mortgage rates are linked to the yield on the 30 year Treasury note.

The Fed wants to increase rates to keep inflation in check, which of course is a benefit to consumers, who do not want to see prices start to rise unless wages also go up.

More return on savings

Consumers who are trying to save money might also benefit from rising interest rates. Bank's have paid almost nothing for nearly a decade because of the low interest rate environment. But that could be about to change.

Jeffrey Gundlach, chief executive of DoubleLine Capital, says the yield on the 10-year bond could hit 3% soon, and if it does he predicts investors will sell stocks and buy bonds because of the guaranteed 3% return. Bond rates, in turn, influence what banks pay on deposits.

In the short run, consumers should not feel the effects of the Fed's December rate hike much at all. As for the anticipated additional hikes next year, the Fed left itself plenty of wiggle room to change its find. After all, last December it also suggested it could raise rates three more times in 2016. And as we saw, it's first hike of the year came yesterday.

As was widely expected, the Federal Reserve Open Market Committee announced Wednesday that it is raising its short term interest rate a quarter percentage...

Rising services costs push November wholesale prices higher

Food prices advanced while the cost of energy declined

The Producer Price Index (PPI) for final demand -- what we call wholesale prices -- rose 0.4% in November, the second increase in three months.

The increase followed no change in October and a 0.3% gain in September, and translates into a year-over-year advance of 1.3% -- the largest increase since the 12 months ended November 2014.

Services prices on the rise

According to the Bureau of Labor Statistics (BLS), over 80% of last month's increase was due to a rise of 0.5% in prices for services, the largest since January's 0.9% increase. A quarter of that came from a surge in costs for apparel, jewelry, footwear, and accessories retailing (+4.2%).

Increases were also posted in prices for fuels and lubricants retailing; machinery, equipment, parts, and supplies wholesaling; food and alcohol retailing; food and alcohol wholesaling; and inpatient care.

Prices for guestroom rental, on the other hand, were down, as were the costs of cleaning supplies and paper products retailing and portfolio management.

Cost of goods inches upward

Goods prices rose 0.2% last month, half the increase registered in October. Food costs were up (+0.6%), thanks to rises in the prices of beef and veal, fresh fruits, and melons which offset dips in fresh and dry vegetables prices.

Conversely, energy costs declined 0.3%, with gasoline prices plunging 2.9%.

The cost of goods less foods and energy -- the “core rate” of wholesale inflation -- was up 0.2%.

The full report is available on the BLS website.

The Producer Price Index (PPI) for final demand -- what we call wholesale prices -- rose 0.4% in November, the second increase in three months.The incr...

Rising gasoline prices push October consumer prices higher

Initial jobless claims fall to lowest level since '73

Gasoline prices shot higher last month, bringing with them the overall Consumer Price Index (CPI).

The  Department of Labor (DOL) reports prices were up a seasonally adjusted 0.4% in October and have jumped 1.6% over the last 12 months.

As was the case in September, rising gasoline and housing costs were behind the increase in the CPI. The 7.0% surge in the cost of gas accounted for more than half of the increase. Housing prices rose 0.4% for a second straight month.

Energy prices post significant gain

The cost of energy, due largely to the aforementioned increase in gas prices, was up 3.5% last month -- the sharpest advance since February 2013. Fuel oil costs rose 5.9%, while electricity and natural gas prices rose 0.4% and 0.9%, respectively.

Over the last 12 months, energy prices are up just 0.1%, the first 12-month increase since August 2014.

Food prices hold steady

The cost of food was unchanged in October for the fourth straight month. The food away from home category (restaurant costs ) inched up 0.1%, while food at home (groceries) fell 0.2%, the sixth decline in as many months

The prices of nonalcoholic beverages fell 0.4%, meats, poultry, fish, and eggs were down 0.7% -- the 14th consecutive monthly decline, and miscellaneous grocery prices were off 0.1%. Costs for cereals and bakery products were unchanged, while fruit and vegetable prices inched up 0.2%, and dairy and related products increased 0.3 %.

Grocery prices over the last 12 months are down 2.3%, the largest 12-month decline since December 2009. The cost of eating out, on the other hand, is up 2.4% over the last 12 months.

Core inflation

The cost of all items, excluding the volatile food and energy categories -- the “core rate” of inflation -- rose 0.1% for the second straight month.

Along with housing, prices for apparel, new vehicles, and motor vehicle insurance rose in October, along with education, household furnishings and operations, alcoholic beverages, and tobacco. Personal care, communication, used cars and trucks, recreation, and airfare costs all declined. Medical care prices were unchanged.

The core rate of inflation rose 2.1% for the 12 months ending in October and has remained in the narrow range of 2.1% to 2.3% since December 2015.

The complete report may be found on the DOL website.

Jobless claims

Also from DOL, word that filings of first-time applications for state unemployment benefits plunged by 19,000 in the week ending November 12 to a seasonally adjusted total of 235,000.

That's the lowest level in 46 years. It also marks 89 consecutive weeks of initial claims below 300,000 -- the longest streak since 1970.

The four-week moving average, a more reliable gauge of the labor market because of its lack of volatility, came in at 253,500 -- a decline of 6,500 from the previous week.

The complete report is available on the DOL website.

Gasoline prices shot higher last month, bringing with them the overall Consumer Price Index (CPI).The  Department of La...

Inflation on the wholesale level unchanged in October

While goods prices were on the rise, the cost of services declined

Wholesale prices, or what the Labor Department calls the Producer Price Index (PPI) for final demand, held steady in October for the second time in three months.

The PPI rose 0.3% in September and, for the 12 months ended in October, was up 0.8%, the largest such increase since a 0.9% advance in December 2014.

Within final demand in October, a 0.4% increase in the index for final demand goods offset a 0.3% decline in prices for final demand services.

Goods prices head higher

A surge in energy costs (+2.5%), the result of a jump of 9.7% in the cost of gasoline, led the cost of goods higher. Also contributing to the increase were higher prices for light motor trucks, beef and veal, industrial chemicals, jet fuel, and liquefied petroleum gas. 

Prices for fresh and dry vegetables, electric power and for iron and steel scrap were lower

The cost of services falls

A decline of 0.3% in the cost of services following a 0.1% rise in both August and September helped keep wholesale inflation in check The drop was led by prices for securities brokerage, dealing, investment advice, and related services (-5.7%), along with declines in the costs of food and alcohol retailing; fuels and lubricants retailing; apparel, jewelry, footwear, and accessories retailing; consumer loans (partial); and hospital outpatient care.

Prices for truck transportation of freight, machinery, equipment, parts, and supplies wholesaling and guestroom rental were higher.

Core inflation

The “core rate” of wholesale inflation, which excludes the volatile foods energy, and trade services categories, dipped 0.1% last month after rising 0.3% in both August and September.

For the 12 months ended in October, the core was up 1.6%, the sharpest increase since it climbed 1.7% for the 12 months ended September 2014.

The complete report is available on the DOL website.

Wholesale prices, or what the Labor Department calls the Producer Price Index (PPI) for final demand, held steady in October for the second time in three m...

Social Security recipients to get tiny benefit hike in 2017

Rising gasoline prices sent consumer prices higher in September

It's not much, but monthly Social Security and Supplemental Security Income (SSI) payments will be going up next year.

The Social Security Administration reports more than 65 million recipients will see a 0.3% increase in their benefits in 2017.

The more than 60 million Social Security beneficiaries will see the cost-of-living adjustment (COLA) starting in January, while increased payments to more than 8 million SSI beneficiaries will begin later this year -- on December 30.

The Social Security Act ties the annual COLA to the increase in the Consumer Price Index (CPI) as determined by the Department of Labor (DOL).

Some give, some take

Other adjustments aren't nearly as pleasant.

Based on the increase in average wages, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will jump to $127,200 from $118,500. That means roughly 12 million workers will pay more because of the increase in the taxable maximum.

Information about Medicare changes for 2017 have yet to be announced, but some beneficiaries may see their benefit increase or be partially or completely wiped out by increases in Medicare premiums.

Consumer prices on the rise

Meanwhile, DOL reports the CPI rose 0.3% last month on a seasonally adjusted basis, due in large part to increases in the costs of gasoline and shelter.

Gasoline prices soared 5.8%, while housing costs were up 0.4% -- the largest increase since May.

Food prices, meanwhile, were unchanged for the third consecutive month, with the food at home (grocery store prices) continuing to decline.

Core inflation

The price of items less food and energy -- the “core” rate of inflation -- was up 0.1% after rising 0.3% in August. For the 12 months ending in August, core inflation is running at a rate of 2.2%.

The complete report is available on the DOL website.

It's not much, but monthly Social Security and Supplemental Security Income (SSI) payments will be going up next year.Th...

Rising medical care and shelter costs send consumer prices up in August

Prices for food and energy were unchanged

The government's Consumer Price Index (CPI) rose slightly in August as steady food and energy costs mitigated increases in rising shelter and health care prices.

The Bureau of Labor Statistics (BLS) reports the CPI was up a scant 0.2% last month, with prices over the last 12 months gaining 1.1%

Food costs hold steady

As it was a month earlier, the cost of food was unchanged in August, with food at home -- grocery store prices -- falling 0.2%. Meats, poultry, fish, and eggs were down 0.4%, the 12th decline in a row. The “other food at home” category fell 0.2%, and prices for nonalcoholic beverages dipped 0.1%. The remaining major grocery store prices were all unchanged in August.

During the past 12 months, food prices overall were unchanged -- the first time that's happened since the 12 months ending February 2010. Grocery store prices were down 1.9% over the past 12 months.

Energy costs unchanged

The price of energy held steady after declining in July, with gasoline and fuel oil down 0.9% and 2.5%, respectively. Natural gas, on the other hand, was up 2.1% after surging 3.1% in July. Electricity rose 0.5%, the same increase as in July.

Energy prices have declined 9.2%, with gasoline down a whopping 17.8% and fuel oil dropping 12.8%.

Core inflation

The costs of living excluding the volatile food and energy categories -- what's known as the “core” rate of inflation -- was up 0.3% in August, led by medical care (+1.0%) and shelter (+0.3%). Other increases came in prices for motor vehicle insurance (+0.5%), apparel (+0.2%), and tobacco (+0.7%).

Declining prices were seen for used cars and trucks (-0.6%), as well as household furnishings and operations, recreation, and airline fares (all -0.1%).

The core rate of inflation over the past 12 months was up 2.3%, led by motor vehicle insurance (+6.5%), medical care (4.9%), and shelter (+3.4%).

The full report may be found on the BLS website.

The government's Consumer Price Index (CPI) rose slightly in August as steady food and energy costs mitigated increases in rising shelter and health care p...

Wholesale prices flat in August

A drop in food prices played a major role

Inflation on the wholesale level -- what the government calls “the Producer Price Index (PPI) for final demand” -- showed no change last month, according to figures released by the Department of Labor (DOL) The PPI was also unchanged for the 12 months ended in August.

Goods and services prices

The cost of goods one step shy of the retail level was down 0.4%, with 80% of that due to a decline of 1.6% in food costs. In addition, energy prices were down 0.8%.

A breakdown shows meat prices fell 3.6%, with prices for gasoline, fresh and dry vegetables, jet fuel, chicken eggs, and diesel fuel also lower. The cost of pharmaceutical preparations, meanwhile, jumped 1.0%, with prices for electric power and natural, processed, and imitation cheese also higher. Goods prices excluding foods and energy inched up 0.1%.

Services costs, on the other hand, edged up 0.1% in August with prices for outpatient care (partial) advancing 0.5%. Also on the rise were the costs of apparel, jewelry, footwear, and accessories retailing; guestroom rental; portfolio management; and residential real estate services (partial).

Conversely, prices for machinery and equipment wholesaling plunged 2.9%. Chemicals and allied products wholesaling, services related to securities brokerage and dealing, and airline passenger services also fell.

Core inflation

The PPI less foods, energy, and trade services, so-called “core inflation,” was up 0.3% in August after no change a month earlier.

For the 12 months ended in August, the core rose 1.2% -- the largest rise since a 1.3% surge for the 12 months ended December 2014.

The complete report may be found on the DOL website.

Inflation on the wholesale level -- what the government calls “the Producer Price Index (PPI) for final demand” -- showed no change last month, according t...

Consumer prices hold steady in July

A sharp drop in gasoline prices gets much of the credit

For the first time in five months, the government's Consumer Price Index (CPI) has failed to rise.

According to the Department of Labor (DOL), the CPI was unchanged in July, as energy costs declined and food prices held steady. During the last 12 months, consumer prices have risen 0.8%.

Energy and food costs

Energy costs plunged 1.6% last month following a 6.1% surge over the previous three months. A major factor in the July decline was gasoline prices, which fell 4.7%. Fuel oil costs also slipped, dropping 1.3%. Natural gas prices, on the other hand, jumped 3.1%, its largest increase in more than two years, while the cost of electricity rose 0.5%. Energy prices are down 10.9% over the past year.

The price of food was unchanged in July following declines in May and June, with food at home -- grocery prices -- down 0.2%, the seventh decline in the last nine months. Four of the six major grocery store food groups were lower, with meats, poultry, fish, and eggs down 0.6%, followed by dairy and related products (-0.4%), cereals & bakery products, and other food at home (both -0.2%).

The price of fruits and vegetables both rose (+0.3%) along with alcoholic beverages (+0.3%). Food costs over the past year are up just 0.2% -- the smallest 12-month increase since the period ending March 2010.

Core inflation

The cost of items excluding the volatile food and energy components “core inflation” rose 0.1% in July, with the price of a shelter up 0.2%, the smallest increase since March. Prices for medical care, new vehicles, and motor vehicle insurance also were on the rise. Airline fares, used cars and trucks, communication, and recreation costs were among those that fell.

For the 12 months ending in July, core inflation was up 2.2%, versus an increase of 2.3% for the year ending in June.

The complete July CPI report is available on the DOL website.

For the first time in five months, the government's Consumer Price Index (CPI) has failed to rise.According to the Department of Labor (DOL), the CPI w...

Wholesale prices drop in July

Both food and energy costs were lower

Prices one step short of the consumer level fell in July for the first time in four months.

The Department of Labor (DOL) reports the Producer Price Index (PPI) for final demand was down 0.4%, with declines in the costs of food and energy major factors. For the 12 months ended in July, the PPI declined 0.2%.

Goods and services prices

The final demand cost of goods fell 0.4%, with almost half of the decline due to a 1.1% plunge in food costs. Prices for beef and veal fell 9.8%, with the cost of gasoline, corn, motor vehicles, oilseeds, and iron and steel scrap also moving lower. Utility natural gas prices, on the other hand, rose 4.3% with fresh eggs and nonferrous scrap prices also on the upside.

The cost of final demand services dipped 0.3%, the largest decline since last March. Nearly 60% of that can be attributed to the price of apparel, jewelry, footwear, and accessories retailing (-6.0%). Also on the decline were costs for machinery and equipment wholesaling; health, beauty, and optical goods retailing; food retailing; loan services; and automotive fuels and lubricants retailing. Trade services (prices received by wholesalers and retailers) fell 1.3%.

Increases were posted in prices for traveler accommodation services (+3.9%) chemicals and allied products wholesaling, and for securities brokerage, dealing, investment advice, and related services also moved higher.

Core inflation

The “core” rate of inflation, which excludes the volatile food and energy components, was up 0.7% year-over-year, down significantly from the 1.3% growth rate posted in June.

The complete report is available on the DOL website.

Prices one step short of the consumer level fell in July for the first time in four months.The Department of Labor (DOL) reports the Producer Price Ind...

Online prices fall for six straight months

Adobe report suggests the best place to save money is online

You may notice the cost of living is going up here and there, but if you do all your shopping online, you no doubt have seen mostly prices that are going down.

That's the bottom line of Adobe's July Digital Price Index (DPI), which showed a consistent, downward trend in online prices over the last six months. The survey also picked up on new trends in online grocery shopping and the continued impact of Brexit on London flight and hotel prices.

In July, consumers shopped for groceries online with in-store pickup at a record pace. Anything related to Pokemon also sold well. But despite the increased sales, the prices for nearly everything was going down, according to the report.

Where's the inflation?

“The Federal Reserve is looking for an uptick in inflation, yet we’re seeing further deflation, even for categories with significant increase in demand such as groceries and popular merchandise like Pokémon items,” said Mickey Mericle, vice president, marketing and customer insights at Adobe.

Inflation is usually caused when there is huge demand for something and a limited supply. But in spite of the incredible popularity of Pokemon Go and other Pokemon-branded items, prices did not go up.

Pete Klenow, an economics professor at Stanford University, says that's a fascinating development.

“Among other factors, it could be that the new buyers are more price sensitive, which hints at some of the difficulties the economy is facing in raising prices, or that they have been able to ramp up production without increasing per unit costs,” he said.

Consumers embrace online grocery shopping

As for trends, the July DPI suggests online grocery shopping has caught on. Sales were up 66% year-over-year and in-store pickup jumped from 18% in January 2015 to 45% in July 2016. The report's authors suggest the increase in online grocery shopping shows consumers believe it is more convenient and a way to save time.

Where consumers saw the biggest price declines in online shopping came in purchases of toys and electronics. Prices for Pokémon items fell 2.9% from June, even though sales volume shot up 170% year-over-year. In fact, Pokémon toys and electronics saw even more deflation than the overall categories.

Online travel bookings also were less costly in July, through the authors attribute much of that to Brexit's impact on travel to London. London airfares were down 13.3% since the Brexit vote and London hotel prices were down more than 15%.

What can consumers take away from all of this? The bottom line may be that the best deals are online.

You may notice the cost of living is going up here and there, but if you do all your shopping online, you no doubt have seen mostly prices that are going d...

Consumer prices creep higher

An increase in energy costs offset falling food prices

The cost of living rose in June for a fourth consecutive month.

According to the Department of Labor (DOL), the Consumer Price Index (CPI) increased at a seasonally adjusted annual rate of 0.2% largely on the strength of a jump in gasoline prices. For the last 12 months, prices are up 1.0%.

Energy prices were up 1.3% -- the fourth straight increase, although they're down 9.4% over the past year.

The big factor in the June increase was a surge of 3.3% in the cost of both gasoline and fuel oil. Meanwhile, electricity prices fell 0.5% and natural gas dipped 0.4%.

Food prices fall

The cost of food slipped 0.1% on top of a decline of 0.2% in May. Four of the six major grocery store food groups were lower: meats, poultry, fish, and eggs (-0.7%), nonalcoholic beverages (-0.7%) -- its largest decline since May 2013 -- dairy and related products (-0.3%), and fruits and vegetables (-0.1%) percent.

Over the past year, what's known as the food at home category is off 1.3%, its largest 12-month decline since February 2010.

Core inflation

The “core rate” of inflation, which strips out the volatile food and energy sectors, was up 0.2% in June. The cost of shelter led the way with a gain of 0.3%, with medical care, education, airline fares, motor vehicle insurance, and recreation also rising. On the other hand, prices for used cars and trucks, apparel, communication, and household furnishings and operations were lower.

For the 12 months ending in June, the core rate of inflation was up 1.0% -- the same increase as for the 12 months ending in May, but well below the 1.7% average annual increase over the past 10 years.

The complete June CPI report is available on the DOL website.

The cost of living rose in June for a fourth consecutive month.According to the Department of Labor (DOL), the Consumer Price Index (CPI) increased at ...

Wholesale prices post third straight monthly gain

Energy costs -- primarily gasoline -- were a major factor

A nearly 10% surge in the wholesale price of gasoline sent the Producer Price Index (PPI) for final demand higher in June for the third month in a row.

The Bureau of Labor Statistics (BLS) reports the advance of 0.5% followed increases of 0.4% in May and 0.2% in April.

Goods and services on the rise

Prices for goods one step shy of the retail level shot up 0.8% last month, the largest increase since a surge of 1.2% in May 2015. Over three-quarters of June's increase was due to energy cost, which surged 4.1%. Within that category, gasoline was up 9.9%.

Prices for meats, jet fuel, electric power, home heating oil, and cigarettes also moved higher, while the cost of chicken eggs plunged 29.9%. Prices for carbon steel scrap and residential natural gas also fell.

The cost of services rose 0.4% in June, in large part due to a 7.7% hike in prices for services related to securities brokerage and dealing. Also on the rise were prices for automotive fuels and lubricants retailing; machinery, equipment, parts, and supplies wholesaling; traveler accommodation services; airline passenger services; and health, beauty, and optical goods retailing.

In contrast, the cost of apparel, footwear, and accessories retailing, long-distance motor carrying and residential real estate loans (partial) fell.

Prices excluding the volatile foods, energy, and trade services categories rose 0.3% after a dip of 0.1% in May. For the 12 months ended in June, this “core rate” is up 0.9%.

The complete report is available on the BLS website.

Jobless claims

It was steady as she goes for initial jobless claims last week, with the Department of Labor (DOL) reporting that first-time applications for state jobless benefits were unchanged in the week ending July 9, at a seasonally adjusted annual rate of 254,000.

That makes 71 consecutive weeks of initial claims below 300,000 -- the longest streak since 1973.

The four-week moving average dropped 5,570 from a week earlier to 259,000. This measure is consider a better gauge of the labor market as it lacks the volatility of the weekly headcount.

The full report may be found on the DOL website.  

A nearly 10% surge in the wholesale price of gasoline sent the Producer Price Index (PPI) for final demand higher in Ju...

What the heck is Brexit and why should you care?

British voters surprised the markets, and markets hate surprises

U.S. consumers awoke Friday morning to some shocking news. Voters in the UK voted Thursday to withdraw from the European Union (EU), a political and economic union of 28 European countries.

The so-called Brexit issue has been in the headlines for weeks, though most consumers have probably ignored it. It didn't seem to affect us. Some likened it to a big fuss over nothing, similar to the Y2K hysteria of 1999.

As voting day approached, the polls all signaled growing strength on the side favoring to remain in the EU. The global political and economic establishment all favored Britain remaining a part of the EU, so when the forces advocating a break prevailed with 52% of the vote, it was a shock.

Global stock markets plunge

The first impact was a massive drop in global stock markets. Japan's Nikkei Stock Exchange plunged nearly 8% with stocks opening sharply lower on Wall Street. And consumers who have retirement assets in stocks might be the most affected, at least in the short term.

Markets price based on certain assumptions, and stocks have risen over the last couple of weeks on Wall Street due to the strong belief that Britain would remain a part of the EU. Because the opposite has happened, stock values are being repriced.

But plenty of market analysts are pointing out today that, just as the market's value yesterday was unrealistic, a drastic drop in prices might also be an over-reaction to events.

"The reaction we're seeing in markets today is far more exaggerated and far more pronounced because it was so unexpected," Kristina Hooper, U.S. investment strategist at Allianz, told CNBC.

So what kind of reaction should U.S. investors have? That's a matter for investors to discuss with a financial adviser, because each individual is different.

Key points

For consumers who haven't been following events across the Atlantic until today, here are some key points:

  • Nothing is going to happen immediately. It may take some time for the details of Britain's withdrawal to be negotiated.
  • U.S. stock prices may go down in the short term. How long they will stay down is anyone's guess, though there are plenty of advisers who suggest these events will present an excellent opportunity for investors who have been sitting on cash.
  • The real implication is for the future of the EU itself. Greece nearly exited last year and a number of weaker nations might follow Britain's example.
  • Some have predicted the UK economy will slip into recession as a result of the vote. If a major trading partner suffers a recession, there is always the danger it could spread to other nations.
  • A bigger implication of the British vote might well be political. After years of the world moving toward a single connected global economy, the British people have revolted, saying they want out. Politicians around the world might well tap into similar sentiments in their own countries.
U.S. consumers awoke Friday morning to some shocking news. Voters in the UK voted Thursday to withdraw from the European Union (EU), a political and econom...

Adobe's economic measure differs from the government's

The Digital Price Index show signs of deflation

In the same week the U.S. Labor Department released its May Consumer Price Index (CPI), showing a slight rise in prices, Adobe issued its Digital Price Index (DPI) showing prices are continuing to fall.

Can both be right? They can, because it appears that in this economy there are always some things that cost people more, while some things cost less. Depending on what it is you are buying, you could encounter inflation or deflation.

Adobe's DPI tracks billions of actual online transactions to gather its data. The government's CPI is based on consumer surveys that are designed to approximate sales in each product category.

Adobe says its DPI reveals deflation – prices that are going down, not up – in most of the tracked consumer goods. In May, Adobe found prices for appliances, computers, flights, furniture, sporting goods, TVs, and toys went down in price by as little as 2.8% or as much as 19.7%.

The government's official statistics, the CPI, reported year-over-year deflation between 0.3% and 16.1% for these categories. It also found airfares went up 0.4%.

Tablet prices are falling

Consumer electronics prices went down 1.4%, led by a 3.7% price decline for tablets. Sporting goods prices fell by 0.4%. But it you travel a lot, you likely encountered higher prices. Air travel cost 4.1% more in May than in April and hotel rooms cost 0.7% more.

Adobe looks at other digital data to draw conclusions on other aspects of the economy, and its picture is somewhat different than the one drawn by the government.

For example, the DPI suggests more people are looking for jobs. It draws that conclusion from counting visits to employment search sites. The latest analysis shows an increase from April to May in those job site visits and points to potentially higher unemployment rates than reported.

Housing weakness

It also measures the housing market. By tracking two billion visits to real estate marketplace sites in the last year, the DPI found that online searches for housing purchases and rentals have slowed.

The DPI also tracks price movements within categories, breaking it down between high priced items and low priced items. In May, Adobe said most consumer categories saw the biggest price declines among lower priced models.

“This tremendous amount of data reveals further deflation, higher unemployment, and more weakness in the housing market than current reports suggest,” said Adobe VP Mickey Mericle.

That's not necessarily good news. While consumers like low prices, economists worry that deflation shows a lack of demand in the economy, which can signal the onset of a recession.

In the same week the U.S. Labor Department released its May Consumer Price Index (CPI), showing a slight rise in prices, Adobe issued its Digital Price Ind...

Consumer prices up moderately in May

Energy costs rose for a third straight month

The cost of living crept upward in May, with energy prices moving higher for a third straight month.

The Bureau of Labor Statistics (BLS) reports the Consumer Price Index rose 0.2%, and is up just 1.0% for the 12 months ending in May.

The cost of energy was a major factor, jumping 1.2% in May -- its third increase in a row. Contributors were the prices of gasoline (+2.3%), fuel oil (+6.2%), and natural gas (+1.7%). Electricity, on the other hand, dipped 0.2%. Energy prices have plunged 10.1% over the past 12 months, with all major components falling over the span.

Food prices, meanwhile were down 0.2%, with the “food at home” category -- grocery prices -- falling 0.5%, the fifth decline in the last seven months. All the major grocery store food group prices were lower in May, including fruits and vegetables (-0.7%), dairy and related products (-0.6%), and meats, poultry, fish, and eggs (-0.5%), the ninth consecutive monthly decline.

The cost of food has risen 0.7% over the last year, with the index for food at home down 0.7% and food away from home (restaurant meals) rising 2.6%.

Core inflation

The CPI less the volatile food and energy categories increased 0.2%. The cost of shelter was up 0.4%, with medical care, apparel, motor vehicle insurance, and education prices also increasing. This “core rate” of inflation is up 2.2% over the past 12 months, with over 60% of the increase resulting from rising shelter costs.

The complete CPI report may be found on the BLS website.

Initial claims

Separately, the Department of Labor (DOL) reports a jump in first-time applications for state unemployment benefits.

Initial jobless claims shot up by 13,000 in the week ending June 11 to a seasonally adjusted total of 277,000. That kept claims below the 300,000 mark for the 67th consecutive week -- the longest streak since 1973.

The four-week moving average, a less volatile measure, was down 250 from the previous week -- to 269,250. This is seen as a more accurate barometer of the labor market.

The full report is available on the DOL website.

Photo (c) mybaitshop - FotoliaThe cost of living crept upward in May, with energy prices moving higher for a third straight month.The Bureau of L...

Fed once again keeps interest rates where they are

Seven years of easy money still hasn't sufficiently stoked the economy

What are we to take away from the Federal Reserve's unsurprising decision this week not to raise interest rates?

That seven years of easy money at historically low interest rates has done little to spur economic growth.

Interest rate hikes are usually initiated to slow inflation, but inflation has barely moved for years. Falling prices have been a greater fear.

So why did the Fed raise its key interest rate a quarter point back in December and suggest that there could be several more increases this year? That now appears to have been based largely on hope. Policymakers dearly want to “normalize” rates so they will be able to lower them again in case of a financial crisis.

The very real problem, however, is that raising rates amid economic weakness threatens to make the economy even weaker. In its statement, the Fed said it sees signs of strength as well as things that give it pause.

Pluses and minuses

On the plus side, household spending has increased slightly; the housing sector has improved, and exports have made gains. On the minus side, improvement in the job market has slowed; inflation is less than 2%, and low energy prices, while helpful to consumers, have created severe recessionary conditions in parts of the U.S.

“Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2%, the Fed statement said. “The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2% inflation.”

Brexit worries

Though the statement didn't mention it, Britain's vote next week on whether to leave the European Union – the so-called Brexit vote – was likely another big concern. Should Britain vote to leave, as current polls suggest it will, it could lead to economic uncertainty in Europe and possibly a recession.

The Fed left the door open to rate hikes later this year, but made clear it needs to see more evidence of economic strength – notably, improvement in the job market and inflation of at least 2%.

What are we to take away from the Federal Reserve's unsurprising decision this week not to raise interest rates?That seven years of easy money at histo...

Wholesale inflation up for a second straight month

Energy prices led the advance

The cost of living one step shy of the retail level rose in May for the second straight month.

The Department of Labor (DOL) reports the Producer Price Index (PPI) for final demand jumped 0.4% last month on top of April's increase of 0.2%. For the 12 months ended in May, the PPI is down 0.1%.

Over 60% of the May advance is due to an increase of 0.7% in prices for final demand goods. The cost of final demand services inched up 0.2%.

The cost of goods and services

A large chunk of the increase in good prices came from the cost of energy, which surged 2.8%, thanks to a 6.6% jump in the cost of gasoline. Prices for diesel fuel, iron and steel scrap, fresh and dry vegetables, jet fuel, and oilseeds were higher as well. The cost of beef and veal fell 5.2%, and prices for electric power and for carpets and rugs also decreased.

The rise in prices for services was due largely to the 3.6% rise in the cost for machinery and equipment wholesaling. Apparel, jewelry, footwear, and accessories retailing; inpatient care; residential property brokerage fees and commissions; flooring and floor coverings retailing; and legal services costs also increased. Prices for loan services (partial) declined 3.0%, and the costs for food retailing and airline passenger services also moved lower.

Core inflation

Prices for final demand less foods, energy, and trade services – the “core rate” of inflation -- dipped 0.1% in May, but it is up 0.8% for the 12 months last month.

The complete report is available on the DOL website.

The cost of living one step shy of the retail level rose in May for the second straight month.The Department of Labor (DOL) reports the Producer Price ...

Fed meets this week amid growing economic worries

Wall Street is up, but so are concerns about the economy

It is said that the stock market “climbs a wall of worry,” meaning stock prices usually go up when there is a lot of negative sentiment in the market.

The last few months provide a good example. Stocks have hit recent highs, but they have done so in an environment where one high-profile economist or market trader after another has expressed varying levels of concern about the state of the economy.

Jurrien Timmer, director of global macro at Fidelity Investments, told CNBC's "Squawk Box" that the market is rising, despite the fact that corporate earnings are not growing. He compared it to being in “bull market purgatory,” where the economy isn't firing on all cylinders.

All during May, various Federal Reserve officials spoke publicly about the need for the Fed to boost interest rates again. But in the last couple of weeks, those officials have been mostly silent, as the latest data has not suggested an economy that is heating up.

Zero percent chance

Wall Street trader Stephen Guilfoyle says he thinks there is “zero percent” change the Fed will announce a rate hike when it meets this week. As a result, he says he is thinking of moving more money into gold.

The Fed has to consider a lot of data before making a move to hike rates, and if it is looking at its own data, it may have cause to hesitate. A Fed survey of consumers, in which they were quizzed about their economic well-being, found 31% of U.S. adults said they are struggling financially – a figure that works out to roughly 76 million Americans.

Employment data

Fed officials say they need to discover why so many Americans feel they are struggling financially, but one clue might be found in the monthly employment reports. Once again in May, the unemployment rate was below 5%, but the labor force participation rate – the number of people with jobs – remained near all-time lows.

The Fed survey found that 46% of adults said they would be unable to meet a sudden $400 expense, such as a medical or car repair bill. They said they would have to either borrow the money or sell something to raise the cash.

Even consumers making high salaries say they often find themselves in that situation. Confronted with an unexpected $400 expense, 19% of people earning more than $100,000 said they could not pay the bill right away.

It is said that the stock market “climbs a wall of worry,” meaning stock prices usually go up when there is a lot of negative sentiment in the market.T...

Don't bet on a Fed rate hike this month

Economist says economy isn't as strong as policymakers think

Over the last couple of weeks, a number of Federal Reserve insiders, in speeches and other policy statements, have suggested the time is right for another hike in the Fed's key interest rate.

After all, the Fed signaled a policy of rising rates back in December, but has only hiked the Overnight Discount Rate once – in December. Surely June is the time for another rate hike.

Don't count on it, says Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business. Dhawan says the Fed may wait nearly an entire year, until March 2017, before hiking rates.

“The Federal Open Market Committee (FOMC) dot charts are of interest to the press for their noise potential,” Dhawan wrote in his quarterly “Forecast of the Nation,” released May 26. “These are submitted weeks in advance of the meeting and as such are purely opinions and not policy projections, resulting in confusion.”

Dhawan says there is plenty of evidence to suggest the Fed will wait. He singles out comments in the April FOMC minutes that contradict the idea of a June rate hike.

Momentum indicator is down

“The FOMC said consumer sentiment was high, which is true, but it has been moderating since last fall,” Dhawan said. Combined with extreme volatility in the stock market and the political uncertainty surrounding the presidential primaries and upcoming elections, “the momentum indicator for confidence is not up, but down.”

In the past, the FOMC moved to hike rates when economic indicators suggested the economy was heating up. The purpose of the rate hike was to tap on the brakes. Dhawan argues that improvements in the economy are about half the size of those before the Great Recession.

The fact that auto sales continue at a record pace is not a good indicator, Dhawan said. Spending on cars diverts money from other things.

“This is bad news for shopping malls and retail centers because consumers are scrimping on discretionary spending to service their auto loans in the face of less than stellar income gains,” he said.

Subpar recovery

The fact is, he says, it is a subpar recovery. Since the Fed normally hikes rates to show things down a bit, Dhawan says there is absolutely no reason the Fed should want to slow economic activity now.

So why would a rate hike even be on the table? Many a pundit has suggested the Fed is desperate to raise rates, only so it would be able to lower them in the future when the economy goes over a cliff, as it did in late 2008.

All of this makes Friday's May employment report from the Labor Department more important than usual. Strong job growth would suggest improving economic conditions that might give Fed policymakers an added incentive to hike rates later this month.

But increasingly Dhawan's view seems to be the prevailing one. A June rate increase – or anytime this summer – is by no means certain.

Over the last couple of weeks, a number of Federal Reserve insiders, in speeches and other policy statements, have suggested the time is right for another ...

Adobe: prices are going down, not up

Company monitors online purchases and sees consumers paying less

This week the government reported the Consumer Price Index (CPI) jumped 0.4% in April compared to March, and was up 1.1% compared to last year. Economists pounced on the news that inflation is picking up, justifying the Federal Reserve's policy of boosting interest rates.

But Adobe, which recently launched a price-measuring system of its own, says prices are actually falling, not rising. It says its Digital Price Index (DPI), which measures online transactions, points to a continuing deflationary trend.

It's possible, of course, that both are correct. Prices for some things are going up. The cost of other things are going down. As a consumer, it all depends whether prices are higher or lower for the things you consume.

What's going up

April's CPI shows the cost of gasoline went up, along with food prices, education, car insurance, housing costs, and recreation.

But Adobe’s April report for consumer goods prices found deflation between 0.2% and 2.4% for all the categories it tracks. The sole exception was hotel prices, which went up over the last 12 months.

Between March 2015 and March 2016 Adobe's DPI found that prices for TVs, computers, flights, appliances, toys, furniture, bedding, and sporting goods went down between 2.2% and 19.8%. In fairness, the government's CPI tracked similar price declines in those categories – they just had less impact in the overall CPI.

Monitors online purchases

Adobe gets its data by analyzing billions of digital transactions involving 2.2 million products sold online. It says it is able to provide a more accurate picture of what is happening with prices consumers pay.

“With brands rapidly innovating and introducing new products and consumers increasingly shopping online, it’s essential that we have a mechanism to identify digital pricing trends quickly and accurately,” said Mickey Mericle, Vice President, Marketing and Customer Insights at Adobe.

What causes prices to go down? In a word, competition. The money consumers spend on a particular thing gets spread around among a larger number of providers, who must then lower prices in order to win or keep customers.

When there are fewer providers of something, prices tend to go up, producing inflation.

While deflation might sound like a good thing for consumers, it usually isn't in the long run. Businesses that can't raise their prices over time don't grow, and might even close their doors, leading to higher unemployment.

This week the government reported the Consumer Price Index (CPI) jumped 0.4% in April compared to March, and was up 1.1% compared to last year. Economists ...

No let up in persistent recession warnings

Black cloud seems to be hanging over Wall Street

Since the beginning of the year, the financial community has been in a funk. One bank, analyst, economist, and major Wall Street player after another has worried out loud about a recession.

These worries are being expressed as the stock market has churned along near recent highs, employment has been rising, and workers' wages have begun to increase.

One of the latest to warn of a coming recession is hedge fund manager John H. Burbank III, of Passport Capital.

Yahoo Finance quotes Burbank in an investment letter as saying he believes that within the next year the world will experience a major Chinese currency devaluation and a U.S. recession.

U.S. election is a wild card

“It is for certain in seven months we will see a U.S. election whose outcome may provoke or have discounted one or both,” Burbank wrote. “China will enter their liquidity crisis with likely the largest amount of non-performing debt in the world; the U.S. will enter its recession with the smallest rate reduction potential in history. For both it will be a normal ending after decades of extending their booms with the first quarter’s flip-flops possibly being their final policy moves."

Investment bankers have also been wearing grim expressions lately. JP Morgan is predicting even lower bond rates on the belief that the economy is running out of gas. The New York Post reports that 2016 has so far been one of the most pessimistic on Wall Street since the 2008 financial crisis.

“We’ve had crises in the past. What’s different about this is there’s not a crisis and we still feel pessimistic,” Paul Mortimer-Lee, chief economist at BNP Paribas, told The Post. “If something nasty comes around the corner, we’re in trouble.”

Disappearing shoppers

Then there are the nation's retailers, who have turned in disappointing earnings over the last couple of weeks. Both Kohl's and Macy's reported a drop in same store sales as consumers disappeared from sight.

If consumers are earning more and have a better chance of being employed, why aren't they spending? While some see that as a sign the economy is slowing, others see it as a sign the economy is shifting. Amazon.com, it turns out, is doing quite well. So are Home Depot and Lowes.

Where, then, is all the recession worry coming from? Perhaps it is coming from those segments that are losing business in the new environment. After all, when your sales go down and your costs go up, it's a recession for you.

The question, of course, is will it become a recession for everyone else? A growing number of people think so.

Since the beginning of the year, the financial community has been in a funk. One bank, analyst, economist, and major Wall Street player after another has w...

Consumer prices surge in April

The increase was spurred by rising gasoline costs

A big jump in the cost of gasoline helped send the cost of living up in April at the fastest clip in three years.

The Department of Labor (DOL) reports its Consumer Price Index (CPI) increased a seasonally adjusted 0.4% last month and is up 1.1% over the last 12 months.

Energy and food costs on the rise

An 8.1% increase in the cost of gasoline helped push overall energy prices up 3.4% last month. Also on the rise were the cost of fuel oil (+1.9) and natural gas (+0.6). Electricity prices dipped 0.3%. Despite the big April increase, energy costs are down 8.9% over the past year, led by gasoline which has plunged 13.8%.

Food prices inched up 0.2% last month with the food at home category, a reflection of grocery store prices, advancing just 0.1%. The cost of dairy and related products rose 0.4%, while cereals & bakery products and nonalcoholic beverages both increased 0.3%. The largest of the increases came in the “other food at home” group, which jumped 0.5 percent. Fruits and vegetables were lower (-0.5%), as were meats, poultry, fish, and eggs (-0.1%). In the past 12 months, food prices are up 0.9%.

Core inflation

The core rate of inflation, which excludes the volatile energy and food categories, rose 0.2% in April, with prices for shelter, medical care, motor vehicle insurance, airline fares, recreation, and education up 0.3%. Costs for household furnishings and operations, apparel, new vehicles, used cars and trucks, and communication were lower. Over the last 12 months, the core rate is up 1.1%.

The complete April CPI report is available on the DOL website.

A big jump in the cost of gasoline helped send the cost of living up in April at the fastest clip in three years.The Department of Labor (DOL) reports ...

Wholesale prices rise for the first time in three months

A rise in food costs offset declining energy prices

After declining 0.1% in March and 0.2% in February, the cost of living one step shy of the consumer level is on the rise again.

The Bureau of Labor Statistics (BLS) reports its Producer Price Index (PPI) for final demand rose a seasonally adjusted 0.2% in April. For the 12 months ended in April, the PPI is unchanged.

Goods and services

The wholesale cost of goods was up 0.2% last month -- the same as in March, with energy prices up 0.2% and food down 0.3%. A major contributor to the April increase in prices was carbon steel scrap, which soared 22.1%. Prices for gasoline, electric power, pharmaceutical preparations, beef and veal, and prepared poultry also advanced. The cost of chicken eggs dropped 33.9%, while home heating oil and jet fuel also fell.

Services prices edged up 0.1% with the cost of portfolio management up 4.5%. The prices of fuels and lubricants retailing, residential real estate loans, chemicals and allied products wholesaling, and truck transportation of freight also increased. The cost of airline passenger services fell (-1.7%) along with health, beauty, and optical goods retailing; machinery and equipment wholesaling; and services related to securities brokerage.

Core inflation

The PPI less foods, energy, and trade services rose 0.3% in April after holding steady in March. For the 12 months ended in April, the core rate of inflation was up 0.9%.

The full report may be found on the BLS website.

After declining 0.1% in March and 0.2% in February, the cost of living one step shy of the consumer level is on the rise again.The Bureau of Labor Stat...

Consumer prices inch higher in March

Energy costs were up for the first time in four months

Energy costs rose in March for the first time since last November, pushing the Department of Labor's (DOL) Consumer Price Index (CPI) up 0.1%. That increase put the rate of inflation over the last 12 months at 0.9%.

The increase of 0.9% in energy costs was the first in four months and was led by gasoline (+ 2.2%), followed by fuel oil (+1.7) -- the first advance since May -- and electricity (+0.4%). Natural gas prices dipped 0.7%.

The rise in energy was partially offset by a drop of 0.2% in the cost of food. The food at home category fell 0.5%, thanks to declines in fruits and vegetables (-1.9%), cereals and bakery products (-0.6%), dairy and related products (-0.5%), and meats, poultry, fish, and eggs along with nonalcoholic beverages -- both down 0.3%. The only increase was 0.5% for a category called “other food at home.”

The “core” rate of inflation, which excludes the volatile food and energy components was up just 0.1% in March -- the smallest increase since August -- and is up 2.2% over the last 12 months. Prices for shelter, recreation, medical care, education, tobacco, and personal care were among those that rose. The costs of apparel, airline fares, communication, household furnishings and operations, and used cars and trucks were lower.

The complete March CPI report is available on the DOL website.

Jobless claims

A milestone of sorts for initial jobless claims.

The Bureau of Labor Statistics (BLS) reports first time applications for state unemployment benefits fell by 13,000 in the week ending April 9 to a seasonally-adjusted 253,000. That's the 58th straight week of claims staying below 300,000, the longest streak since 1973.

At the same time, the four-week moving average, which strips out the weekly compilation’s volatility and is considered a more accurate measure of the labor market, came in at 265,000 -- a drop of 1,500 from the previous week. That's the lowest level since November 2000.

The full report may be found on the BLS website.

Energy costs rose in March for the first time since last November, pushing the Department of Labor's (DOL) Consumer Price...

Federal Reserve backing away from interest rate hikes

Fed Chair Janet Yellen says the economy has softened since December

What a difference three months makes.

In December, the Federal Reserve announced a modest quarter-point increase in the Federal Funds interest rate and strongly suggested as many as four additional rate hikes could come in 2016.

The Fed had held rates at near 0% since late 2008, and with employment rising the Fed policymakers said it was time to get rates back to normal.

But in a speech Tuesday to the Economic Club of New York, Fed Chair Janet Yellen backed away from that aggressive move, saying the U.S. economy, while resilient, remains weak and there is no immediate threat of inflation.

Mixed reading on the economy

“Readings on the U.S. economy since the turn of the year have been somewhat mixed,” Yellen said in her speech. “On the one hand, many indicators have been quite favorable. The labor market has added an average of almost 230,000 jobs a month over the past three months.”

But on the other hand, she noted, manufacturing and net exports have continued to be hard hit by slow global growth and the significant appreciation of the dollar since 2014. These same global developments have also weighed on business investment by limiting firms' expected sales, she said.

Translation: the economy is barely growing, and raising interest rates – normally something the Fed does only when inflation begins to emerge as a threat – doesn't make sense. It especially doesn't make sense when the rest of the world is lowering rates.

The rates that matter

As several pundits have pointed out in the wake of the speech, the Federal Funds rate is the only interest rate the Fed really controls. The bond market sets the rates that really matter, and since December's Fed hike, bond rates have all been going lower – suggesting the market's belief that the economy is slowing, not heating up.

Bond rates tend to affect consumers most – from long-term rates on mortgages to shorter term rates on auto loans.

For investors, the Fed action is much more significant. The stock market loves low interest rates, which make it cheaper for companies to buy back their stock, pushing stock prices higher.

With rates staying where they are, current stock valuations may hold up a while longer. The Fed not raising rates can also be expected to boost the price of gold, which has rallied off its lows in recent weeks.

And if the dollar continues to soften because rate hikes have been taken off the table, it will probably lift the price of oil, and in turn make it more expensive for consumers to fill-up at the pump.

What a difference three months makes.In December, the Federal Reserve announced a modest quarter-point increase in the Federal Funds interest rate and ...

Recession fear just won't go away

But maybe the economy is just changing into something we haven't seen before

Monday's revised first quarter Gross Domestic Income (GDI) estimate shocked a lot of economists. It probably shouldn't have.

Wall Street traders have been sharply divided since the start of the year, with some saying the U.S. economy is doing just fine and others warning that the economy is headed for recession – and the market for steep losses.

The GDI estimate revision, to just 0.9%, promises to escalate the debate in the next couple of weeks. Analysts downgraded expectations in the face of evidence that consumers aren't spending that much.

The U.S. may be doing better than the rest of the world, but the fact is, economies everywhere appear to be slowing down. That might not seem like a terrible thing – we haven't had a recession since that really bad one, from 2007 to 2009 – except that a lack of growth right now threatens a lot of things.

Fed policy

For one thing, the Federal Reserve is trying to pursue a policy of gradually raising interest rates. It hiked rates in December for the first time in six years, telegraphing that more hikes are coming. The last thing it wants to do is raise rates heading into a recession.

Fed Chair Janet Yellen may provide some clues about the central bank's plans when she speaks to the Economic Club of New York later today.

The U.S. stock market's valuation is based on growth. People buy stock in companies with the assumption that profits will increase and the value of the company will also go higher. If that assumption is wrong, investors won't continue to buy stocks unless their price goes down.

This is a problem for millions of Baby Boomers and other retirees who have the bulk of their retirement savings in stocks. If the value of those stocks goes down, these retirees will lose a lot of money – at least on paper.

It is worth noting that retirees who did not panic and sell when the stock market suffered steep declines in the wake of the financial crisis did just fine. The market quickly regained all the ground it lost.

But if the economy isn't growing, or threatens to slide into reverse, that threatens to reduce the value of retirees' assets, so they'll spend less. Baby Boomers, who drove the consumer economy for 40 years, are buying fewer “things” anyway, since many are trying to downsize.

Millennials, who are coming along behind them, have a value system that largely frowns on conspicuous consumption. They're even content to share things, like cars and houses, and save their money. At some point that has to have an effect on the economy.

Technological changes

So what may be at work here is a generational and cultural shift that is having profound – but thus far unrecognized – impact on the economy.

Technology is also having a disruptive effect on the economy. Stores in small towns now have to compete with Amazon.com. Etsy has allowed artisans to market their product to a global audience.

The technology effect is about to get even more pronounced. Author John Hornick says 3D printers will make a company's former customers their competitors.

“Presently, the products that can be self-manufactured are limited, but it won't always be that way,” Hornick said in an email to ConsumerAffairs. “Given enough time, anyone will be able to make almost anything, away from control.”

He says that means retail outlets that once sold mass-produced products will vanish, just like camera stores vanished when photography went digital.

The disruption to the old economy will increase, as people figure out easier and cheaper ways to do things and companies just won't be able to keep up. In fact, it may just be getting started.

Monday's revised first quarter Gross Domestic Income (GDI) estimate shocked a lot of economists. It probably shouldn't have.Wall Street traders have be...

Producer prices drop in February

Costs have held steady for the past 12 months

The cost of living on the wholesale level ticked lower last month.

Figures released by the Bureau of Labor Statistics (BLS), show the Producer Price Index (PPI) for final demand, which measures the cost of things one step short of the consumer level, fell a seasonally adjusted 0.2% in February.

The PPI was up 0.1% in January and down 0.2% in December. For the last 12 months, the index is unchanged.

Goods and services

The cost of goods dipped 0.6% -- the third decline in a row. Most of that was the sharp 3.4% plunge in the price of energy. Food costs were down 0.3%. Excluding those two volatile categories, goods prices inched ahead 0.1%.

Services prices were unchanged in February after rising for three consecutive months. A rise of 0.3% for services excluding trade, transportation, and warehousing offset a 0.4% drop for trade services and a 0.7% decline in prices for final demand transportation and warehousing services.

The government's report on consumer inflation for February is scheduled for release tomorrow.

The complete report may be found on the BLS website.

The cost of living on the wholesale level ticked lower last month.Figures released by the Bureau of Labor Statistics (BLS), show the Producer Price Ind...

Consumer prices hold steady in January

Energy costs were down, while food prices were unchanged

The Consumer Price Index (CPI) was unchanged in January, thanks to a drop in the cost of energy and no change in food prices, according to the Department of Labor's Bureau of Labor Statistics (BLS).

For the last 12 months, the CPI is up just 1.4%.

Energy and food

Energy costs were down 2.8%, with all major components falling for a second straight month. Gasoline prices fell 4.8%, fuel oil plunged 6.5%, electricity was off 0.7%, and natural gas posted a 0.6% decline.

Over the last 12 months, fuel oil prices have plummeted 28.7%, natural gas has decreased 12.7%, gasoline has fallen 7.3%, and the cost of electricity is down 2.4%.

Food prices were unchanged last month after falling in November and December. With the food at home category down 0.2% it's second decline in a row. Five of the six major grocery store food group categories were lower led by for meats, poultry, fish, and eggs (-1.3%). Cereals and bakery products, dairy and related products, nonalcoholic beverages, and other food at home all declined 0.2%. In contrast, fruits and vegetables increased 1.3% the largest increase since March 2011. The food at home index has declined 0.5% over the past 12 months. Food away from home (restaurant meals) rose 0.3% percent in January and is up 2.7% over the last 12 months.

Core inflation

The “core” rate of inflation, excluding the volatile food and energy categories, was up 0.3% for the month, due to increases in the cost of shelter (+0.3%), medical care (+0.5%), alcoholic beverages (+0.5% and motor vehicle (+0.4%). Education and communication prices were both unchanged in January, while household furnishings and operations costs dipped 0.1%.

Over the past, the core rate of inflation is up 2.2%, its highest 12-month change since the period ending June 2012.

The complete report is available on the BLS website.

The Consumer Price Index (CPI) was unchanged in January, thanks to a drop in the cost of energy and no change in food prices, according to the Department o...

Wholesale prices post second gain in three months

Advances in the cost of services led the increase

A smidgeon of inflation on the wholesale level -- that's what we got in January.

According to the Department of Labor (DOL), the Producer Price Index (PPI) for final demand, which measures prices one step shy of the consumer level, was up a seasonally adjusted 0.1% last month. The PPI was down 0.2% in December after posting a 0.4% advance in November.

For the 12 months ended in January, the index is down 0.2%.

Services prices

A 0.5% increase for services was behind the January advance, with nearly half of that attributable to a 4.0% increase in the cost of machinery and equipment wholesaling. Services related to securities brokerage and dealing; loan services (partial); apparel, footwear, and accessories retailing; fuels and lubricants retailing; and airline passenger services also rose.

Prices for food and alcohol retailing declined 4.1%, with health, beauty, optical goods retailing, and physician care also falling.

The cost of goods

Prices for goods were down 0.7% for the second straight month. Energy costs were down 5.0%, thanks to a drop of 8.8% in gasoline prices. Additionally, the cost of for home heating oil, electric power, jet fuel, and basic organic chemicals fell.

Food prices advanced 1.0%, led by a surge of 17% for fresh and dry vegetables. Prices for pharmaceutical preparations and residential natural gas also increased.

The complete report may be found on the DOL website.

A smidgeon of inflation on the wholesale level -- that's what we got in January.According to the Department of Labor (DOL), the Producer Price Index (P...

Fed Chair Janet Yellen defends decision to hike interest rates

Reaffirms view that the economy is healthy

Federal Reserve Chair Janet Yellen was the subject of close attention Wednesday as she testified before the House Financial Services Committee.

After all, since the Fed hiked its key interest rate in December, the stock market has been in turmoil, with averages selling off significantly. Some market analysts have suggested the U.S. economy is sliding into a recession and have questioned the Fed's wisdom in hiking rates in the face of a slowing economy.

But if anyone expected Yellen to back away from the Fed's December rate hike, they were disappointed. Yellen told the committee that since her last appearance before it in July, the economy has made further progress toward full employment. In fact, the January unemployment rate fell to 4.9%.

The Fed Chair did, however, concede that there could be some rough spots on the economic horizon.

Less supportive of growth

“Financial conditions in the United States have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar,” Yellen said in prepared testimony. “These developments, if they prove persistent, could weigh on the outlook for economic activity and the labor market, although declines in longer-term interest rates and oil prices provide some offset.”

"If" may be the key word in that paragraph. Right now there is no strong consensus on the direction of the economy. Yellen said the Fed would be looking to see if there are ongoing employment gains and faster wage growth. If there are, she says that should promote faster economic growth.

With rapid economic growth comes inflation – at least it has in the past. The Fed's policy of gradually raising interest rates is designed to keep inflation under control.

In her appearance before the committee, Yellen made it clear that the Fed began on the path of rising interest rates because it believes the economy is growing, and so far it has seen nothing to suggest it was mistaken.

Trouble outside the U.S.

But she acknowledged that might not be the case in the rest of the world, and global economic trouble can always have a negative impact in the U.S. While the Fed is raising rates as a hedge against possible inflation, Japan has instituted negative interest rates – meaning it costs money to put money into bonds – to head off deflation.

“As is always the case, the economic outlook is uncertain,” Yellen said. “Foreign economic developments, in particular, pose risks to U.S. economic growth.”

She points to economic problems in China as a potential trouble spot that could have ramifications in the U.S. She also conceded that inflation remains below the Fed's target of 2%, which to many suggests the U.S. economy is not growing that fast.

But Yellen attributes the low rate to a steep drop in energy prices. She again defended the Fed's decision in December to hike interest rates, saying it reflected the belief that economic activity would continue to expand at a moderate pace and labor market indicators would continue to strengthen.

Federal Reserve Chair Janet Yellen was the subject of close attention Wednesday as she testified before the House Financial Services Committee.After al...

Graco recalls Extend2Fit Convertible child seats

The recline label affixed at the wrong location, resulting in confusion about use of the seat

Graco Children's Products, Inc. is recalling 15,064 Extend2Fit Convertible child seats manufactured November 27, 2015, to January 20, 2016.

The child seats may have the recline label affixed at the wrong location, resulting in confusion about how to use the seat properly. As such, these child seats fail to comply with the requirements of Federal Motor Vehicle Safety Standard (FMVSS) No. 213, "Child Restraint Systems."

If the instructions are followed as shown, a rear-facing infant could be placed in an upright position and/or a forward-facing toddler could be placed in a recline position. Either scenario may increase the risk of injury to the child in the event of a crash.

Graco will notify owners and provide a new corrected label with application instructions, free of charge. The recall is expected to begin February 26, 2016.

Owners may contact Graco customer service at 1-800-345-4109.

Graco Children's Products, Inc. is recalling 15,064 Extend2Fit Convertible child seats manufactured November 27, 2015, to January 20, 2016. The chi...

Inflation may be low, but not for everything

Housing and vehicles are just a couple of things that cost more

There's no doubt falling gasoline prices have offered consumers a nice break. They've also pulled down the official inflation rate, which remains near record lows.

In fact, the Federal Reserve would like to see a little more inflation in the economy, since its worry over the last few years has been that prices aren't rising enough.

But behind the numbers suggesting little or no increase in consumer costs, the cost for some things that are common consumer expenditures continues to go up. They include housing, vehicles, restaurant meals, college tuition, and healthcare services.

Housing

The cost of putting a roof over your head is one thing that has gone up sharply over the last year, regardless of whether you are renting or buying. In mid 2015, real estate marketplace Zillow warned that rental affordability had worsened, with renters forced to pay 30.2% of their monthly income toward rent – the highest percentage ever.

Before the real estate bubble and bust, U.S. renters were spending about 24.4% of their incomes on rent. Zillow expects rents to flatten out this year after a double-digit rise last year.

"There are good reasons to rent temporarily – when you move to a new city, for example – but from an affordability perspective, rents are crazy right now,” Zillow Chief Economist Dr. Svenja Gudell noted in an August press release. “If you can possibly come up with a down payment, then it's a good time to buy a home and start putting your money toward a mortgage."

But consumers buying homes also face rising prices. The National Association of Realtors (NAR) report for December showed a 7.6% rise in the median home price in 2015.

New and used cars

The cost of both new and used cars has risen faster than the official inflation rate. Analysts at Kelley Blue Book (KBB) report the average transaction price of a new car hit another record high in January. KBB said the cost of a new set of wheels rose nearly $1,000 from January 2016 to last month, hitting $34,112.

However, KBB points out that doesn't reflect increases in vehicle prices as much as it does consumers' preference for more expensive vehicles, primarily SUV and pick-up trucks. That said, prices for full-size and mid-size trucks increased by 5.9% and 7.9%, respectively.

The average price of a used car has also gone up lately. Automotive site Edmunds.com reported that consumers are buying newer used cars, which cost more. It found average used car prices hit a record high of $18,800 in the second quarter of last year, up 7.6% — or $1,300 per vehicle — from the second quarter of 2014. Meanwhile, the average age of used cars sold in Q2 2015 was 4.5 years, down from an average of 4.9 years the same time last year.

Mixed bag on food costs

Like energy, food costs have generally been lower for consumers in recent months. With the exception of fresh vegetables, most other grocery items are down or have risen no more than the official inflation rate.

The exception is restaurant meals. According to the Labor Department's December report, food consumed away from home rose 2.6% in 2015.

For consumers attending college, costs continue to rise much faster than the inflation rate. According to the experts at FinAid, an online guide to college financial aid, tuition generally increases at about double the inflation rate, going back to the 1970s.

But lately increases have been much higher. On average, the site says, tuition tends to increase about 8% per year. At that rate, the cost of college doubles every nine years.

Drug prices

That brings us to healthcare, and in particular, the cost of prescription drugs. The AARP reports that overall healthcare costs, while still going up faster than inflation, have begun to stabilize. The exception is for prescription medication.

The seniors group reports drug costs have doubled, and in some cases soared by 1,000% or more.

So the overall inflation rate may be tame, but that doesn't mean everything is cheap.

There's no doubt falling gasoline prices have offered consumers a nice break. They've also pulled down the official inflation rate, which remains near reco...

The consumer issue Presidential candidates aren't talking about

The national debt is taking a back seat to immigration and drug prices

Chances are you haven't heard the Presidential candidates in either party talking a lot about the national debt. It tends to get overshadowed by immigration, healthcare, and other economic issues.

Yet this issue affects every consumer, particularity Millennials.

The U.S. government must borrow increasing amounts of money each year to pay its bills. The national debt, in terms of that borrowing, is growing exponentially. Worse still, unfunded mandates, such as Social Security payments and government pensions, push that total much higher.

According to the Treasury Department, the national debt more than doubled between 2007 and 2015. The numbers are so large it's hard to even comprehend.

It might surprise you to learn that the United States has carried a national debt every year of its existence, except for one. In 1790 the U.S. government owed $70 million, a hefty sum in those days. It ran up the debt paying off the states' Revolutionary War debts.

In debt every year but one

Andrew Jackson, who hated debt, was elected President in 1828 and made it his mission to pay down the debt. He sold off U.S. government land during a land speculation boom and by 1835, the U.S. was debt-free.

However, it didn't last. Jackson left office and the land speculation bubble popped in 1837, ushering in a big depression. The government was back to borrowing again. And even when borrowing increased during wars, it was generally manageable because the country's economy was growing.

Think of it like a young couple's home mortgage. When they first buy a home, the mortgage payment takes a big bite out of their income. But as they get older and make more money, the debt is less of a burden.

Even during times of prosperity, the U.S. government didn't attempt to pay off the debt – it simply maintained it, spending about what it collected in revenue each year. During those years, it built the Interstate Highway System, launched the Space Program, and began new entitlement programs.

Borrowing to pay the bills

The issue that worries some economists today is that the U.S. government must borrow just to pay its bills. The economic growth that would make the burden of increasing debt easier to bear just hasn't been there since the financial crisis.

Either taxes must rise, spending must decrease, or a balance must be struck between the two. However the political process has been unable to even approach a solution.

There are, in fact, two sides to the debate. Some economists say a rising debt is preferable to harming the economy with large tax hikes or by slashing government spending.

Deficit “hawks” worry that interest on the debt is rising to the point that it competes with other expenses. Even the Congressional Budget Office points out that increasing interest payments will compete with other needs if the economy doesn't start growing again, or should interest rates spike. And it will be largely up to today's young people to deal with it.

In the 1992 Presidential election, third-party candidate Ross Perot captured public attention with his hand-drawn charts showing an exploding deficit. At the time, the national debt and yearly deficit was a good bit smaller.

Since then, we haven't heard much about deficits or debt in Presidential campaigns.

Chances are you haven't heard the Presidential candidates in either party talking a lot about the national debt. It tends to get overshadowed by immigratio...

Consumers get a break in December as prices fall

Lower costs for food and energy were responsible

A drop in food and energy costs in December sent the Consumer Price Index (CPI) down a seasonally adjusted 0.1% in December, putting the increase in prices over the last 12 months at just 0.7%.

According to the Department of Labor (DOL), energy costs plunged 2.4% last month following November's 1.3% decline. Major influences in December were gasoline (-3.9%) -- the fourth decline in the last five months -- and fuel oil (-7.8%) -- the seventh consecutive decrease. Natural gas was down 2.3% and electricity slipped 0.4%. Over the past year, fuel oil has plunged 31.4% and gasoline is down 19.7%.

Food prices were down a smaller 0.2% in December, after declining 0.1% the month before. Food at home -- grocery prices -- fell 0.5%, the largest decline since last March. Five of the six major grocery store food groups were down, with meats, poultry, fish, and eggs (-1.4%) declining the most. Also lower were the cost of eggs (-3.4%), fruits and vegetables (-0.5%), other food at home (-0.3%) and cereals & bakery products, and nonalcoholic beverages (-0.1%). The only major grocery store food group to rise in December was dairy and related products (+0.1).

For all of 2015, grocery prices were down 0.4%. Food away from home, or restaurants, rose 0.1% in December and was up 2.6% over the last 12 months.

Core inflation

The so-called “core” rate of inflation, which excludes the volatile food and energy categories, was up just 0.1% in December, its smallest increase since August.

Gainers included shelter, medical care, household furnishings and operations, motor vehicle insurance, education, used cars and trucks, and tobacco. Among the decliners were apparel, airline fares, personal care, new vehicles, and communication. For the last 12 months, the core rate of inflation rose 2.1%.

The complete December CPI report is available on the DOL website.

A drop in food and energy costs in December sent the Consumer Price Index (CPI) down a seasonally adjusted 0.1% in December, putting the increase in prices...

Wholesale prices move lower in December

Jobless claims were on the rise

Once again, there was no evidence of inflation on the wholesale level in December.

The Bureau of Labor Statistics (BLS) reports the Producer Price Index (PPI) for final demand dipped 0.2% on a seasonally adjusted basis last month, continuing the zig-zag pattern that saw them rise 0.3% in November and fall 0.4% in October.

The December decrease was led by prices for goods, which were down 0.7% the sixth consecutive decline. Most of the drop last month was in the energy sector, where prices plunged 3.4%. Food costs were down 1.3%.

Prices for final demand services edged 0.1% higher following an advance of 0.5% in November. The increase was led by services related to securities brokerage and dealing, which shot up 30.3%. Costs for for machinery, equipment, parts, and supplies wholesaling -- including physician care, food retailing, and hospital inpatient care also moved higher.

For all of 2015, the final demand PPI was down 1.0%, after rising 0.9% in 2014.

The complete PPI report is available on the BLS website.

Jobless claims

In a separate report, the Department of Labor (DOL) says first-time applications for state unemployment benefits rose by 7,000 in the week ending January 9 to a seasonally adjusted 284,000. The previous week's level of initial jobless claims was unrevised. The DOL says no special factors affected this week's headount.

The four-week moving average, which is seen as a better gauge of the labor market because it lacks the volatility of the weekly tally, totaled 278,750 -- an increase of 3,000 from the previous week's unrevised average.

The full report may be found on the DOL website.

Once again, there was no evidence of inflation on the wholesale level in December.The Bureau of Labor Statistics (BLS) repo...

Federal Reserve raises key interest rate

Rate has been at 0% since late 2008, last hike was in 2006

In one of the best-telegraphed moves in history, the Federal Reserve Open Market Committee has voted to raise the Federal Funds interest rate by 0.25%.

The tiny rate hike is significant only because the Fed has kept the rate at 0% since 2008, part of its effort to keep the economy on life support in the wake of the financial crisis and Great Recession.

After several false starts – Wall Street thought it would happen in September – there was little doubt the Fed would move at the December meeting. The only question was whether it should raise rates. There are plenty of economists who argued against it.

The reason? The economy is still weak and inflation is nowhere in sight. In the past the Fed has raised rates to dampen inflation and cool an overheating economy. That's clearly not the environment now.

So why raise?

So why is the Fed doing it? Some have speculated that, as bizarre as this might sound, the Fed wants higher rates so it can lower them again if the economy begins to falter.

Former Obama Administration economic advisor Larry Summers has argued on his blog that raising rates now, just for the sake of raising rates, is a serious mistake, especially if it slows an already slow economy.

“There is certainly a real risk that slow speed becomes stall speed becomes recession,” Summers wrote. “On average mature recoveries like the present one last less than an additional three years. And given how low rates are and the political aversion to the use of fiscal policy a substantial slowdown could have very severe consequences.”

Impact on consumers

In truth, whether this rate hike shoves the economy into a recession is by far the biggest potential impact it will have on consumers. While it is true that credit card rates are often influenced by the Federal Fund Rate, a quarter percent rise is unlikely to be noticed much if you're already paying about 15% on your balance.

And yes, if you have a savings account at your local bank, you might see a little more interest – but a tiny bit.

Consumers who own stocks and bonds will also feel the impact. In anticipation of the Fed rate hike, the value of “junk,” or high-risk bonds, has plunged in recent weeks. Some think stocks are poised for a sell-off over the next few months.

A Bank of America poll of fund managers found 58% expect the Fed to raise rates three more times in the coming 12 months. A net 43% of regional fund managers expect China’s economy to weaken in 2016, up from a net 4% last month.

In one of the best-telegraphed moves in history, the Federal Reserve Open Market Committee has voted to raise the Federal Funds interest rate by 0.25%....

Consumer inflation AWOL in November

Both food and energy costs were lower

If you're looking for signs of inflation, good luck.

The Bureau of Labor Statistics (BLS) reports that the Consumer Price Index (CPI) was unchanged last month, thanks to declines in the cost of food and energy. For the last 12 months, prices are up a modest 0.5% before seasonal adjustment.

Food costs

Food prices were down 0.1%, marking the first decline since March. The food at home category dropped 0.3%, with every major grocery store food group except fruits and vegetables (+0.6%) falling. Prices for meats, poultry, fish, and eggs fell for a third straight month (-0.6%). Also posting declines were the costs for dairy and related products (-0.6%), cereal & bakery products, and nonalcoholic beverages (-0.5%). Other food at home was down 0.3%.

Over the past 12 months, food at home has increased just 0.3%, the smallest 12-month increase since the period ending June 2010. The food away from home category was up 0.2% and has jumped 2.7% over the last 12 months.

Energy

The cost of energy fell 1.3% in November following a 0.3% increase the month before. The decline was led by gasoline prices, which were down 2.4% after rising 0.4% percent in October. Also declining were natural gas (-1.9%) and fuel oil (-1.3). Electricity costs, conversely, rose 0.3% on top of an advance of 0.4% in October.

Core inflation

The “core” rate of inflation, which strips out the volatile food and energy categories, rose 0.2% in November, the same as in September and October. Fueling the increase were prices for shelter, medical care, airline fares, new vehicles, and tobacco. Cost for recreation, apparel, household furnishings and operations, and used cars and trucks all declined.

Over the past 12 months, the core rate of inflation is up 2.0%, with about two-thirds of that due to rising housing costs (+3.2%). Also on the rise during that period were medical care (+2.9%), education, motor vehicle insurance, tobacco, alcoholic beverages, personal care, recreation, and new vehicles. The prices of apparel, airline fares, communication, household furnishings & operations, and used cars & trucks posted declines.

The complete CPI report is available on the BLS website.

If you're looking for signs of inflation, good luck.The Bureau of Labor Statistics (BLS) reports that the Consumer Price Index (CPI) was unchanged last...

Retail sales inch higher in November

Wholesale prices post first gain in three months

Retail sales were up a tiny 0.2%, or $448.1 billion, in November, according to Commerce Department figures that were adjusted for seasonal variation and holiday and trading-day differences, but not for price changes.

The increase lifted sales 1.4% above the same month a year ago.

Contributing to the increase -- the second in as many months -- were gains by grocery stores, clothing and accessories stores, and sporting goods, hobby, book & music stores (+ 0.8% each). Food services & drinking places also advanced by 0.7%.

The November increase was limited by declines at gas stations (-0.8%), auto & other motor vehicle dealers (-0.6%), and furniture and home furnishing stores (-0.3%).

Core retail sales, which strip out auto, gasoline station, and building material & supplies sales, jumped 0.6% following an October increase of 0.3%.

The complete report is available on the Commerce Department website.

Producer prices

The Producer Price Index (PPI) for final demand, more commonly known as wholesale prices, posted a 0.3% gain last month after falling 0.4% and 0.5% in October and September, respectively.

Figures released by the Bureau of Labor Statistics show the PPI is down 1.1% for the 12 months ended in November -- the tenth consecutive 12-month decline.

Final demand services led the advance with a gain of 0.5%, thanks largely to an increase of 6.2% in apparel, jewelry, footwear, and accessories retailing. On the other hand, prices for securities brokerage, dealing, investment advice, and related services fell 3.9%.

Prices for final demand goods were down 0.1%, with over 90% due to a 0.6% drop in the cost of energy, with gasoline prices down 1.3%. Prices for residential natural gas, electric power carbon steel scrap, and corn also moved lower. Conversely, prices for fresh fruits and melons jumped 11.6%, with the cost of eggs for fresh use, jet fuel, and pharmaceutical preparations also increasing.

The core PPI, which excludes the volatile food and energy categories, edged down 0.1% but is up 0.5% over the last 12 months.

The full report may be found on the Labor Department website.

Retail sales were up a tiny 0.2%, or $448.1 billion, in November, according to Commerce Department figures that were adjusted...

Consumer prices inch upward in October

Prices were subdued across the board

The cost of living rose in October, but it's nothing to get excited about.

Figures released by the Department of Labor's Bureau of Labor Statistics (BLS) show the consumer price index (CPI) was up a tiny 0.2% last month and that over the last 12 months, prices are up by the same amount.

Food costs

Food prices posted their smallest increase since May -- just 0.1%, with the index for food at home also up 0.1%. Four of the six major grocery store food group indexes rose were higher last month, with cereals and bakery products advancing 0.8%, and fruits and vegetables up 0.5% for the fourth monthly increase in a row. Nonalcoholic beverages and other food at home were also higher.

The cost of meats, poultry, and fish declined (-0.5%). Egg prices dropped 4.8% after sharp increases during the summer, while dairy and related products also declined (-0.2%).

Over the past 12 months, food at home is up 0.7%. The index for food away from home rose 0.2% in October and is up 2.9% over the last 12 months. Overall food prices have jumped 1.9% over the last 12 months.

Energy prices

After plunging 4.7% in September, energy prices were up 0.3% last month. Major energy components were mixed, with gasoline (+0.4%) and electricity (+0.4%) higher. In contrast, fuel oil (-1.1%) and natural gas (-0.7%) declined.

All major energy components were down over the past 12 months, with fuel oil index plunging 32.9%, gasoline down 27.8%, natural gas down 11.0%, and electricity 0.5% lower.

Over the last 12 months, overall energy prices have plummeted 17.1%

Core inflation

Prices excluding the volatile food and energy categories -- the “core rate” of inflation -- were up just 0.2% in October, the same as in September. The largest contributors were medical care (+0.7%) and shelter (+0.3%). Prices for personal care, airline fares, recreation, alcoholic beverages, and tobacco also rose.

Costs of apparel, new vehicles, household furnishings and operations, and used cars and trucks all declined in October. The core rate is up 1.9% over the last 12 months

The complete CPI report is available on the BLS website.

The cost of living rose in October, but it's nothing to get excited about.Figures released by the Department of Labor's Bureau of Labor Statistics (BLS...

Wholesale prices continue their decline

Retail sales rose -- but not by much

Wholesale prices -- officially known as the Producer Price Index (PPI) for final demand -- dropped a seasonally adjusted 0.4% in October following a decline of 0.5% in September.

According to figures released by the Department of Labor (DOL), the PPI is down 1.6% for the 12 months ending in October, a record 12-month decline for the index, which was introduced in November 2009.

In October, 70 percent of the decrease in the final demand index can be traced to prices for final demand services, which moved down 0.3 percent. The index for final demand goods declined 0.4 percent.

Final demand services

The cost of final demand services fell 0.3% percent in October after declining 0.4% a month earlier. Over 70% of the decline last month can be traced to margins for final demand trade services, which dropped 0.7% percent. The index for final demand services excluding trade, transportation and warehousing slipped 0.1%. In contrast, prices for final demand transportation and warehousing services inched up 0.1%.

Within the services sector, margins for fuels and lubricants retailing, were down 15.8% followed by apparel, jewelry, footwear, and accessories retailing. Loan services (partial); portfolio management; wireless telecommunication services; and health, beauty, and optical goods retailing also declined.

On the other hand, prices for truck transportation of freight rose 0.3%, with food retailing and deposit services (partial) also increasing.

Final demand goods

The index for final demand goods moved dipped 0.4% in October, the fourth consecutive decrease. Leading the decline, the index for final demand goods less foods and energy fell 0.3%. Prices for final demand foods decreased 0.8%.. The index for final demand energy was unchanged.

Over one-third of the October decline in the final demand goods index is attributable to prices for light motor trucks, which were down 1.8%. Prices for chicken eggs, iron and steel scrap, beef and veal, boxed meat, and electric power also moved lower. In contrast, gasoline prices rose 3.8%, with pharmaceutical preparations and corn also advancing.

The complete report is available on the DOL website

Retail sales

Heading into the all-important holiday shopping season, the report on retail sales was something less than impressive.

The Commerce Department reports sales in October, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were up a tiny 0.1% or $447.3 billion. On a year-over-year basis, sales rose 1.7%.

Advancers and decliners

Strengths, what there were of them, were found in miscellaneous store retailers (+1.8%), nonstore retailers (+1.4%), building equipment and supplies (+0.9%), health and personal care stores (+0.7%), and food service & drinking places (+0.5%).

Providing a drag were the 0.9% drop in gasoline sales, auto and parts sales (- 0.5%), electronics and appliance store sales (-0.4%), and food & beverage store sales (-0.3%).

Stripping out auto, gasoline station, and building material & supplies sales, core retail sales were up 0.3% in October after being flat the month before.

Stifel Fixed Income Chief Economist Lindsey Piegza thinks the may be worse to come. "Without stronger retail spending numbers," she says, "there is going to be a lot less cheer this holiday season."

The full October retail sales report can be found on the Commerce Department website.

Wholesale prices -- officially known as the Producer Price Index (PPI) for final demand -- dropped a seasonally adjusted 0.4% i...

All of a sudden, consumers are borrowing more

Non-revolving debt hit record levels in September

The financial crisis of 2008 threw millions out of work and deepened the recession. As a result, consumers who were able to not only limited their new debt, but began aggressively paying down their old debt.

Even in the face of near 0% interest rates, consumers either couldn't borrow or didn't want to. But that seems to have changed in a month's time.

In its G-19 release, the Federal Reserve reports consumer borrowing surged 10% in September. That's nearly double the rate of increase for August, which at 5.6% is more typical of the post-recession environment.

All-time high

Consumers borrowed $28.9 billion, beating the previous high set back in 2001.

What was behind the sudden desire to take out a loan? The Fed data shows it wasn't a surge in home buying. The biggest gain came in non-revolving credit; auto and student loans are prime examples of non-revolving credit.

U.S. car sales have been reaching record levels month after month, and in October, blew the doors off.

New U.S. car sales rose at a record pace, recording the best October since 2001. Sales were up double-digits for all brands, except for Volkswagen, which continues to deal with the fallout from its emissions scandals. The average transaction price was over $34,000, meaning most buyers had to take out a loan.

“We've officially passed recovery mode and are now into record new-car sales,” said Karl Brauer, senior analyst for Kelley Blue Book. “All the key factors, including pent-up demand, low interest rates, easy credit and cheap gas, were in place for unprecedented October sales. Like 2005 all over again, truck sales are dominating the market, and driving not only growth but healthy profits throughout the industry. Right now it's a great time to be an automaker or dealer.”

Loading up the plastic

Consumers also put a lot of new debt on plastic. The Fed report shows revolving debt – mostly department store charge cards and credit cards – increased $6.7 billion in September, an increase of 8.7%.

So far, extremely low interest rates have not set off the feared inflation, mainly because consumers weren't taking advantage of them.

If September is any indication, it's now a new ball game.

The financial crisis of 2008 threw millions out of work and deepened the recession. As a result, consumers who were able to not only limited their new debt...

Economist weighs in on “coming economic collapse”

Despite problems, economic catastrophe not a certainty

You can't go online these days without reading dire predictions about America's demise.

They range from a coming economic collapse and Great Depression to a 50% sell-off in the stock market. In most cases, the blame is placed on the Federal Reserve's policy of cheap money, enacted after the financial crisis.

The forecasters are sometimes people who are selling something – a report or video – telling you how to protect yourself or even profit from the coming calamity. Sometimes the warnings come from former politicians. In some cases, the forecasters have a strong political point of view.

So what is a consumer to think when the stock market has been volatile and the economy weak? Is the end really near?

Mainstream economist

We decided to ask a mainstream economist who monitors economic data on a regular basis. Joel Naroff, of Naroff Economic Advisors, says as things now stand, the U.S. domestic-related economy is just fine.

“Consumers are spending, firms that supply into the U.S. based economy are generally doing well and with wages rising and energy costs low, consumption should remain solid for all of 2016,” Naroff told ConsumerAffairs.

CA: Why does the economy seem to be so sluggish?

NAROFF: The slowdown is being caused primarily by the collapse in energy costs. Consumers are only slowly spending the added free cash but the energy companies have reacted much more quickly. They are laying off workers, slowing job growth. They have cut back investment activities, reducing orders and demand for all the companies that supply capital goods, operating products and services that are suppliers to the industry.

So investment is down as is manufacturing for those firms providing capital products. But the price of energy has stabilized and the energy industry is moderating its cut backs.

What about China?

CA: Some of the sense of unease seems to be be related to China. Is China in trouble?

NAROFF: Whether China is slowing sharply or the data are just catching up with the reality, is something we just don’t know. When you have as big an economy as is China’s, it is almost impossible to sustain 7%-9% annual growth. China will be throttling back to 5% and lower over the next few years. Thus, for there to be a catastrophe, certain things have to happen.”

CA: Like what?

NAROFF: “The price of oil has to fall sharply once again, basically crashing the elements of the energy sector that have been able to survive the fall to $40-$50. Is that likely? It doesn’t look like it. Second, Chinese growth has to not just slow, but probably flatline. Think of it this way, if China grew at a 5% pace, nominal GDP would expand by over $500 billion.

That would power an awful lot of purchases from the rest of the world. That would also be equivalent to about a nearly 8% rise in the Chinese economy just five years ago. In other words, on a nominal dollar basis, China is still growing strongly.

It is just the percentage change off of a really higher base that is confusing people. And in any event, the U.S. economy doesn’t depend upon China to buy much of its output. Exports to China will probably run about 0.6% of total GDP this year. Thus, even a 10% or 20% reduction in exports would have little direct effect. The rest of the world might be hurt more, but that makes it a secondary effect for the U.S."

We aren't without problems

CA: Well, are there economic problems facing the U.S.?

NAROFF: The primary problem is financial. Since corporate earnings growth has been powered by sharp gains outside the U.S., the slowdown in China would depress earnings. But those are earnings made in foreign markets and we shouldn’t be concerned about them. Similarly, earnings reductions that are due to the strong dollar, not a slowdown in sales, is also totally irrelevant when it comes to the U.S. economy.

CA: So, are we headed for an economic calamity?

NAROFF: I never say never, but right now, the probability is pretty low.  

You can't go online these days without reading dire predictions about America's demise.They range from a coming economic collapse and Great Depression ...

Wholesale prices drop in September

Retail sales barely rise

If someone could “get it for you wholesale” last month, you got a pretty good deal. The Department of Labor reports its Producer Price Index (PPI) for final demand declined 0.5% in September.

The index for final demand goods moved down 1.2% for the month, the largest decrease since a 1.9% drop in January.

What does that mean, exactly? It means the cost of producing goods was lower, with not a hint of inflation. It also means the Federal Reserve may hesitate once again before raising interest rates.

Lower gasoline prices

Much of the decline was centered in the energy sector, dragged down by falling gasoline prices. In fact, the Bureau of Labor Statistics says over 80% of the price decline can be traced to final demand for energy, which was down 5.9%. Final demand prices for gasoline were down 16.6%.

Wholesale prices for beef, veal, and eggs were also lower, helping to keep food prices in check. Egg prices were down from recent highs caused by the bird flu virus.

The deflationary trend also extended to the service sector. The report shows the index for final demand services fell 0.4% in September, the largest decline since falling 0.5% in February.

Almost half of the drop can be traced to prices for services outside the trade, transportation, and warehousing sectors.

Cause for concern

This is a report that may worry Fed policymakers who are trying to increase the amount if inflation in the economy. Normally, inflation is bad for consumers because it makes everything more expensive.

But the Fed wants prices to rise moderately to encourage businesses to expand and hire more people. It also makes existing debt cheaper, since it will be paid back in dollars that are worth less than when the debt was incurred.

Today's Commerce Department report on retail sales won't make Fed policymakers feel any better. In September, consumer spending rose an anemic 0.1%, largely because consumers spent less on gasoline.

Consumers pocket the savings

That, of course, could be considered a good thing as long as they spent the savings elsewhere. They didn't. The report shows other spending areas were down or flat as consumers, for the most part, pocketed their fuel savings.

Sluggish demand feeds worries that the economy is slowing down, at a time when demand is falling worldwide and commodity prices continue to move lower.

For consumers, it's something of a double-edged sword. Buying things becomes more affordable, but if you are an employee, your employer may feel the pressure.

At best, raises may be harder to come by. At worst, there could be an increasing number of pink slips.

If someone could “get it for you wholesale” last month, you got a pretty good deal. The Department of Labor reports its Producer Price Index (PPI) for fina...

Researchers find new contributor to Great Recession

Damage to corporate bond market did long-term damage

No doubt there will be many issues in the 2016 presidential election – from immigration to private email servers.

But researchers at the University of Houston and Georgia State Universitysuggest one more – the role of corporate bond sales in the Great Recession. The effects of that economic calamity, they say, are still being felt and need to be better understood so they can be avoided in the future.

The general view is that the collapse of the subprime housing market created the severe recession. While it played a major role, the researchers in their paper – "Spreading the Fire: Investment and Product Market Effects of Corporate Bond Fire Sales" – find another culprit.

University of Houston finance professor Praveen Kumar says that a central question that should be asked is why the housing bubble spread to the broader economy, sparking corporate cutbacks and job losses.

Wall Street sinking Main Street

"There is a widespread view that financial market shocks were transmitted to the real sector - the 'Wall Street sinking the Main Street' syndrome," he and Georgia State's Hadiye Aslan wrote. "In particular, shocks in the asset-backed commercial paper market led to substantial losses on the balance sheets of banks, forcing them to sell assets in 'fire sales,' contract their lending firms, and force the economy into a prolonged recession.”

There was nothing wrong with the corporate bonds that got dumped during the financial crisis, the authors write. It's actually that fact that led to the fire sale.

Because banks were holding so many “toxic” assets they couldn't sell at any price, they were forced to sell their more valuable assets to raise money. And the more commercial paper put up for sale, the lower the price sank.

The study found institutional holders of corporate bonds - primarily insurance companies and mutual fund firms – were also heavily invested in risky mortgage securities.

Credit freeze

As they dumped their good assets and saturated the commercial bond market, even strong companies were unable to issue additional bonds to finance capital expenditures. At one point, even GE could find no buyers for its bonds.

When major companies couldn't raise capital, they suspended activity and slashed their workforce. At that point, an ordinary recession became the Great Recession.

The research team says capital expenditures of affected firms dropped by 14.5% while research and development dropped by 17.2%.

"This highlights how integrated the financial markets are with the rest of the economy," Kumar said. "One financial market sneezes, and the rest of the economy catches pneumonia. This goes far beyond Wall Street."

The research already has captured the attention of advocates for additional reform of the nation's financial markets. Kumar predicts the issue of Wall Street risk taking, and how it could threaten the overall economy, will heat up as the 2016 presidential campaign progresses.

No doubt there will be many issues in the 2016 presidential election – from immigration to private email servers.But researchers at the University of H...

Carl Icahn the latest to warn of impending economic catastrophe

Billionaire investor says Fed policy has created "dangerous bubbles"

In a video released today, billionaire investor and legendary Wall Street trader Carl Icahn said the Federal Reserve policy of keeping interest rates at 0% for the last seven years has created “dangerous bubbles” in art, real estate, and high yield bonds.

"It's like giving somebody medicine and this medicine is being given and given and given and we don't know what's going to happen - you don't know how bad it's going to be,” Icahn said in the video. “We do know when we did it a few years ago it caused a catastrophe, it caused '08. Where do you draw the line?"

Icahn is hardly alone in predicting economic collapse. For months, former Rep. Ron Paul (R-TX) has appeared in ads for Stansberry Research, a newsletter publisher, promoting a video in which he warns of an even greater economic crisis in the offing – but this one is also due to the Fed's monetary policy.

The problem with “free money”

Why, exactly, is the extended period of “free” money a bad thing? How does that set the economy up for a catastrophic fall? Back in 2010, less than two years after the zero interest rate policy (ZIRP) went into effect, there were plenty of warnings.

At that time, financial blogger Charles Hugh Smith laid out some of the arguments. With ZIRP, he wrote, savers, investors, and money managers cannot earn any kind of return for having their assets in cash. Therefore, they have to look elsewhere for a return on capital.

That means less money is going into banks, at a time when banks need to replenish their reserves. With rates at zero, even the banks can't earn a return.

Since banks can borrow from the Fed at 0%, many are doing so in order to buy bonds in other countries, where rates are higher. The banks earn a return but it also draws money out of the U.S. economy.

Encourages risk-taking

ZIRP also encourages risk-taking. Instead of keeping money in cash, individuals and institutions are putting it in assets that have dramatically risen in value. Icahn specifically mentions art and real estate.

When he worries about real estate, he is obviously not talking about suburban tract houses, but rather palatial homes in red hot markets like New York, San Francisco and San Jose, where the wealthy have bid up the price of condos well past a million dollars.

Money has also flowed into stocks, raising prices beyond what the fundamentals of the underlying companies might justify. In recent weeks, money has been flowing out of stocks and prices are falling.

Five years ago Smith concluded even then that evidence of the Fed's interest rate policy was “perniciously undermining the financial sector and the U.S. economy is increasingly persuasive.”

The Fed is increasingly signaling that it will begin raising rates before the end of the year, but a lot of people like Carl Icahn think it may be too late.

In a video released today, billionaire investor and legendary Wall Street trader Carl Icahn said the Federal Reserve policy of keeping interest rates at 0%...

Federal Reserve decides not to raise interest rates

Central bank was worried about the impact on developing economies

Despite a low official unemployment rate and steady economic improvement, the Federal Reserve Open Market Committee (Fed) has decided to leave U.S. interest rates at 0%.

The Fed said economic conditions in the U.S. are improving but cited concern about economic weakness in developing economies. A number of international economists had urged the Fed not to raise U.S. interest rates, saying the move could have a harmful effect on other economies.

Foreign nations and corporations have borrowed billions of dollars and a rise in U.S. rates would place added costs on those loans.

Wall Street reacted with relief, since cheap money supports current stock valuations, which some economists think are too high.

The housing industry is also relieved. Jonathan Smoke, chief economist at Realtor.com, says a Fed rate hike would have signaled the end of historically low mortgage rates and would have added about 6% to the cost of the average new mortgage.

Because of the Fed's decision, consumers should find mortgage rates, as well as rates on car loans, little changed.

The Fed lowered interest rates to 0% in the wake of the 2008 financial crisis and has not raised them since. It's next opportunity will come at it's October meeting. At that time, the will-it-or-won't-it guessing game will begin again.

Despite a low official unemployment rate and steady economic improvement, the Federal Reserve Open Market Committee (Fed) has decided to leave U.S. interes...

Cost of living declines in August

And the year-over-year rate of inflation has barely budged

Consumer prices became less of a worry during the past month.

According to the Labor Department (DOL), the Consumer Price Index (CPI) dipped 0.1% in August on a seasonally adjusted basis. Moreover, during the past 12 months, it's up a miniscule 0.2%.

Energy and food

Energy costs were down 2.0% in August after posting gains in five of the last 6 months. Gasoline prices, which were up for three straight months, dropped 4.1%. Fuel oil index also declined (-8.1%), offsetting increases in natural gas (+1.2%) and electricity (+0.3%). Over the past 12 months, electricity has fallen 0.6%, fuel oil has plunged 34.6%, gasoline is down 23.3%, and natural gas is off 11.5%.

Food prices, however, were up 0.2%, with the food at home category up 0.3% -- the same as July. Within that latter sector, major grocery store food groups were mixed. The largest increase was for fruits and vegetables, which jumped 1.5% with both fresh fruits and fresh vegetables posting their largest increases of the year. Prices for meats, poultry, fish, and eggs rose 0.5%, while beef, poultry, and pork costs all declined. The biggest sticker shock came in eggs, where costs surged 7.7% and are now up 35.3% over the past year. Over the past 12 months, food at home prices are up 0.8%.

Excluding the volatile food and energy categories, the core rate of inflation increased 0.1% in August the same as July. Shelter costs were up 0.2%, apparel rose 0.3%, and tobacco was up 0.5%. The costs of medical care, new vehicles, and personal care were unchanged, while airline fares fell 3.1%., used cars and trucks were down 0.4%, and household furnishings and operations prices dropped 0.3%. Over the last 12 months, the core rate of inflation is up 1.8%.

The interest rate outlook

The inflation report comes as the Federal Reserve begins a two-day meeting to decide the course of interest rates.

Given the latest CPI numbers, Stifel Fixed Income Chief Economist Lindsey M. Piegza says inflation is likely to remain increasingly benign for the remainder of the year and beyond. That, she says, undermines "any notion of confidence inflation will begin to reverse course back towards the Fed's target of 2%."

Piega believes that despite an apparent growing impatience at the Fed to raise rates, the data suggest September "may not be the appropriate timetable for liftoff."

The complete CPI report is available at the Department of Labor website.   

Consumer prices became less of a worry during the past month. According to the Labor Department (DOL), the Consumer Price Index (CPI) dipped 0.1% in Augus...

The Fed's interest rate decision and what's at stake

Policymakers will show their hand on Thursday

On Thursday the Federal Reserve Open Market Committee (Fed) may announce that it is raising interest rates for the first time in seven years. On the other hand, it might not.

The will it or won't it question has been Wall Street's obsession for months now, and it has spawned a wide variety of economic theories about what happens if the Fed, as expected, raises interest rates by one-quarter of a percent.

Theories range from the apocalyptic to the benign, and any number of smart, thoughtful people paint very different scenarios. So, what is the average consumer to think?

Stock market impact

First, raising interest rates is very likely to have a short-term negative impact on the stock market. That's because of the distorting effect cheap money has on stock valuations.

Think back to the housing bubble. A major reason home values soared as high as they did was because mortgage money to buy them was overly plentiful. Money wasn't exactly cheap but “creative” financing allowed buyers to purchase a home with low “teaser” rates for a couple of years before the rate reset to normal levels.

Current interest rates below 1% make it very cheap to buy stocks on margin, or in the case of corporations to buy back shares of their own companies to keep stock prices high. As a result, traders and investors could justify paying more for a stock than it's really worth, based on its fundamentals.

When rates go up it costs more to buy those shares, so the valuation has to be adjusted lower. That's what many economists expect will happen.

Shiller weighs in

Yale's Nobel economics laureate Robert Shiller has been outspoken in his concern that many stocks are currently overvalued.

“It looks to me a bit like a bubble again with essentially a tripling of stock prices since 2009 in just six years and at the same time people losing confidence in the valuation of the market,” Shiller told the Financial Times.

But Shiller is not one who is predicting a Fed interest rate hike will crash the stock market. He says the market has seen this coming for so long that it's really “no big deal” at this point. But at some point in the future, Shiller said he expects stock valuations to become more realistic, bringing prices down.

Mohamed El-Erian, chief economic advisor to Allianz, also believes the market holds some downside risk. But like Shiller, he thinks it could come from worsening economic conditions, rather than Fed policy.

Buying opportunity

But if stocks drop sharply in the months ahead, El-Erian told CNBC that he thinks it would be a “once in a decade” opportunity to buy bargain stocks.

So it sounds like the Fed raising rates might not cause lasting harm to the markets, but what about the economy?

In a media briefing late last week, Claudio Borio, an official of the Bank for International Settlements (BIS), noted that developing nation debt, in particular borrowing from the U.S., has surged since the financial crisis. But lately, credit has begun to dry up.

$3 trillion in debt

“The total amount of dollar credit to non-bank borrowers outside the United States had risen by over 50% since early 2009, to $9.6 trillion by the end of March 2015, and almost doubled for emerging market economies, to over $3 trillion,” Borio said.

Much of that money, he says, ended up going to foreign corporations that may, or may not, be able to pay it back.

That's why many international economists are urging the Fed not to raise interest rates just yet. The U.S. economy may be recovering and can withstand a modest hike – the rest of the world, however, might not.

In a global economy, the danger for the U.S. – and by extension U.S. consumers – is the threat that a global recession becomes a U.S. one as well.

On Thursday the Federal Reserve Open Market Committee (Fed) may announce that it is raising interest rates for the first time in seven years. On the other ...

Wholesale prices flatline in August

A big drop in gasoline prices helped keep the lid on

The Producer Price Index (PPI) for final demand -- wholesale prices, in other words -- was unchanged in August following increases of 0.2% and 0.4% in July and June, respectively, according to the Department of Labor (DOL).

A gain of 0.4% for services offset a drop of 0.6% in prices for goods.

Look out below

The August decline of 0.6% for goods was the largest since an identical decrease last April. In August, most of it was attributable to a drop of 3.3% in energy costs. Prices for gasoline plunged 7.7%, with jet fuel, grains, iron and steel scrap, home heating oil, and light motor trucks also lowering. In contrast, prices for residential natural gas and for search, detection, navigation, and guidance systems and equipment increased. Conversely, prices for foods rose 0.3%, led by 23.2% surge in the cost of chicken eggs.

Services prices on the rise

The 0.4% rise in the cost of services was the third in as many months. Almost half of the advance is attributable to for apparel, footwear, and accessories retailing, which jumped 7.0%. Prices for automotive fuels and lubricants retailing; securities brokerage, dealing, investment advice, and related services; wireless telecommunication services; residential real estate loans (partial); and inpatient care also moved higher. Prices for airline passenger services, on the other hand, declined 1.6 percent with costs for machinery and equipment wholesaling and guestroom rental also dipping.

Core inflation

The PPI less the volatile foods, energy and trade services -- what's known as the less volatile “core rate” of wholesale inflation -- inched up 0.1% in August after advancing 0.2% the month before. For the 12 months ended in August, the core rate is up 0.7%.

The complete report is available on the DOL website.

The Producer Price Index (PPI) for final demand -- wholesale prices, in other words -- was unchanged in August following increases of 0.2% and 0.4% in July...

What to make of Wall Street's wild week

Economist sees strong positives for economy, even as stock values slide

Granted, most consumers are not active investors in the stock market, so when the major averages rise and fall with whipsaw-like speed in the space of a few trading days, fewer people feel they are directly related.

But millions have the bulk of their retirement savings invested in stock mutual funds, and large pension funds are heavily invested in stocks; so, what happens on Wall Street matters.

Then what is the average consumer to make of this week's action in the financial markets? After huge intra-day swings, the Dow Jones Industrial Average is likely to end the week about 800 points or so higher than where it began on Monday.

Then again, it would still be about 800 points lower than where it began the previous week.

Overdue correction

Most market-watchers have concluded the turbulence is the result of a long-overdue correction, based on the fact that the Federal Reserve finally appears ready to begin raising interest rates. When the cheap money disappears, stock valuations have to be adjusted lower.

But is that all there is to it? Rajeev Dhawan of the Economic Forecasting Center at Georgia State University, says the markets are also reacting to events in China, which has devalued its currency and sent other signals that its huge economy is badly in need of a jump start.

Although financial markets reacted negatively to China's currency devaluation, Dhawan says the move was “positive news for the economy overall” that will boost domestic profit margins on imported goods.

Consumer-friendly news

There is other consumer-friendly news out there, he says. Between low gas prices and wealth gains from reflated home prices and stock portfolios, he believes consumers are finally in the mood to spend, albeit judiciously, on necessities, if not luxuries.

Car sales are up, driven in large part by low interest rates. As for oil, Dhawan expects prices will stay below $60 a barrel until late 2016 due to a drop in global demand and an increase in drilling efficiency by U.S. producers.

“People can safely expect low gas prices to continue for the next year,” he said.

Businesses appear to be investing more in personnel and infrastructure. Dhawan expects the increase in business investment will be the final piece of the economic puzzle for the Fed, prompting it to start raising interest rates before the end of this year.

Stronger economic growth

Economic growth also appears stronger. After an anemic showing in the first quarter of 2015, the second quarter showed much more evidence of a rebound, with the Gross Domestic Product (GDP) rising at an annual rate of 3.7%.

Dhawan also thinks it will be easier to get a job in the months ahead. He expects jobs to grow by a monthly rate of 219,000 in 2015, 226,000 in 2016 and 214,000 in 2017.

So despite the sideshow on Wall Street this week, Dhawan says the underlying economy is showing improvement, even if it is coming slowly.

As for the markets, the turbulence is likely to continue for a while. Corrections, after all, usually take weeks, not days.

Granted, most consumers are not active investors in the stock market, so when the major averages rise and fall with whipsaw-like speed in the space of a fe...

Are economic warning signs flashing “recession?”

Consumer activity in the next few weeks may provide a clue

Last week's stock market carnage has Wall Street traders – as well as millions of consumers with retirement accounts in mutual funds – a bit nervous. The stock indices are now in bear market territory with the first major correction since 2011.

The debate on Wall Street is whether the selling is over. Even if it's not, many economists say the U.S. economy is still fairly strong and job growth is good.

But there are warning signs everywhere that may suggest otherwise.

It's true that the stock market sell-off could just be a long-overdue correction from abnormally-high stock valuations. But there are troubling signs that suggest the economy is weaker than many think.

Weak growth numbers

It starts with the economic growth rate. Gross Domestic Product (GDP) is estimated to be around two percent for the year. But in the first quarter of both 2014 and 2015, growth was dismal. In fact, in both years there was negative growth in the January through March period.

The weak showing in 2014 was blamed on a cold winter and this year on a labor action that blocked West Coast ports for a time. But every first quarter is cold, because it's in the winter. Winter doesn't appear to have been a negative factor in years before the financial crisis. For example, GDP in the first quarter of 2004 was 2.4%.

So even if economic growth picks up in the rest of the year, as it usually does, the fact the U.S. economy has gone in reverse to begin the last two years doesn't exactly paint a picture of a robust economy.

Cheaper commodities

Consumers are probably well aware of falling oil prices, but the price of just about every other commodity has been falling too. Falling oil prices are good for consumers but have hurt the U.S. oil industry, whose rapid growth the last few years has helped keep the economy afloat. That stimulus is no longer the economic driver it once was.

Oil prices are lower because there is an oversupply but the situation with other commodities, like copper, is different. There just doesn't seem to be as much demand. Falling demand could be a sign of an economic slowdown.

The economies of other nations may already be in recession. Countries like Brazil that rely on the export of oil and minerals are reeling because of falling prices.

China's woes

China, the world's second-largest economy, also appears to be in trouble. China last week took aggressive action to devalue its currency to prop up its fading export market. True, the U.S. imports more from China than it exports, but many U.S. corporations rely on the vast Chinese market. Apple stock's plunge the last few weeks is attributed in part to a belief Apple will sell fewer iPhones in China if that country's economy tanks.

This all creates strong headwinds for the U.S. economy, especially in light of an ever-strengthening dollar,that makes U.S. exports more expensive.

So, is the U.S. sliding toward recession? Very few people think so but the U.S. consumer may be a strong indicator. Keep an eye on back to school sales, now under way. As we reported last week, consumers don't appear to have spent heavily so far.

“As expected, families are carefully measuring where, when and how they should spend on fall apparel items, school supplies, electronics and other necessities,” said National Retail Federation President and CEO Matthew Shay. “Late summer promotions and sales tax holidays around the country are likely contributing to the delay in back-to-school shopping this year, which means the next few weeks could be exceptionally busy for retailers large and small.”

If it's not exceptionally busy, it could be a bad sign. In 2008 retailers suffered a dismal back to school shopping season. It was followed a month later by the financial crisis, in which a garden variety recession turned into the Great Recession.

Last week's stock market carnage has Wall Street traders – as well as millions of consumers with retirement accounts in mutual funds – a bit nervous. The s...

CPI barely budges in July

Both food and energy costs were on the rise

There was inflation in July, but you had to look around for it.

According to the Department of Labor (DOL), the Consumer Price Index (CPI) rose a tiny 0.1% on a seasonally adjusted basis last month, and is up just 0.2% over the last 12 months.

Food prices move higher

The cost of foods rose 0.2% last month, with a 0.3% advance in the food at home category. That came as all six major grocery store food groups rose modestly, including an 0.8% gain in dairy and related products. Nonalcoholic beverage prices were also higher (+0.4%), as were fruits and vegetables (+0.3%), meats, poultry, fish, and eggs (+0.2%); and cereals, bakery products, and other food (+0.2%). All told, the food at home category is up 0.9% over the past 12 months.

Energy prices inch upward

After a 1.7% increase in June, energy costs were up a tiny 0.1% last month, due largely to a 0.9% increase in gasoline prices -- the third straight monthly gain. All other major energy components were down in July, with natural gas falling 1.4%, electricity off 0.4% -- its third decline in the last five months -- and fuel oil nosediving 3.4%.Over the past year, energy costs have plummeted 14.8%

Core inflation

The index for all items less the volatile food and energy sectors -- the so-called “core rate” of inflation -- rose 0.1% in July. The main contributor was a gain of 0.4% in the cost of shelter. Other increases were seen in clothing (+0.3%) and medical care (+0.1%). Several items showed no change, including personal care, recreation, alcoholic beverages, and tobacco. Airline fares declined sharply in July, falling 5.6% -- the largest decline since December 1995. Also lower were prices for used cars and trucks (-0.6%), household furnishings and operations (-0.2%), and new cars (-0.2%). For the last 12 months, the core rate of inflation is up 1.8% -- the fourth time in five months the 12-month change was 1.8%.

The complete CPI report is available on the DOL website.

There was inflation in July, but you had to look around for it. According to the Labor Department, (DOL), the Consumer Price Index (CPI) rose a tiny 0.1% ...

Wholesale prices rise again

Falling food and energy costs helped keep a lid on the increase

The Producer Price Index (PPI) for final demand -- wholesale prices in plain English -- rose in July for a third straight month.

According to the Labor Department (DOL), the PPI was up a seasonally adjusted 0.2% following advances of 0.4% in June 0.5% in May.

On an unadjusted basis, the PPI was down 0.8% for the 12 months ended in July, the sixth consecutive 12-month decline.

Services prices up

The services sector of the PPI rose 0.4% last month, the sharpest increase since October of last year when it surged 0.6%. Sixty percent of the broad-based July advance was due to a 0.4% rise in the index for services less trade, transportation, and warehousing. Trade services prices also rose 0.4%, while the cost of transportation and warehousing services was up 0.2 percent.

Over 40 percent of the increase is the result of a 9.9% surge in prices for guestroom rental. The costs of automotive fuels and lubricants retailing; health, beauty, and optical goods retailing; securities brokerage, dealing, investment advice, and related services; computer hardware, software, and supplies retailing; and transportation of passengers (partial) also moved higher. Conversely, prices for apparel,

footwear, and accessories retailing declined 4.2 percent. Loan services (partial) and truck transportation of freight prices also fell.

Goods prices drop

The prices of goods inched down 0.1% last month after posting a gain of 0.7% in June. Most of that was the result of a 0.6% decline in energy costs. Food prices dipped 0.1%, leaving prices for all goods less foods and energy unchanged.

A major factor in the July decrease in prices for goods was the 2.4% drop in the cost of residential natural gas. Prices for chicken eggs, home heating oil, pork, and nonferrous metals were lower as well. In contrast, the cost of gasoline advanced 1.5%, with prices for corn, motor vehicles and basic organic chemicals also increasing.

The complete PPI report is available on the DOL website.

The Producer Price Index (PPI) for final demand -- wholesale prices in plain English -- rose in July for a third straight month. According to the Labor De...

Evidence mounts that the anemic economy is running out of gas

Consumers still appear to be under stress

Even as the Federal Reserve pondered when and whether to raise interest rates – they've been at 0% for 6 years – there was more evidence the economy is far from over-heating.

Three reports late last week seemed to bring it home.

First, the Labor Department Friday reported a minuscule rise in labor costs, meaning workers didn't receive as much pay. In fact, the increase in second quarter labor costs was the smallest in the last 33 years.

That fact took economists by surprise since businesses have been busy hiring new employees. Job openings are at the highest level in years. It suggests that new employees aren't making all that much money.

In the second quarter, the biggest pay cut came for information workers, who saw compensation decline 1.6%.

Easy to get a table

Meanwhile, the National Restaurant Association reported its Restaurant Performance Index (RPI) fell in June for the second straight months. The RPI, which tracks the health and outlook of the restaurant industry, was down 0.4% from May, which until June was at its lowest level in 9 months.

Again, that goes against the conventional wisdom that consumers, with more money in their pockets because of lower gasoline prices, would go out to restaurants more. While traffic is up in some places, restaurant operators seem to be worried it won't last.

"Although same-store sales and customer traffic levels remained positive in June, the overall RPI declined as a result of dampened optimism among restaurant operators," said Hudson Riehle, Senior Vice President of the Research and Knowledge Group for the Association. "The proportion of restaurant operators expecting sales growth fell to its lowest level in 9 months, while operators' outlook for the economy turned negative for the first time in nearly 2 years."

Optimism about the potential for sales growth has been on a downward trend in recent months. Forty-two percent of restaurant operators said they expect to have higher sales in 6 months, down from 59% just three months ago. Only 8% of restaurant operators expect their sales volume in 6 months to be lower than it was during the same period in the previous year, which is a slight improvement over last month.

Negative outlook

More troubling, perhaps, is the index shows restaurant operators' outlook for the overall economy turned negative for the first time in nearly 2 years. Only 17% of restaurant operators said they expect economic conditions to improve in 6 months, down from 30% last month. Twenty-one percent actually expect economic conditions to worsen in 6 months, up from just 11% last month.

Last week also brought the first reading on second quarter Gross Domestic Product (GDP) from the Commerce Department, adding to a growing sense of economic unease. The government found the economy grew by just 2.3%, not even rising to the forecast 2.6%.

The first quarter reading was revised upward, but it was small consolation. Instead of shrinking by 0.2%, it grew by 0.6%.

Even as the Federal Reserve pondered when and whether to raise interest rates – they've been at 0% for 6 years – there was more evidence the economy is far...

The economy: Consumer prices and new home construction on the rise in June

Higher gasoline and food costs pushed the CPI higher

The cost of living moved moderately higher in June, with gasoline, food and shelter prices all contributing to the increase.

According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) rose a seasonally adjusted 0.3% last month and over the last 12 months is up a miniscule 0.1%.

Food and energy

Food prices, which were unchanged in April and May, rose 0.3% last month. The food at home category -- things you buy at a grocery store -- jumped 0.4% after declining in each of the 3 previous months. Over three-fourths of that increase came in the price of eggs, which rose 18.3% -- the largest increase since August 1973. Also posting gains were for meats, poultry, fish, and eggs (+1.4%), and cereal and bakery products (+0.5%). In contrast, prices for dairy and related products fell for the sixth consecutive month (-0.6%), and the fruits and as did the cost of vegetables (-0.4%. Food at home costs are up 1.0% over the last 12 months.

Energy prices were up 1.7% following a surge of 4.3% in May, due largely to an advance of 3.4% in gasoline costs. Electricity prices rose 0.2%, and natural gas prices advanced 0.3% -- the first increase since December. Fuel oil was the only major energy component index to decline, falling 1.9%.

Core inflation

The core rate of inflation -- all items excluding the volatile food and energy categories -- rose 0.2% in June. The cost of shelter, which rose 0.3%, accounted for over two-thirds of the increase. Other increases include prices for recreation, airline fares, personal care, tobacco, and new vehicles. Those advances more than offset declines in the prices of medical care, household furnishings and operations, used cars and trucks, and apparel. The core rate of inflation is up 1.8% over the past 12 months.

The complete CPI report is available on the Labor Department website.

Housing starts

A surge in new-home construction in June recovered nearly all the losses suffered a month earlier.

The Census Bureau and the Department of Housing and Urban Development report privately-owned housing shot up 9.8% last month to a seasonally adjusted annual rate of 1,174,000 -- 26.6% above the same month a year ago.

Construction of single-family housing was up 0,9% to an annual rate of 685,000, while the rate for units in buildings with 5 units or more was 476,000 -- up 116,000 from May.

Building permits

The outlook for construction in the months ahead improved as well.

Privately-owned housing units authorized by building permits were at a seasonally adjusted annual rate of 1,343,000 in June -- 7.4% from May.

Permits for single-family construction rose 0.9% to a rate of 687,000; authorizations of units in buildings with 5 units or more were at a rate of 621,000 -- a gain of 86,000 from May.

Stifel Fixed Income Chief Economist Lindsey Piegza says the housing market continues to take steps in the right direction. But, she adds, "growth remains far from robust; as we have seen in the recent decline in retail sales, consumers continue to struggle to afford purchases -- particularly large ticket items -- amid stagnant income growth. Still, with the threat of rising rates on the near horizon, some homeowners are jumping in to lock in low rates."

The full report on housing construction is available on the Commerce Department website.

The cost of living moved moderately higher in June, with gasoline, food and shelter prices all contributing to the increase. According to the Bureau of La...

Producer prices continue to rise

It's the second straight gain in wholesale inflation

Producer prices for final demand (PPI), the cost of goods and services one step shy of the consumer level, were up in June for the second month in a row.

Led primarily by surging energy costs, the PPI rose 0.3% last month on top of the May increase of 0.5%, according to the Labor Department (DOL).

Almost two-thirds of the June increase is the result of a 0.7% increase in the cost of goods. Services prices rose 0.3%

Goods and services

The 0.7% gain in the cost of goods was the result of a 2.4% surge in energy prices. Within that category, the cost of gasoline was up 4.3%. Food prices were up 0.6%, with the cost of eggs higher, and fresh and dry vegetables lower.

Thirty percent of the 0.3% gain in services costs last month can be attributed to prices for loan services, which climbed 2.4%. Prices for machinery and equipment wholesaling, fuels and lubricants retailing, truck transportation of freight, deposit services and portfolio management also advanced. Margins for food and alcohol wholesaling were down 3.7%.

The core PPI, which excludes the volatile food, energy and trade services categories,rose 0.3% in June after edging down 0.1% the month before. For the 12 months ended in June, core PPI was up 0.7%

The complete PPI report is available on the DOL website.  

Producer prices for final demand (PPI), the cost of goods and services one step shy of the consumer level, were up in June for the second month in a row. ...

Rising gasoline costs help push consumer prices higher

Jobless claims slip

A spike in the cost of gasoline was a major factor in the rise in the consumer price index (CPI) during May.

Figures released by the Bureau of Labor Statistics (BLS) show the CPI was up 0.4% last month, but that over the last 12 months, the index is unchanged.

Energy and food

Energy prices overall were up 4.3% in May following a decline in April, with gasoline costs shooting up 10.4%. Fuel oil edged up 0.7%, natural gas was unchanged and electricity prices fell 1.2%. Over the last 12 months, electricity is up just 0.5% -- its smallest 12-month increase since January 2013. The other energy components have sharply declined over the last 12 months, with fuel oil down 27.6%, gasoline off 25.0%, and natural gas off 15.4%.

Food prices were unchanged in May. As was the case in April, the index for, with 4 of the 6 major grocery store food group indexes declining, led by the dairy and related products with a drop of 0.7%. Meats, poultry, fish, and eggs were down 0.5%, beef and veal off 0.1% and nonalcoholic beverages inching down 0.2%. In contrast, fruits and vegetables increased 0.3% and the “other food” category was up 0.1%. food at home index rose 0.6 percent For the 12 months ending May, prices were up 0.6%.

Core inflation

The “core” rate of inflation, which strips out the volatile food and energy categories was up just 0.1% last month after rising 0.3% in April. The cost of shelter rose 0.2% percent, airline fares soared 5.7% after declining in 5 of the last 6 months and medical care was up 0.2%. Also posting gains were new vehicles (+0.2%), tobacco (+0.4%) and alcoholic beverages (+0.2%). Apparel index, meanwhile, declined 0.5%, household furnishings and operations fell 0.3% and prices for used cars and trucks decreased 0.4%. Thew core rate has risen 1.7% over the past 12 months, compared with an increase of 1.8% for the 12 months ending April.

The complete CPI report is available on the Labor Department (DOL) website.

Jobless claims

First-time applications for state unemployment benefits dipped last week.

The DOL reports initial jobless claims plunged by 12,000 in the week ending June 13 to a seasonally adjusted 267,000.

The government says there were no special factors affecting the claims level.

The 4-week moving average, which is less volatile and considered a more accurate gauge of the labor market came in at 276,750, a decline of 2,000 from the previous week.

The full report may be found on the DOL website.

A spike in the cost of gasoline was a major factor in the rise in the consumer price index (CPI) during May. Figures released by the Bureau of Labor Stati...

Wholesale inflation on the rise in May

A spike in gasoline prices was a major factor

Following a decline the previous month, the Producer Price Index (PPI) for final demand shot up 0.5% in May. Still, according to the Labor Department (DOL), for the 12 months ended in May the PPI was down 1.1% -- the fourth straight 12-month decrease.

It was higher prices for final demand goods (+1.3%) that drove the increase as the index for final demand services was unchanged.

Goods and services

Eighty percent of the broad-based advance in goods is attributable to prices for energy, which jumped 5.9%, including a 17.0% surge in the cost of gasoline. In the overall goods sector, prices for diesel fuel, chicken eggs, jet fuel, pharmaceutical preparations and motor vehicles also moved higher. The costs of residential natural gas, hay, hayseeds and oilseeds, and for primary basic organic chemicals also were lower.

As far as services are concerned, the prices of food and alcohol retailing, apparel, jewelry, footwear, and accessories retailing; television, video, and photographic equipment and supplies retailing; inpatient care; and residential real estate services posted gains. Prices for services related to securities

brokerage and dealing; machinery and equipment wholesaling; loan services; health, beauty and optical goods retailing; and wireless telecommunication services were lower.

The "core" PPI, which strips out the volatile food, energy, and trade services categories, edged down 0.1% in May. For the 12 months ended in May, the core rate was up 0.6%.

The complete report is available on the DOL website.

Following a decline the previous month, the Producer Price Index (PPI) for final demand shot up 0.5% in May. Still, according to the Labor Department (DOL)...

Consumer prices barely move in April

In fact, prices have fallen over the last 12 months

Not much to see here, folks.

According to the Labor Department (DOL), the Consumer Price Index (CPI) inched ahead just 0.1% in April, and for the last 12 months is actually down 0.2%.

One of the biggest factors in the tiny increase was a rise of 0.7% in the cost of medical care -- the largest increase since 2007.

Energy and food

Energy costs were down 1.3% percent in April after rising in February and March, with fuel oil down 8.4%, natural gas off 2.6%, gasoline posting a 1.7% decline and electricity unchanged. For the last 12 months, energy costs are down 19.4%, with all the major components declining except electricity.

Food costs were unchanged, with food at home -- grocery prices, if you will -- down 0.2%. Dairy and related products posted the largest decline (-0.8%), followed by meats, poultry, fish, and eggs (-0.7%), and cereals and bakery products (-0.3). In contrast, the nonalcoholic beverage prices rose 0.5% while fruits and vegetables edged 0.2% higher. Food at home has increased 1.3% for the 12 months ending April -- the smallest 12-month increase since the year ending February 2014.

Core rate

Prices for items less the volatile food and energy categories -- the “core rate” of inflation -- rose 0.3% last month, with costs for shelter, medical care, household furnishings and operations, used cars and trucks, and new vehicles all posting gains. Apparel prices and airline fares moved lower.

Over the last 12 months, the core rate has risen 1.8%, the same increase as for the 12 months ending March, and slightly below its 1.9% annualized increase over the past 10 years.

The complete CPI report is available on the DOL website.

Not much to see here, folks. According to the Labor Department (DOL), the Consumer Price Index (CPI) inched ahead just 0.1% in April, and for the last 12 ...

Producer prices back on the downside

First time applications for jobless benefits slip

After rising in March for the first time since last October, the governments producer price index (PPI) is headed lower again.

Figures released by the Bureau of Labor Statistics show prices were down a seasonally adjusted 0.4% last month. For the 12 months ended in April, the PPI is down 1.3%

The broad-based decline was led by a 2.9% drop in energy costs, with a 4.7% plunge in gasoline playing a major role. Prices for diesel fuel, jet fuel and utility natural gas also fell.

Food costs also were down 0.9%,with pork prices lower, but the costs of fresh and dry vegetables rising.

The “core rate,” less the volatile food and energy categories, was down 0.1%

The full PPI report is available on the Labor Department website.

Initial claims

Separately, the government reports initial jobless claims were down by 1,000 in the week ending May 9 to a seasonally adjusted 264,000. Officials say there were no special factors affecting the tally.

The 4-week moving average, which is less volatile than the weekly count, fell 7,750 to 271,750 -- the lowest level since April 22, 2000 when it

Details may be found on the Labor Department website.

After rising in March for the first time since last October, the governments producer price index (PPI) is headed lower again. Figures released by the Bur...

Consumer prices post second consecutive gain

An increase in energy costs offset a decline in food prices

Rising energy costs pushed consumer prices higher in March for the second increase in two months.

Figures from the Labor Department (DOL) show the Consumer Price Index (CPI) inched up 0.2% last month following an identical increase in February. Over the last 12 months, though, the CPI has dipped 0.1%.

Energy and food

Energy prices jumped 1.1% on top of February’s 1.1% advance. Gasoline prices shot up 3.9%, fuel oil surged 5.9%, while natural gas declined 2.7% and electricity fell 1.1%.

Food prices, on the other hand, dipped 0.2%, wiping out an 0.2% increase in February. Five of the 6 major grocery store food group indexes declined, with fruits and vegetables down 1.4%, nonalcoholic beverages off 0.6%, and dairy and related products along with meats, poultry, fish, and eggs down 0.5%. Beef and veal prices, however, rose01.% -- the 14th monthly increase in a row.

Core inflation

For March, the “core” rate of inflation -- all items less the volatile food and energy categories -- increased 0.2%. A major factor was a 1.2% advance in prices for for used cars and trucks and a 0.3% increase in the cost of shelter. Airline fares, in contrast, plunged 1.7% after rising in February.

Over the past 12 months, the core rate of inflation is up 1.8%, compared with the 1.7% increase for the 12 months ending February.

The complete CPI report for March is available on the DOL website.

Rising energy costs pushed consumer prices higher in March for the second increase in two months. Figures from the Labor Department (DOL) show the Consume...

Producer prices on the rise

It's the first advance since last October

After posting declines in four consecutive months, the Producer Price Index (PPI) moved higher in March.

According to the Bureau of Labor Statistics, the PPI was up a seasonally adjusted 0.2% last month after falling 0.5% in February and 0.8% in January. Over the last 12 months, the PPI is down 0.8%.

Goods and services

Prices for goods were up 0.3% following 8 consecutive decreases, led by a 1.5% surge in energy costs, due primarily to gasoline, which jumped 7.2%. Food prices, meanwhile, fell 0.8%, thanks to a plunge of 5.1% in pork prices. The “core rate” -- less foods and energy – was up 0.2% in March.

The cost of services inched up 0.1% in March following a decline of 0.5% in February. Services less trade, transportation, and warehousing, rose 0.3%, while transportation and warehousing services and trade services both declined 0.2% in March.

Details are available on the Labor department website

After posting declines in four consecutive months, the Producer Price Index (PPI) moved higher in March. According to the Bureau of Labor Statistics, the ...

Consumer prices post first gain in 4 months

Energy, food and shelter were major factors

Here's something we haven't seen in a while: an increase in the Consumer Price Index (CPI).

The Labor Department (DOL) reports hikes in the costs of energy, food and shelter sent the CPI up 0.2% in February, the first increase since it rose 0.1% last October. The index is unchanged over the last 12 months.

Energy and food hikes

The cost of energy rose 1.0% last month after posting seven consecutive declines. Gasoline costs jumped 2.4%, fuel oil was up 1.9% and electricity 0.3%. The only major energy component to fall was natural gas, which dropped 2.0%. Energy costs have plunged 18.8% over the last 12 months.

Food prices were up 0.2%, with “food at home” rising 0.1%. The cost of nonalcoholic beverages advanced 0.6%, the meats, poultry, fish and eggs category gained 0.3%, and veal and beef prices rose 0.7 % -- the thirteenth consecutive increase. In contrast, dairy and related products were down 1.0%, fruits and vegetables dipped 0.3% -- with fresh fruits up 0.6% but fresh vegetables down 2.0% -- and cereals and bakery products were down 0.2%. Over the last 12 months food prices are up 3.0%.

Core inflation

The core rate of inflation, which strips out the volatile food and energy categories, rose 0.2% in February, the same as in January. Within the core, prices for used cars and trucks, apparel, new vehicles, tobacco, and airline fares were higher, medical care costs were unchanged and personal care prices were down. The core rate has risen 1.7% over the last 12 months.

The full February inflation report is available on the DOL website.

Here's something we haven't seen in a while: an increase in the Consumer Price Index (CPI). The Labor Department (DOL) reports hikes in the costs of energ...

Producer prices tumble -- again

Demand for services posted the biggest decline in more than 5 years

The Producer Price Index (PPI) fell 0.5% in February -- the fourth consecutive decline – due largely to the largest decrease in demand for services since December 2009.

Figures released by the Bureau of Labor Statistics show the PPI is down 0.6% for the past 12 months.

The drop in prices for services was led by margins for final demand trade services and transportation and warehousing services. Both were down 1.5%. Prices for final demand services less trade, transportation, and warehousing rose 0.3%.

Prices for goods fell 0.4%, the eighth consecutive decrease. Over two-thirds of the decline came in food, which was down 1.6 percent. A quarter of that can be laid to fresh and dry vegetables, which dropped 17.1%. Energy prices were unchanged, even though gasoline rose 1.5%.

The core PPI, which strips out the volatile food and energy sectors edged down 0.1%.

The full PPI report is available on the Labor Department website.  

The Producer Price Index (PPI) fell 0.5% in February -- the fourth consecutive decline – due largely to the largest decrease in demand for services since D...

Lower energy costs send consumer prices tumbling in January

There's been no inflation over the last 12 months

Consumer inflation is not just under control; it's nonexistent.

According to the Labor Department (DOL), the Consumer Price Index (CPI) was down 0.7% in January on a seasonally adjusted basis. Moreover, the cost of living is down 0.1% over the last 12 months -- the first negative 12-month change since the period ending October 2009.

Looking to give credit? It's mostly energy prices, which were down 9.7%, thanks largely to an 18.7% plunge in the cost of gasoline. Had gasoline prices been unchanged, the CPI would have gone up 0,1%

Energy and food prices

In addition the the slide in gasoline prices, the energy sector was affected by declines in the costs of fuel oil (-9.9%) and natural gas (-3.4%). The only increase in the category was electricity (+0.9). Over the past year, energy prices are down 19.6%, with the gasoline costs falling 35.4%.

Food prices were unchanged last month after rising through all of 2014. Four of the 6 major grocery store food groups declined in January: fruits and vegetables (-0.9%), dairy and related products (-0.9%), meats, poultry, fish, and eggs (-0.1%) and other foods (-0.1). Over the last 12 months, the food category is up 3.3%, with all six major grocery store food groups rising over that span.

Core inflation

Prices for all items less the volatile food and energy sectors -- the so-called “core rate” of inflation --- rose 0.2% in January, with shelter personal care, apparel and recreation posting gains. Medical care costs were unchanged, while prices for household furnishings and operations, alcoholic beverages, new vehicles, used cars and trucks, airline fares, and tobacco declined.

Over the last 12 months, the core rate has risen 1.6% over the past 12 months, the same figure as for the 12 months ending in December.

The complete CPI report is available on the DOL website.

Consumer inflation is not just under control; it's nonexistent. According to the Labor Department (DOL), the Consumer Price Index (CPI) was down 0.7% in J...

Inflation report doesn't tell whole story for most consumers

Gasoline prices may be lower but food costs aren't

Friday's report by the U.S. Labor Department showing a sharp drop in the Consumer Price Index (CPI) is, at first glance, good news for consumers.

The December CPI fell 0.4%, largely on the steep drop in gasoline prices. That gave consumers who drive cars a nice end-of-the-year bonus.

But consumers who don't drive a car didn't fare nearly as well. And even motorists had to give back some of their fuel savings when they sat down at the dinner table.

Rising food prices

While the government's gasoline index plunged 9.4% – a massive one-month decline – the food index rose 0.3%, the largest jump since September. Drilling deeper into the food index we see that food consumed at home also rose 0.3%, as 5 of the 6 major grocery store food groups were more costly.

The cost of dairy and related products increased by the largest amount, rising 0.6% after declining slightly in November. Fruits and vegetables also cost more. The fresh vegetables index rose 2.4%, negating a 1.3% decline for fresh fruit.

Prices for meats, poultry, fish, and eggs all went up. The index for other food at home increased 0.3% while the cereals and bakery products index advanced 0.2%.

Give and take

In short, it cost less to drive to the grocery store but cost more to fill up the cart when you got there. And this is not just a one-off in December. The government statistics show the cost of food prepared and consumed at home has risen 3.7% over the last 12 months.

It also cost more to eat at restaurants. The index for food consumed away from home rose 0.3% in December on the heels of a 0.4% increase in November, and has risen 3.0% over the last year.

Other items, in addition to food, were more costly in December. Even though oil and gasoline prices were lower, people heating their homes with natural gas paid 1.5% moe last month. Homes using electricity – and that's about all of them – paid 0.8% more.

It cost more to put a roof over your head, with rents and owners' equivalent rent and lodging away from home all rising 0.2%.

It cost more to go to the doctor in December, with medical care rising 0.5%. The index for prescription drugs rose 0.9% and the hospital services index increased 0.5%.

Air travel and used cars cheaper

Was anything else besides gasoline cheaper? Sure. If you bought a used car or truck, took a trip on an airline, bought some clothing, selected a new sofa for the living room or restocked the liquor cabinet, you saved a little money.

But to say that inflation plunged in December, as the headlines proclaimed? Not really, at least not for most consumers.

Friday's report by the U.S. Labor Department showing a sharp drop in the Consumer Price Index (CPI) is, at first glance, good news for consumers....

Consumer inflation goes AWOL in December

Falling energy prices -- chiefly gasoline -- are a major factor

A sharp drop in the cost of gasoline helped push the Consumer Price Index (CPI) lower in December.

According to figures released by the Labor Department (DOL) the CPI was down 0.4% on a seasonally adjusted basis. For all of 2014, the cost of living rose 0.8%, a notable improvement over the 1.5% advance in 2013 and the second-smallest December-December increase in the last 50 years. The average annual increase over the last 10 years is 2.1%.

Energy and food

The cost of gasoline was down sharply -- 9.4% -- a big contributor to the decline of 4.7% in overall energy prices last month. For the year, energy prices are down 10.6% over the span.

Food prices, meanwhile, rose 0.3% -- the largest increase since September. The cost of fresh vegetables led the advance, with a gain of 2.4%. Fresh fruit prices, on the other hand, were down 1.3%. Meats, poultry, fish and eggs edged up 0.3%. For the year, food prices shot up 3.4% -- more than triple the 2013 increase.

The “core rate” of inflation, which excludes the volatile food and energy sectors, was unchanged in December. Last month was only the second time since 2010 that it did not increase. For all of 2014, the core rate is up 1.6%, versus a 1.7% increase in 2013, and below its 1.9% annual rate over the past ten years.

The complete CPI report is available on the DOL website.

A sharp drop in the cost of gasoline helped push the Consumer Price Index (CPI) lower in December. According to figures released by the Labor Department (...

How the oil price plunge is like the housing crisis

But consumers were big losers in one, big winners in the other

For a couple of months now we consumers have watched with wide smiles on our faces as the price of gasoline has fallen.

It fell below $3.30 a gallon, then $3. By mid-December it was below $2.50 a gallon – and even well below $2 in the cheapest states. It was a wonderful thing. For consumers.

The financial community, however, is terrified.

Why? Because the collapse of oil prices poses a systemic risk, albeit a smaller one, just as the collapse in home prices in 2009 did.

Housing similarities

When home prices collapsed their value as assets evaporated. On an individual basis, many homeowners saw their equity disappear. They might have gone from having $100,000 in home equity to being “under water,” owing more than their homes were worth.

Some people who had owned their homes for a decade or longer or owed very little on their original mortgage decided to take advantage of surging home valuations, refinancing and taking out tens of thousands of dollars in equity. Many lost their homes when home values sank.

The systemic risk to the economy, however, came from bundling these mortgages into securities and selling them to investors – investors who largely borrowed the money from banks to buy them. When home values fell and many went into foreclosure, these assets became “toxic.” Other investors wouldn't touch them because it was impossible to tell which bundles contained mortgages in default.

Shale revolution

The collapse in oil prices has been similar, but so far, on a smaller scale. And while both consumers and financial institutions were affected by the housing collapse, consumers have actually benefited from oil's collapse.

How did all this happen? In the past 5 years American oil production has surged, largely because of the shale revolution – and cheap money.

With historically low interest rates tiny oil companies could borrow huge amounts of capital to expand their drilling operations. Banks were only too willing to lend the money since oil was $100 a barrel or more and no one could imagine it going down – just like no one could imagine home prices falling in 2008.

Rob Raymond of RCH Energy made this comparison last month in an appearance on CNBC.

Homes and oil wells

“The issue with this has become, what were houses in Florida and Arizona in 2000 to 2006 became oil wells in North Dakota and Texas in 2009 to 2014, and most of that was funded in the high-yield market and by private equity," he told the business news channel. “And now that a barrel of West Texas Intermediate crude oil has fallen from $100 to $60 in five months, those energy producers are in trouble.”

And just maybe, so are the banks that loaned them money and the investors who purchased their bonds.

But where the housing crisis crushed millions of consumers who bought or refinanced their homes at the wrong time, consumers are mostly winners with oil's collapse – at least, so far. And they are starting to figure out they have been paying inflated prices for fuel for years.

Because more and more analysts are beginning to refer to oil as “a bubble” that has finally popped. When a commodity is in a bubble, it's price is not determined by the costs of producing it but what people are willing to pay for it.

Stocks, houses, oil

We've seen this movie before. There was a tech-fueled stock market bubble in the late 1990s. There was a housing bubble in the early to mid 2000s. Since 2005, there has been an oil bubble.

But the speculators who drove up the price of oil are now not willing to pay very much, and in some cases have profited by “shorting” the oil market, betting prices will go even lower, basing their decision on the belief the world is producing more oil than it can consume.

As long as it doesn't bring down the economy, this is good news for consumers.

For a couple of months now we consumers have watched with wide smiles on our faces as the price of gasoline has fallen....

Consumer prices drop in November thanks to lower gasoline costs

Energy costs overall were lower

The plunging cost of gasoline sent consumer prices spiraling downward in November.

The Bureau of Labor Statistics reports the sharpest decline in gasoline prices in almost 6 years pushed the Consumer Price Index (CPI) down 0.3% last month. Over the past 12 months, the CPI is up a modest 1.3%.

Energy prices

Overall, energy prices fell 3.8%, the fifth decline in a row. Gasoline was down 6.6% in November -- the sharpest decline since December 2008, and has fallen 10.5% over the last 12 months. The cost of fuel oil was down 3.5%, its ninth consecutive decline. Natural gas prices dipped 1.7%, while electricity was the only energy component to rise; it increased 0.1% last month and has risen 2.8% over the past year.

Food costs

Food prices, on the other hand, rose 0.2% on top of a 0.1% increase the month before. The cost of meats, poultry, fish, and eggs was up 0.6% as beef and veal posted their tenth consecutive increase. Nonalcoholic beverage prices rose 0.5%, and the index for other food at home increased 0.4%. In contrast, prices for fruits and vegetables were down 0.7%, dairy and related products and cereals and bakery products both fell 0.2%.

Core inflation

Prices for all items excluding food and energy -- the so-called “core rate” of inflation advanced 0.1% percent in November, with shelter costs up 0.3%, and prices for medical care, airline fares and alcoholic beverages also higher. The costs of apparel, used cars and trucks, recreation, household furnishings and operations, personal care, and new vehicles all declined. The core rate of inflation over the last 12 months is up 1.7%.

The complete November CPI report is available on the Labor Department website.

The plunging cost of gasoline sent consumer prices spiraling downward in November. The Bureau of Labor Statistics reports the sharpest decline in gasolin...

Holding the line on inflation

Another drop in gasoline costs helps keep consumer prices in check

Consumer prices were unchanged in October, thanks largely to declining energy costs which offset increases in other prices.

According to the Bureau of Labor Statistics,the Consumer Price Index (CPI) was steady last month, holding the increase over the last 12 months to just 1.7%.

Energy and food costs

Gasoline prices fell 2.0% in October, the fourth decline in as many months, while natural gas prices dropped 2.7% and fuel oil plunged 4.0%. Electricity, on the other hand, inched up 0.5%. Overall, energy prices declined 1.9% for the month and are down 1.6% over the past year.

Food prices rose edged up 0.1% in October, the smallest increase since June. Fruits and vegetables were up 0.9%, nonalcoholic beverages jumped rose 0.6%, dairy and related products posted an 0.5% increase, and cereals and bakery products rose 0.3%. In contrast prices for meats, poultry, fish and eggs -- which had been rising sharply in recent months, declined 0.4 percent. The cost of food at home is up 3.3% over the last 12 months -- the largest 12-month increase since April 2012.

Core rate

The core rate of inflation, which excludes the volatile food and energy categories, increased 0.2 percent in October. Contributing factors were higher prices for shelter, airline fares, household furnishings and operations, medical care, recreation, personal care, tobacco, and new vehicles. Costs for used cars and trucks and for apparel declined.

The core rate for the last 12 months is up 1.8%

The complete CPI report is available on the Labor Department website.

Jobless claims

After taking into account the revisions to the previous week's reports, initial applications for state unemployment benefits were lower in the week ending November 15.

First-time applications totaled a seasonally adjusted 291,000, a drop of of 2,000. The previous week's level was revised upward by 3,000 -- to 293,000. The consensus of analysts surveyed by Briefing.com was for the claims level to drop to 285,000.

Even with the upward revision, the claims level continues to remain below 300,000 which is normally associated with full employment.

The 4-week moving average, which removes the volatility found in the weekly numbers, rose by 1,750 to 287,500.

The complete report is available on the Labor Department website.

Consumer prices were unchanged in October, thanks largely to declining energy costs which offset increases in other prices. According to the Bureau of Lab...

Consumer prices inch higher in September

A drop in energy costs negated a rise in the price of food

Declining energy costs helped keep consumer prices in Check during September, with the consumer price index (CPI) inching up just 0.1%.

Figures from the Labor Department (DOL) show that over the last 12 months, the CPI is up 1.7%.

Energy and food costs

Energy costs fell for a third consecutive month, declining 0.7% in September. Three of the 4 components were lower, with gasoline off 1.0%, electricity down 0.7% and fuel oil dropping 2.1%. In contrast, natural gas rose 1.6% after falling in each of the 4 previous months. Over the past 12 months, energy costs are down 0.6%.

The price of food was up 0.3% last month on top of a 0.2% increase in August. Meats, poultry, fish, and eggs rose 0.7%, with beef and veal prices up 2.0% for a gain of 16.7% since January. Dairy and related products increased 0.5% for the tenth advance in the last 11 months, while fruits and vegetables posted a gain of 0.1% percent after declining in August. Food at home costs are up 3.2% over the past year, while food away from home has risen 2.7% over the last 12 months.

Core rate

The core rate of inflation, which strips out the volatile food and energy categories, was up 0.1% In September. Within that, rising costs were seen for shelter (0.3%), medical care (0.2%), alcoholic beverages (0.1%) and personal care (0.1%), while declines were posted for airline fares (0.5%) and used car and truck prices (0.1%).

The full September CPI report is available on the DOL website.

Declining energy costs helped keep consumer prices in Check during September, with the consumer price index (CPI) inching up just 0.1%. Figures from the La...

Retail sales post first decline in 8 months

Clothing and autos were among the big losers

After posting gains for seven consecutive months, retail sales slipped 0.3% in September to $442.7 billion.

Figures released by the U.S. Census Bureau show major factors in the decline were sagging sales at clothing stores (-1.2%) and auto dealers (-0.8%). Even with the decline, overall sales were up 4.3% from the same month a year ago.

In addition to clothing stores and auto dealers, losers during September include furniture and home furnishing stores and gas stations (both -0.8%) and building material and garden supply dealers (-1.1%).

On the other hand, electronics and appliance stores saw sales surge 3.4%, while food services and drinking place posted a gain of 0.6%.

The complete retail sales report is available on the Commerce Department website.

Inflation

Separately, the Labor Department (DOL) is reporting drops in energy and food costs sent the producer price index (PPI) down 0.1% in September, the first decline since August 2013.

With both food and energy costs down 0.7% last month, the “core rate” of wholesale inflation was up just 0.2%.

The full PPI report may be found on the DOL website

After posting gains for seven consecutive months, retail sales slipped 0.3% in September to $442.7 billion. Figures released by the U.S. Census Bureau sho...

Why Fed money-pumping hasn't helped consumers

Some economists argue it would have been better to send cash to consumers directly

The Federal Reserve announced this week more of the same. Fed Chairwoman Janet Yellen said the central bank will continue the policy started by her predecessor, Ben Bernanke, of pumping money into the financial system.

“There are still too many people who want jobs but cannot find them, too many who are working part time but would prefer full-time work, and too many who are not searching for a job but would be if the labor market were stronger,” Yellen said at a Wednesday news conference.

But for the last 5 years the Fed has been purchasing trillions of dollars worth of assets – mostly mortgage-backed securities – in an effort to stimulate demand. By all accounts it has sent the stock market soaring but little of that money has found its way to consumers' pockets.

Questions

If the objective all along was to boost consumer spending, a lot of people are asking why the Fed chose this particular policy. They point out the objective and results haven't matched up very well.

In early September two economists at the St. Louis Federal Reserve Bank published a report explaining why inflation is as low as it is. The report says consumers have been “hoarding” cash since the 2008 financial crisis, resulting in slower “velocity,” or movement of money through the U.S. economy.

The authors say that because the Fed increased the money supply an average 33% per year between 2008 and 2013, inflation should have been 31% per year during that time. Instead, it averaged less than 2%.

“So why did the monetary base increase not cause a proportionate increase in either the general price level or GDP?” the authors ask. “The answer lies in the private sector’s dramatic increase in their willingness to hoard money instead of spend it.”

But who, exactly, was doing the hoarding? Some of the readers commenting on the article point out things that might seem obvious to consumers.

Faulty assumption

“This is not difficult,” wrote a poster named John. “The velocity of money went down because it matters who holds the money. The inequality divide in this country has expanded uncontrollably, and the Fed has done nothing to mitigate this. They pump money into the banking system and simply assume the banks will get it out to the consumers. But the banks (nor any business) are not charities. When business is carried out, money generally rises from those who have less of it to those who have more of it.”

In other words, most of the money the Fed has pumped into the economy has remained locked up within the banking system. And because interest rates are so low, banks are less willing to lend it out because the risk-reward ratio doesn't tilt in that direction.

Could the Fed have taken different action that would have achieved better results for consumers? Writing in Foreign Affairs magazine, economists Mark Blyth and Eric Lonerga argue that it could have.

Give money to consumers

“Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly,” they write.

Taking the money spent on asset purchases through the banking system and instead putting it directly in consumers' pockets could have resulted in every U.S. household receiving more than $50,000. That much money would undoubtedly have set off massive inflation – so the overall direct payment could have been much less and still boosted consumer spending.

Cash for Clunkers

In the months immediately following the financial crisis Congress actually tried this, on a limited basis. The 2009 Cash for Clunkers program paid consumers to trade in their old cars for a new one.

While the program was criticized as gimmicky, it had the desired effect of pumping up a struggling auto industry. Since then, the auto industry has become one of the healthier sectors of the U.S. economy.

Is it too late to try this approach as a policy for long-term economic recovery? Blyth and Lonerga don't think so.

“Unless one subscribes to the view that recessions are either therapeutic or deserved, there is no reason governments should not try to end them if they can, and cash transfers are a uniquely effective way of doing so,” they write.

The Federal Reserve announced this week more of the same. Fed Chairwoman Janet Yellen said the central bank will continue the policy started by her predece...

Consumers catch a break on inflation

The declining cost of gasoline helped send the CPI lower last month

Nothing to see here as far as inflation is concerned.

Figures released by the Labor Department (DOL) show lower energy  costs -- especially for gasoline -- sent the Consumer Price Index (CPI) tumbling 0.2% in August on a seasonally adjusted basis. It’s the first decline since April 2013.

Energy prices were a major factor in the dip, falling 2.6% -- more than offsetting a 0.2% increase in the cost of food.

Energy prices

The 2.6% slide in energy costs  in August -- the largest since March 2013 -- was led by a plunge of 4.1% in the cost of gasoline. Natural gas prices fell (-2.8%) as did fuel oil (-12%). Electricity was the only major energy component to rise (+0.1%).

Food costs

The 0.2% increase in food prices was more than offset by the decline in energy costs. The six major
grocery store food groups split among 3 increases and 3 declines. Meats, poultry, fish, and eggs rose 1.5 % --  the largest increase among the groups. Beef and veal rose (+4.2%) along with dairy and related products (+0.6%) and the cereals and bakery products (+0.2%). In contrast, fruit and vegetable prices were down (- 0.8%), along with nonalcoholic beverages (-0.2%).

Core inflation

The index for all items less food and energy -- the “core rate” of inflation -- was unchanged in August -- the first month since October 2010 that it did not increase. While prices for housing, new vehicles and alcoholic beverages rose, the advances were offset by declines in the cost of airline fares, recreation, household furnishings and operations, apparel, and used cars and trucks. Over the last 12 months the core rate of inflation is up 1.7%.

The full August CPI report is available on the DOL website.

Nothing to see here as far as inflation is concerned. Figures released by the Labor Department (DOL) show lower energy costs -- especially for gasoline -...

Consumers' incomes finally starting to rise

But survey shows we've got a lot of ground to make up

Some good news and some bad news about consumer income in America. Real median household income has fallen 3.1% since the end of the Great Recession in 2009, and is now 4.8% lower since the start of the recession in December 2007.

But in a hopeful note, real median household income has slowly started to rise from 2011 to 2014.

The data is contained on the latest Current Population Survey, compiled by Sentier Research. It comes on the heels of a report by the U.S. Conference of Mayors that graphically illustrates how Americans have taken a giant pay cut.

That study showed that the average annual wage of all the jobs lost between 2008 and 2009 – when most of the recession's job cuts occurred – was $61,637 a year.

The jobs added since the end of the recession, through the second quarter of this year, paid an average wage of $47,171 a year, a gap of 23%.

Similar picture

The Sentier study paints a similar picture. After adjusting for changes in consumer prices, median annual household income fell during the officially-defined recession from $56,604 in December 2007 to $55,589 in June 2009, a fall-off of 1.8%.

During the first two years of the economic recovery, while the unemployment rate and the time spent jobless remained high, median annual household income continued to fall, to $51,913 in June 2011, a decline of 6.6%.

But lately, the researchers find the trend has turned positive. Between June 2011 and June 2014, when the economy was in a state of slow recovery, real median household income rose 3.8%, from $51,913 to $53,891.

The numbers show the average consumer has lost a lot of economic ground since January 2000, at the end of the tech bubble but before the housing bubble. Median income is now nearly 6% lower than it was then.

“Real median household income is up by 3.8% overall since June 2011, but gains have not been shared equally by all groups, said Gordon Green, a spokesman for Sentier Research. “In terms of percentage increases in median household income over the past 3 years: families have fared better than nonfamilies, the employed have obviously fared better than the unemployed.”

Midwest households have recovered most

Blacks and whites have both fared better than Hispanics, and households in the Midwest region have fared better than households in the other three regions.”

The numbers also show that it has paid to own your own business in the last few years. The self-employed have fared better than private or government wage or salary workers.

Younger Americans have struggled more than their older counterparts to recover from the recession. Householders under age 25 have seen almost no income growth since the end of the recession in 2009. Those 25 to 54 have seen incomes decline, between 3.1% and 5.2%.

Retirees doing okay

But just as it has paid to work for yourself over the last 3 years, it has also paid to be at retirement age. Households with people 65 years old and over were the only groups examined in this study that had a statistically significant increase in median income between June 2009 and June 2014.

For households with a householder between 65 and 74 years old, median income increased by 6.2%, from $41,718 to $44,307. Among households with a householder 75 years old and over, median income increased by 5.4%.

Some good news and bad news about consumer income in America. Real median household income has fallen 3.1% since the end of the Great Recession in 2009, an...

Consumer prices inch upward in July

Falling energy costs offset increases for food and shelter

Consumer prices edged up 0.1% in July, the smallest increase since February.

According to government figures, increases in the cost of food and shelter were partially offset by declining energy costs. Over the last 12 months, the consumer price index (CPI) is up 2.0%.

Energy costs

After rising in each of the last 3 months, energy prices fell 0.3% in July. Gasoline and electricity costs were down 0.3%., while fuel fell 0.7% and natural gas was off 0.4% -- its third decline in a row. Despite the July declines, all the major energy categories have increased over the past 12 months.

Food prices

Food costs posted their fifth increase in the last 6 months, rising 0.4% in July. Prices for for meats, poultry, fish, and eggs rose 0.3%, as did the dairy and related products. The only major grocery store food group that did not increase in July was fruits and vegetables, which was unchanged.

Core rate

The “core rate” of inflation, which excludes the volatile food and energy categories, increased 0.1% in

July, the same as in June. Along with shelter, prices for medical care, new vehicles, personal care and apparel all increased. For the last 12 months, the core rate is up 1.9%, the same for the 12 months ending June. The energy prices are up 2.6% and food costs have risen risen 2.5% over the past year.

The complete report is available on the Labor Department website.

Consumer prices edged up 0.1% in July, the smallest increase since February. According to government figures, increases in the cost of food and shelter we...

More people have jobs but are earning less

For most consumers, today's economy is 1 step forward, 2 steps back

There's a very simple reason that if you ask many consumers about the economy, they'll tell you the recession that began in late 2007 has never ended.

In the latest Gallup Poll of consumers' confidence in the economy, 38% said the economy is getting better while 56% said it is getting worse.

Officially the Great Recession is ancient history. It ended in June 2009. Since that time the economy has added the 8.7 million jobs wiped out by the recession. Employment has finally surpassed its pre-recession peak, reached in 2008.

So what are people complaining about? The answer is in black and white, in a new report from the U.S. Conference of Mayors.

National pay cut

The report finds that the average annual wage of all the jobs lost between 2008 and 2009 – when most of the recession's job cuts occurred – was $61,637 a year.

The jobs added since the end of the recession, through the second quarter of this year, paid an average wage of $47,171 a year. That's a gap of 23%, meaning a lot of people took really big pay cuts. Since prices haven't gone down that's required them to significantly lower their standard of living.

“This wage gap of 23% is significantly larger than that of the earlier recession and recovery (2000-2006), and implies $93 billion in lower wage income,” the authors write.

How about the population as a whole, not just the people working in a newly-created job? Those results are disappointing as well.

Back to the 1990s

In 2012, 3 years after the official end of the recession, the median household income was $51,017 – the lowest since 1995. In other words, the median household income in the U.S. is back where it was about 17 years ago.

The report also shows the much talked-about income gap has gotten bigger. In 1975 the top 20% of income-earning households earned 43.6% of all income. By 2012 it was 51%. Most of the gain was among the top 5%.

There do not appear to be any big raises in the near future either. The mayors' report forecasts the median household income will increase by 2.5% in 2014, barely keeping pace with inflation.

Cause for sleepless nights

So it's no wonder many a consumer is up pacing the floor at night. A poll conducted for the National Foundation for Credit Counseling (NFCC) in July found 79% said personal finances kept them awake at night. The next most common reason for a sleepless night was job insecurity, at a distant 4%.

“There are two pieces of good news that can be gleaned from the poll,” said Gail Cunningham, spokesperson for the NFCC. “First of all, the respondents were able to identify the source of their distress, and secondly, they went to a reliable and trusted resource, www.DebtAdvice.org, for help. Their next step should be to reach out to an NFCC member agency for customized and solution-oriented assistance.”

That might help in managing finances but it is unlikely to put more money in consumers' pockets. A robust economy will be needed for that, and no one is predicting one any time soon.

There's a very simple reason that if you ask many consumers about the economy, they'll tell you the recession that began in late 2007 has never ended....

Gasoline prices push consumer prices higher in June

A slowdown in the food cost increase helped keep in inflation in check

A sharp increase in the cost of gasoline sent the government's consumer price index (CPI) up 0.3% in June, bringing the rise in the CPI to 2.1% over the last 12 months.

It was the 3.3% advance in gasoline prices that drove the monthly inflation figure higher. In fact, it accounted for two-thirds of the increase. Other energy components were were mixed, with electricity up 0.2%, but natural gas and fuel oil declining 1.7% and 2.6%, respectively.

Overall, energy prices were up 1.6%, the third increase in a row and largest since December. For the past 12 months, energy has increased 3.2%.

Moderating food increases

Food prices rose a tiny 0.1% in June following an advance of 0.5% the month before, posting the smallest monthly increase since January.

Major grocery store food groups were mixed: Dairy and related products fell 0.4%, fruits and vegetables dipped 0.3% and the cost of cereals and bakery products was down 0.2% for the second month in a row.

On the other hand, prices for meats, poultry, fish and eggs increased 0.2% June, but registered the smallest rise since December. The index for food at home has increased 2.4% over the past year, while the index for food away from home has risen 2.2 percent over the past 12 months.

Core rate

The cost of all items -- the “core rate” -- excluding the volatile food and energy components, was up just 0.1% following a 0.3% increase in May, and has increased 2.1% over the last 12 months

The full CPI report for June is available on the Labor Department website.

A sharp increase in the cost of gasoline sent the government's consumer price index (CPI) up 0.3% in June, bringing the rise in the CPI to 2.1% over the la...

Inflation hitting seniors especially hard

Economist says cumulative impact of rising prices taking a steep toll

If you follow the government's Consumer Price Index (CPI), a measure of inflation at the consumer level, you know that the index has been relatively tame since the financial crisis of 2008.

The CPI currently rises about 2% per year and the Federal Reserve worries that it isn't high enough. The Fed makes no secret of its desire to see more inflation, which it thinks will boost economic growth.

But not everyone thinks that way. Retirees, for example, don't think 2% inflation is all that low.

Cumulative effect

“The cumulative effect of even 2% inflation is pretty massive,” Mark Dotzour, chief economist and director of research at Texas A&M's Real Estate Center, told ConsumerAffairs. “At the end of 5 years that's 10%.”

Dotzour has tracked the inflation rate since 2008 and found that consumers who retired that year have struggled in ways the official inflation gauge simply doesn't measure. Within that overall number a lot of things have gone up more than others, and some things have gone down.

But the things that have gone down in price aren't the kinds of things that actually help seniors very much.

“If you are living on nothing but television sets, computers and carbonated drinks your cost of living has actually gone down,” Dotzour said. “But if you live in a home and pay insurance, drive a car and buy gas, fly an airline to see your children every once in a while, or buy a magazine or health insurance, or buy sausage or beef, your money isn't going very far.”

It all has to do with how the Labor Department's Bureau of Labor Statistics (BLS) weights the cost of things. It looks at the cost of everything in the economy and the items that go down in price – like TV sets – tend to balance out the things that go up.

Things that have gone up

But Dotzour has focused on just a few essential expenses that nearly everyone has, looking at what they have done over the last 5 years. Here's what he found:

  • Food prepared at home is up 9.5%
  • Fresh ground beef is up 30.6%
  • Bacon and sausage is up 32%
  • Eggs are up 12.5%

Meanwhile, ice cream is only up 5.9% and carbonated beverages have risen just 4.6%.

And that's just food items. Costs of many other things seniors – and average consumers, for that matter – buy have risen more dramatically in the last 5 years. For example:

  • Gasoline has surged 117.3%
  • Car insurance is up 24.1%
  • Water and sewer service is up 35.4%
  • Air travel has risen 31.7%

But clocks are a bargain

If it's any consolation, Dotzour says prices of clocks and lamps have fallen 27.5% and the cost of dishes and flatware is down 25%. It's all part of a point Dotzour is trying to drive home.

“The annual rate of change in prices is not big but the cumulative increase in prices over time is substantial,” he said.

The pain is not just felt by seniors. Lots of people who are still working are facing these rising costs without the extra money to pay them. BLS data show disposable income is rising much slower than prices – around 0.2% per month.

If you follow the government's Consumer Price Index (CPI), a measure of inflation at the consumer level, you know that the index has been relatively tame s...

Inflation's rise hitting consumers where it hurts

Food, energy and child care bills take their toll

Government inflation-watchers are finally figuring out what consumers have known for a while. The cost of living is starting to take off.

The Labor Department this week reported the Consumer Price Index (CPI) rose 0.4% in May on a seasonally-adjusted basis. The inflation rate, projected over a 12-month period, was 2.1%.

But drill deeper into the report and you'll learn that food prices at the supermarket are in the forefront of the inflation charge. According to the data the index for food prepared at home rose 0.7%

It cost even more to drive a car and keep the lights on. Because of more expensive gasoline and electricity, the energy index rose 0.9%.

Shut-off notices

In fact, electricity costs have risen so sharply in recent months that nearly 1 million Consolidated Edison customers in the Northeast have faced the threat of having their home energy shut off this year while dealing with some of the nation's highest bills, according to AARP.

How bad is it? In 2005, 722,635 Con Ed customers received shut-off notices from January through April. In 2009, during the Great Recession, the number surged to 840,886.

But instead of getting better, it has continued to get worse. In the first four months of this year, following an especially cold winter, AARP reports 937,973 NYC residents have received "final termination” notices.

“Across the state, the data tells a similar story: New Yorkers are struggling, and falling behind in their utility bills by a whopping $740 million - the highest in at least the last decade,” said Beth Finkel, State Director for AARP in New York State.

What's behind the rate hikes?

Just a couple of years ago cheap, abundant natural gas caused electric utility costs to fall. So what happened?

Energy experts interviewed by The Los Angeles Times recently blame the phase-out of coal and nuclear plants and difficulty in moving natural gas to where it's needed. Natural gas prices have also risen in the last year. The experts say the surge in utility costs is likely permanent.

AARP sees the rise in energy costs as especially hard on seniors. The organization points to a recent survey showing that, for New Yorkers 50 and older, it was harder to pay the electric bill this winter than the mortgage.

"Many customers are on payment plans, paying off prior arrears from bills they could not afford," said Gerald Norlander, Executive Director of New York's Public Utility Law Project(PULP), which compiled the report with AARP. "When new bills jump due to the volatile prices favored by the utility-regulating Public Service Commission, customers fall behind again and miss the due date for their current bill, plus the installment payment on old arrears.”

At that point the utility is allowed to demand all past due amounts, demand late fees, and shut service off as a collection measure.

“This creates impossible situations, hardships and often hazardous conditions when less safe forms of energy are used,” Norlander said.

Child care costs

For younger consumers, child care is another growing cost. In a recent study by Care.com, 75% of U.S. families said they were overwhelmed by the cost of child care.

The study, conducted last month, concluded that families are misinformed about the cost of child care, what's included and what savings options are available to them.

According to the survey, 52% aren't aware they're eligible for child care tax breaks. A nearly equal number of families fail to budget for child care costs.

The survey found average weekly rates for a nanny ranging from $472-$504 depending upon the number of children cared for.

Government inflation-watchers are finally figuring out what consumers have known for a while. The cost of living is starting to take off.The Labor Depart...

More signs the economy may be slowing

Recent grads just can't make it on their own

Here are two stories that generally point to the same thing; the economy, which has been lousy for years now, just isn't getting any better.

A study of recent college graduates, ages 23 to 26, has found that even though they had full-time jobs, they were still receiving regular support from Mom and Dad.

Must be that crushing student loan debt. No, 60% of those in the survey had no student loan debt.

What's holding them back?

Why then, do they need financial support? The study from the National Endowment for Financial Education, Arizona Pathways to Life Success and the Citi Foundation provides a couple of clues.

"Our data clearly showed that many young adults today may not be earning enough to make it on their own, even when working fulltime," the authors write.

While the jobs may be there for college graduates they may not pay all that much. More importantly to young employees, they may also not provide much in the way of benefits. In many cases, that's where Mom and Dad step in.

But are recent graduates struggling financially because they lack the financial literacy to properly manage their money? As we reported back in January, the evidence suggests the opposite is true.

The second PNC Financial Independence Survey found not only are young people doing a pretty good job of managing their money, but the younger members of the Millennial generation – those 20 to 24 in particular -- are doing the best.

New jobs just not that good

So perhaps those 217,000 new jobs the economy is creating each month are a bit lacking in salary and benefits. Maybe we need a lot more of them to propel the economy forward. The second of our two stories leans in that direction.

In its latest Briefing Report, real estate investment firm Transwestern suggests the economy isn't growing nearly as fast as most economists had predicted and an economic stall may be occuring. It points to the bond market as Exhibit A.

When conditions are improving investors find productive places for their money, other than putting it in bonds. When that happens, bond issuers have to sweeten the deal by raising interest rates.

When the Labor Department reported the jobs numbers earlier this month, it was taken as positive economic news and bond rates were expected to rise. Instead, they fell.

Transwestern sees it as a classic “flight to quality,” with investors seeking the safe haven of U.S. bonds in the event the economy slows. In other words, the people with money may be one step ahead of the economists.

The report authors conclude the prediction of a U.S. economic growth rate of 3% in 2014 is “unduly optimistic.” Rather, they see 2% much more likely.

A stalling economy puts pressure on business – especially small businesses, which tend to employ a lot of young people.  

Here are two stories that generally point to the same thing; the economy, which has been lousy for years now, just isn't getting any better.A study of re...

Are we back in a recession?

The signs don't look all that good

A week ago most economists were shocked when the government reported its latest estimate of first quarter economic growth. There wasn't any.

First quarter Gross Domestic Product (GDP), the total of goods and services sold in the economy, declined 1%.

Wall Street shrugged it off. The decline was blamed on the winter's harsh weather. But could it be something more serious?

The definition of a recession is two straight quarters of negative growth, meaning if the second quarter, which started June 1, has a similar result we're in a recession.

While there is no assurance that will happen, economists have to ask if economic conditions are getting any better. The stock market continues to defy gravity and break through record highs but other indicators are not quite so promising.

Take the consumer, for example. The economy depends on consumers to spend money, creating demand for goods and services. That demand drives economic growth.

Shocking survey

In light of that, the results of the "How Housing Matters Survey," commissioned by the MacArthur Foundation, are shocking. A large number of consumers are struggling simply to keep a roof over their head.

Six in 10 consumers responding to the survey said it is at least fairly likely for a family that is struggling to keep their housing to have to take on an additional job or hours at work, stop saving for retirement, accumulate credit card debt, or cut back on health care just to make ends meet.

Fifty-five percent said a family would have to cut back on healthy, nutritious food, and just fewer than 2 in 5 believe such a family will probably have to move to a neighborhood that is less safe or has worse schools.

The survey suggests that consumers – whether they own a home or rent – have to pay more of their income for housing, leaving less for other things that normally drive the economy.

Paying more than 30% of your income on housing is an established benchmark of financial distress. Of the consumers in that category, 62% of owners and 74% of renters have made sacrifices on things like food, healthcare and retirement savings to stay afloat.

Consumers disagree with the experts

While most economists and housing experts believe the housing crisis is behind us, many consumers believe otherwise. When queried, 70% said we are still in the midst of the housing crisis with 51% believing it's going to get worse.

Housing costs aren't the only expense putting the squeeze on consumers. It continues to cost more to put fuel in the car.

According to AAA, the national average price of self-serve regular started 2014 at $3.30 a gallon. Today, the national average has increased 36 cents a gallon, adding $7.20 to the cost of a 20-gallon fill-up.

Food costs have also surged this year – at least many of the foods that consumers tend to buy. The CRB/BLS Foodstuffs Index, which tracks key food commodity prices, is up nearly 21% since December 2013.

Last month the Agriculture Department reported supermarket prices for beef and pork set record highs. The average price of both beef and pork surged 3% from March to April. The cost of both are up 13% in the last 12 months.

Stagnant wages

Unfortunately, the average consumer isn't getting raises to cover these increased costs. In its most recent report the Commerce Department said personal income growth was an anemic 0.3% in April, among the weakest of the year.

Gasoline prices up 10% in five months. Meat prices up 13% in a year. Incomes growing little, or not at all.

If we've slipped into a recession, it shouldn't come as a big surprise.

A week ago most economists were shocked when the government reported its latest estimate of first quarter economic growth. There wasn't any.First quarter...

Consumer prices up again in April

Overall, though, prices are stable

Rising energy and food costs helped push the government's consumer price index (CPI) moderately higher in April.

On a seasonally adjusted basis, the CPI was up 0.3% last month following an 0.2% increase in March. For the last 12 months, inflation is running at an annual rate of 2.0% -- the largest 12-month increase since last July.

Food and energy

The cost of food was up 0.4% in April, with meet prices surging 2.9% the biggest increase in more than 10 years. Prices for meats, poultry, fish, and eggs 1.5%, while dairy products were up 0.5% the sixth advance in as many months.

Energy prices were up 0.3% for the first advance in 3 months. index increased 0.3% in April after declining in February. The biggest increase was the cost of gasoline (+2.3%) followed by natural gas (+0.3%). In contrast, fuel oil costs were down 3.0%, while electricity costs fell 2.6% -- the largest decline since 1986.

When those volatile categories are stripped out, the “core Rate” of inflation was up 0.2% -- the same as in March.

Other costs

Looking at costs beyond food and energy, shelter was up 0.2%, medical care costs rose 0.3% and airline fares jumped 2.6% -- the largest increase since November 2009.

The full May CPI report is available on the Labor Department website.

Rising energy and food costs helped push the government's consumer price index (CPI) moderately higher in April. On a seasonally adjusted basis, the CPI w...

Consumer prices head higher in March

Rising food costs were a major factor

Increases in what we pay for food and shelter sent the Consumer Price Index (CPI) higher in March.

Government figures show prices were up 0.2% last month, with the CPI up 1.5% over the last 12 months.

A 0.4% rise in food costs and a jump of 0.3% in what we pay for housing accounted for most of the increase.

Food prices

In the food category, several major grocery store food groups increased notably. Prices for meats, poultry, fish, and eggs posted the largest -- 1.2%, the same increase as in February. Dairy and related products were up 1.0%, the fifth consecutive increase. Fruits and vegetables, which rose 1.1% in February, added 0.9%. Over the last year, food prices are up 1.7% -- the largest 12-month increase since August 2012.

Energy costs

Energy prices were down 0.1% following a decline of 0.5% the month before. Drops were posted in the prices of gasoline (-1.7%), the same decline as in February and fuel oil (-2.9%). In contrast, the index natural gas costs shot up 7.5% -- the largest one-month increase since October 2005, and electricity rose 1.1%. Over the last 12 months, energy costs are up 0.4%.

Core rate

Prices for all items, stripping out the volatile food and energy categories, rose 0.2% in March. Besides the 0.3% increase in the cost of housing, prices for medical care, apparel, used cars and trucks, and airline fares also increased. Household furnishings and operations, and recreation costs declined in March. Over the past year, the core rate of inflation is running at 1.7%.

The full March CPI report is available on the Labor Department website.

Increases in what we pay for food and shelter sent the Consumer Price Index (CPI) higher in March. Government figures show prices were up 0.2% last month,...

Rising food prices produce slight uptick in consumer prices

Falling gasoline prices helped hold inflation in check

Consumer prices were up in February -- but not by much.

The government reports the Consumer Price Index (CPI) inched up just 0.1% last month, bringing the rate of inflation for the past year to a moderate 1.1%.

The cost of food was a major factor, accounting for more than half the increase, with a gain of 0.4% -- the largest since September 2011. Within that category, meats, poultry, fish, and eggs rose 1.2%, while dairy and related products saw a more modest increase of 0.7%. Prices for fruits and vegetables rose 1.1 % after five consecutive declines. On the other hand, the cost of cereals and bakery products was down 0.4%, and the nonalcoholic beverage prices dipped 0.3%. Overall, food prices are up 1.4% over the past year.

Energy prices dip

Energy prices were down index declined 0.5% as a drop in gasoline prices offset sharp increases the cost of fuel oil and natural gas. Gasoline prices were down 1.7%, while the costs of fuel oil and natural gas rose 4.1% and 3.6%, respectively. Electricity, meanwhile, dipped 0.2% after an unusually large increase in January. Over the last 12 months, energy costs have fallen 2.5%, due to an 8.1% drop in gasoline prices.

Core rate remains tame

The cost all items excluding the volatile food and energy sectors rose 0.1% in February. Withing that category, shelter rose 0.2%, medical care was up 0.3% and airline fares jumped 1.3%. Decliners included household furnishings and operations (-0.4%), apparel (-0.3%) percent and used cars and trucks (-0.1%).

The full February CPI report is available on the Labor Department website.

Consumer prices were up in February -- but not by much. The government reports the Consumer Price Index (CPI) inched up just 0.1% last month, bring the r...

Inflation barely visible at the start of 2014

Energy accounts for most of the rise in the CPI for January

With apologies to Carl Sandburg, inflation crept in to 2014 on little cat feet.

According to the government, the consumer price index (CPI) inched up 0.1% in January, putting the inflation rate for the last 12 months at a modest 1.6%.

Energy and food

Most of last months increase was the result of a 0.6% rise in energy prices. Electricity costs rose 1.8% -- for the largest increase in almost 4 years, while natural gas prices surged 3.6%, and fuel oil was up 3.7%. Gasoline prices were down 1.0% after rising in December. Over the last year, energy prices have increased 2.1%, with all major components rising.

Food costs rose 0.1% in January, with the major grocery store food group indexes mixed. Three of the six were higher, cereals and bakery products, and dairy and related products both up 0.5%. Prices for meats, poultry, fish and eggs also increased -- rising 0.4%. In contrast, costs for fruits and vegetables fell 0.3%, while nonalcoholic beverage prices fell 0.2%. The index for other food at home was unchanged in January. Food prices were up 1.1% over the past year.

Core rate

The “core rate” of inflation, which excludes the volatile energy and food categories, rose just 0.1% in January. A major contributor was the the cost of shelter, which was up 0.3%. Other increases were posted in the prices for medical care, recreation, personal care and tobacco. Declines were posted in the costs of airline fares, used cars and trucks, new vehicles and apparel.

The complete January CPI report is available on the Labor Department website.

Jobless claims

The Labor Department is also reporting a small decline in the number of initial claims for unemployment benefits last week.

The number of first-time applications dropped by 3,000 in the week ending February 15 to a seasonally adjusted total of 336,000, stabilizing at what some analysts are calling a relatively low rate.

The 4-week moving average, which is less volatile than the weekly number and considered a more accurate gauge of the labor market, rose 1,750 to 338,500.

The full report can be found on the Employment and Training Administration website.

With apologies to Carl Sandburg, inflation crept in to 2014 on little cat feet. According to the government, the consumer price index (CPI) inched up 0.1%...

What's holding back the economy?

Author suggests the global economy simply produces too much stuff

Since the financial crisis of 2008, which turned a regular recession into the Great Recession, the economy has struggled to recover. More than five years later economic growth is anemic, despite the Federal Reserve's massive and relentless stimulus efforts.

Unemployment only recently dropped below seven percent and huge numbers of Americans are working part time or have dropped out of the labor force altogether.

What's responsible for this? In the political world there is a lot of finger-pointing. Republicans blame the Obama administration's policies. The administration blames the Republicans in Congress for being obstructionists. But is there a bigger picture, something we're missing?

Too much supply, not enough demand

Investment banker Daniel Alpert argues the cause of our endless slump lies in the fact that, in today's global economy there is simply too much supply and not enough demand. The economic principle of supply and demand is, after all, tried and true. Prosperity usually results when the two are more or less in balance.

Today, Alpert argues, in his book “The Age of Oversupply,” the global economy has inundated the world with supply. While Americans are dropping out of the labor force because they can't find a job, many of those jobs are going to people who can perform the tasks and happen to live in other countries.

Retail businesses that once required consumers to come to their stores, look at available merchandise on display and either pay the posted price or drive to another store to find a better deal, no longer have that kind of leverage. The Internet allows consumers to shop from home, searching for not only the best product but also the best price. Not only is Target competing with Amazon but, to a lesser extent, Etsy and hundreds of other similar niche businesses that are competing for consumer dollars. There seems to be an endless supply of product and businesses providing it.

Inflation?

When the Fed began printing billions of dollars to try to stimulate the economy, many economists warned of massive inflation because of all that extra money. But inflation hasn't occurred, in part, says Alpert, because supply of everything continues to outstrip demand.

Not only is there little or no inflation, policymakers are more worried about deflation, which they see as a bigger problem. When there is more supply than demand, businesses lose pricing power and must cut prices. Eventually the value of everything – including assets – goes down.

For consumers, such a situation is a double-edged sword. Having an abundance of choices and supply at ever-lower prices is a consumer's dream. But most consumers are also employees, and if the company that employs you goes out of business because it can't sell enough of its goods and services at a profitable price, you have no money to shop that abundant supply.

Is there a fix?

So, if the economy is so out of whack, how does it get fixed? Not, Alpert maintains, by the Fed's stimulus efforts, which has focused mainly on the banking system.

Rather, he advocates massive spending on infrastructure improvements as a way to kickstart economic growth. He also suggests large writedowns of private debt and further bank reforms, two steps not likely to be popular with his fellow investment bankers.

Since the financial crisis of 2008, which turned a regular recession into the Great Recession, the economy has struggled to recover. More than five years l...

Consumer prices unchanged in November

A significant drop in gasoline costs helped hold the line

The prices consumers pay for the things they use held steady in November.

According to the government, the Consumer Price Index (CPI) was unchanged last month after falling 0.1% in October. During the past 12 months, the CPI is up a modest 1.2%.

Energy and food

A 1.0% drop in energy costs helped keep the inflation rate in check last month. The decline was driven by dips in gasoline (1.6) and natural gas (1.8%) -- the fifth decline in natural gas in the last 6 months. On the other hand, electricity prices were up 0.3%, while fuel oil costs rose 0.4%.

Over the past year, energy prices have fallen 2.4%, led by a 5.8% plunge in the cost of gasoline and a drop of 4.1% in fuel oil.

Food prices, meanwhile, inched up 0.1% last month -- the same as in October. The cost of fruits and vegetables declined 0.7%, while meat, poultry, fish, and eggs and nonalcoholic beverage prices each dipped 0.2%. Cereals and bakery products were unchanged. Increases were registered for dairy and related products (0.4%).

The “core” rate of inflation, which strips out the volatile energy and food categories, was up 0.2% in

November, with increases in prices for shelter and airline fares accounting for most of it. For the past 12 months, the core rate of inflation is 1.7%

The complete November CPI report may be found on the Labor Department website.

The prices consumers pay for the things they use held steady in November. According to the government, the Consumer Price Index (CPI) was unchanged last m...

Wholesale prices post third straight monthly decline in November

A drop in energy costs was a major factor

Another drop in wholesale prices -- the third in a row.

The government says its Producer Price Index (PPI) for finished goods dipped 0.1% in November, seasonally, following declines of 0.2% in October and 0.1% in September. For the 12 months ended in November, the PPI is up just 0.7%

Energy and food

Much of last month's decline can be traced to a 0.4% decline in energy prices. Nearly three-quarters of that can be is attributed to gasoline prices, which were down 0.7%. Lower prices for diesel fuel and home heating oil were factors as well.

On the other hand, food prices were unchanged in November after shooting up 0.8% the month before. Higher pork costs were offset by lower prices for processed young chickens.

The “core” rate of inflation, which excludes the volatile food and energy components, was up a tiny 0.1% in November -- the third advance in a row. Higher prices for agricultural machinery and equipment also contributed to the advance in the core.

The full PPI report can be found on the Labor Department website.

Another drop in wholesale prices -- the third in a row. The government says its Producer Price Index (PPI) for finished goods dipped 0.1% in November, sea...

Wholesale inflation takes another month off

Falling energy prices keep things in check

The cost of goods one step shy of the consumer level fell again in October.

According to the Labor Department (DOL), the Producer Price Index (PPI) declined 0.2% following a 0.1% decline in September. For the 12 months ended October 2013, the PPI is up just 0.3%.

Energy and food

As was the case with consumer inflation in October, a drop in gasoline prices (-3.8%) was a major factor in the PPI decline. The energy sector as a whole was down 1.5% -- the first decline since a 2.5% drop in April. Lower prices for diesel fuel and residential natural gas also contributed to the decline.

Foods prices, on the other hand, jumped 0.8%, the largest advance since a 0.9% surge in March. Nearly 60% of that is due to beef and veal prices, which shot up 7.5%. Higher prices for fresh and dry vegetables also were a factor.

Excluding the volatile food and energy sectors, the “core rate” of inflation was up 0.2% in October. Year-over-year, core inflation is up a modest 1.4%.

The complete PPI report is available on the Bureau of Labor Statistics website.

Jobless claims

There was a big drop in the number of first-time applications for state unemployment benefits in the week ending November 16.

In a separate report, DOL says there were 323,000 initial claims filed -- a decrease of 21,000 from the previous week's revised figure of 344,000. Economists surveyed by Briefing.com had projected a level of 333,000 The initial figure for the previous week was 339,000.

DOL analysts say seasonal adjustments from the Veteran’s Day holiday may have played a role in the sharp decline in claims, although how big a factor is unknown.

The 4-week moving average, which is less volatile and seen as a more accurate gauge of the labor market, was down 6,750 -- to 338,500.

The full report can be found on the DOL website.

The cost of goods one step shy of the consumer level fell again in October. According to the Labor Department (DOL), the Producer Price Index (PPI) declin...

Consumer inflation goes AWOL

Falling gasoline prices played a big role

Anyone looking for rising consumer prices during October was sure to be disappointed.

Figures released by the Labor Department (DOL) show the Consumer Price Index (CPI) was down 0.1% last month, putting the rate of inflation for the last 12 months at an even 1.0% -- the smallest 12-month increase since October 2009.

Energy & Food

Gasoline prices plunged 2.9% in October, while other energy costs were mixed, with electricity rising (0.1%), but prices for fuel oil and natural gas declining (0.6% and 1.0%, respectively). Energy prices overall declined 1.7% in October after increasing in September. The cost of energy has fallen 4.8% over the last year, with gasoline prices down 10.1%.

Food prices inched up 0.1% in October after being unchanged in September. Among major grocery store food groups, prices for meats, poultry, fish, and eggs rose 0.6% -- the largest increase of any group and the fifth increase in a row. Nonalcoholic beverage costs were up 0.4% after declining in each of the three previous months, and fruits and vegetables rose 0.2%. In contrast, cereals and bakery products prices fell 0.4%, and dairy and related products fell 0.2%

The “core rate” of inflation, which excludes the volatile energy and food categories, rose 0.1% in October -- the same as in August and September. The core rate is up 1.7% for the 12 months ending October -- the same increase as the 12 months ending September.

The complete CPI report is available on the DOL website.

Retail Sales

Meanwhile, the Commerce Department reports retail sales rose 0.4% in October to a seasonally adjusted total $428.1 billion.

Major factors include increases of 1.3% in sales by auto and other motor vehicle dealers, 1.6% by sporting goods, hobby, book & music stores and 1.4% at clothing & clothing accessories stores.

Retailers that didn't do so well include Building material & garden equipment & supplies dealers, where sales plunged 1.9% and electronics & appliance stores, which suffered a 1.4% decline.

The complete October retail sales report can be found on the Commerce Department website.

Anyone looking for rising consumer prices during October was sure to be disappointed. Figures released by the Labor Department (DOL) show the Consumer Pr...

Wholesale prices dip in September

A decline in food prices offset an uptick in energy costs

A dip in the cost of food more than made up for a slight increase in energy costs, sending the government's Producer Price Index (PPI) down 0.1% in September. The decline follows a rise of 0.3% in August and a flat PPI in July.

The decline was due largely to a drop of 1.0% in consumer foods, the largest since April, thanks to a plunge of 17.9% in the cost of fresh and smaller drops in prices for carbonated soft drinks and processed poultry.

Energy prices, on the other hand, were up 0.5% with one-third of that attributable to a 6.0% jump in home heating oil costs. Higher prices for residential natural gas also were a factor.

The “core” PPI, less the volatile food and energy categories, moved up 0.1%.

The full report is available on the Labor Department website.

Retail sales

In a separate report, the government said retail sales were down 0.1% last month, in line with the forecast from economists at Briefing.com.

The entire decline was due to a drop of 2.2% in motor vehicle sales. Excluding that volatile category, sales were up 0.4%.

Sectors showing sales gains in September include grocery stores (1.0%), food services and drinking places (0.9%) and electronic ans appliance stores (0.7%). Sales at gasoline stations were flat.

The complete retail sales report can be found on the Commerce Department website.

A dip in the cost of food more than made up for a slight increase in energy costs, sending the government's Producer Price Index (PPI) down 0.1% in Septemb...

Consumer inflation on the moderate side in August

Prices were up less than expected

Not much sign of inflation in the newly released figures for August.

According to the government, the Consumer Price (CPI) inched up just0.1%, with increases for shelter and medical care the major contributors. Economists surveyed by Briefing.com were calling for an advance of 0.2%. For the last 12 months, inflation at the consumer level is running at a rate of 1.5%.

Food and energy

Food prices were up 0.1% led by fruits and vegetables, which shot up 1.2%. Meat, poultry, fish, and egg prices rose for the third month in a row with a gain of 0.6%, while costs for dairy and related products advanced 0.4% after declining in each of the three previous months. Cereal and bakery product prices jumped 0.3% in August after declining 0.3% in the month before.

Energy prices declined 0.3%, due mostly to a 2.3% plunge in the cost of natural gas. Gasoline prices fell 0.1% after rising in both June and July, and electricity costs were down 0.1% the second decline in a row. Fuel oil was the only major energy component to increase in August, rising 1.2% on top of a 1.1% rise increase in July.

The “core” rate of inflation -- all items less food and energy -- was up 0.1% in August and has risen 1.8% the last year.

The full CPI report can be found on the Bureau of Labor Statistics website.

Not much sign of inflation in the newly released figures for August. According to the government, the Consumer Price (CPI) inched up just0.1%, with increa...

Wholesale prices resumed their climb in August

Higher food and energy costs were major contributors

After taking a break in July, prices for goods one step shy of the consumer were on the rise again.

The government says its Producer Price Index (PPI) for finished goods, which was unchanged in July, rose 0.3% in August. For the 12 months ended last month, prices are up 1.4% -- the smallest advance since a 0.5% rise in April 2013.

Energy and food increases

Nearly two-thirds of the August increase came from an 0.8% surge in energy prices. In that sector, gasoline prices shot up 2.6%, while liquefied petroleum gas and residential electric power were also higher.

Food costs, which were unchanged in July, jumped 0.6% as fresh and dry vegetables surged 26.9%.

Stripping out the volatile food and energy categories, the “core rate” of wholesale inflation was unchanged in August after nine consecutive increases.

The full PPI report for August  can be found on the Labor Department website.

After taking a break in July, prices for goods one step shy of the consumer were on the rise again. The government says its Producer Price Index (PPI) for...

Middle class caught in a wage-price squeeze

Health care, education, housing and gasoline depleting net worth

Suddenly, it seems everyone is talking about the middle class, that group of Americans who once earned a comfortable living, lived in a comfortable home and pursued the American Dream.

Today there's concern that the middle class is shrinking, bookended by an affluent elite and the struggling poor. Rising debt and falling incomes, it seems, are taking their toll.

Media on both the left and the right – from Breitbart.com to the Huffington Post, have reported the same dismal statistic – nearly three-quarters of the jobs created so far in 2013 have been part-time jobs. While President Obama vacationed on upscale Martha's Vineyard last week, the Washington Post reported on the island's residents who are served by the community's two food banks. 

'Losing our middle class'

“We’re losing our middle class and we’re losing our young people because the jobs aren’t there and because of the cost of living and housing,” Peter Temple, executive director of Martha’s Vineyard Donors Collaborative, which encourages island philanthropy, told the Post.

So why does the American middle class continue to struggle financially? Joseph Nathan Cohen, a Queens College sociologist, says unrestrained household spending has damaged consumer finances, despite the fact that globalization and technological innovation have caused consumer prices to fall. 

But the increase in household spending is not some hedonistic splurge, he says. He cites statistics that show spending on goods that fulfill pleasure, self-esteem, or social status needs have generally been falling, including personal care items, apparel, home furnishings, and automobiles.

So what is the middle class over-spending on? Four product categories, Cohen says. Health care, education, housing, and commuting costs, the last item primarily being gasoline.

Big four factors

Let's take a closer look at Cohen's “big four” factors, starting with health care. The cost of medical care keeps rising two ways, with only one being directly felt by consumers. Consumers who have a medical benefits policy don't pay the huge costs of their health care – the benefits provider, or insurance company, does.

What the consumer pays are the premiums for the policy, and those premiums are rapidly climbing. According to the latest Milliman Medical Index (MMI), a family of four covered through a typical employer health plan will pay out $9,144 this year in premiums and out-of-pocket expenses. It increased over six percent 2012 to 2013 and over seven percent from 2011 to 2012. 

Consumers not covered by an employer's plan have to pay the full premium. However, with the start of the Affordable Care Act in January, many lower income families and individuals will qualify for government subsidies to help pay the premiums. But many middle class families won't qualify and could face higher costs.

Education costs also continue to climb, making it difficult for many middle class families to send their children to college without going into debt. Ironically, the Great Recession and its resulting unemployment spurred many people to go back to school to better their chances of finding a job. With so many students seeking enrollment, colleges have no incentive to reduce their tuition costs.

Rents are climbing

Housing costs should be going down, and for a while they were – if you were buying a house. After being grossly over-inflated during the housing bubble, home values plunged in some areas.

But because of the new, tougher standards lenders imposed it was much harder to qualify for a mortgage to buy one of these newly affordable homes. Instead, the young families who would normally be shopping for their first home had to keep renting and that demand for rental housing has pushed rents higher and higher.

Finally, there's the price of gasoline. Since 2005, when hurricane Katrina caused a widespread disruption of refining and exploration activity, commodity traders have found oil to be a volatile and profitable trading vehicle. While it is true that the developing world now competes for a bigger share of the world's petroleum, driving up prices, it is also true that billions of hedge fund dollars have competed in the futures markets with businesses that actually use the oil.

Higher gasoline prices

Of the four areas, gasoline prices is the one that consumers may feel most deeply. Cohen says soaring tuition and health care costs are not the principal drivers of household financial distress, but they constitute the fastest-growing problem.

While these costs are rapidly rising, job growth has slowed to a trickle. Jobs are harder to come by and don't pay as much. Declining incomes make rising costs of health care, education, housing and transportation harder to bear.

The middle class hasn't wasted its wealth, Cohen insists. But they now face a lose-lose choice between sustainable finances and access to quality schools, child care, medical care, public safety, and employment opportunities.

Suddenly, it seems everyone is talking about the middle class, that group of Americans that once earned a comfortable living, lived in a comfortable home a...

Consumer prices edge higher in July

Shelter, gasoline and food costs led the advance

Consumer prices edged higher in July as Americans shelled out more for food, gasoline and shelter.

Figures released by the Bureau of Labor Statistics show the Consumer Price Index (CPI) rose 0.2% last month, in line with forecasts of economists surveyed by Briefing.com. For the 12 months ending in July, the CPI is up a modest 2.0%.

Increases in prices came in a broad range of sectors including including gasoline and food.

Despite a 1.0% rise in gasoline prices, overall energy costs were up just 0.2%, thanks to declines of 2.8% and and 0.3% in the prices of natural gas and electricity, respectively.

Food prices were up a miniscule 0.1% with only two of the six major grocery store food group increasing: fruits and vegetables up 1.5% and meats, poultry, fish and eggs rising 0.2%.

The “core” rate of inflation on the consumer level, which excludes food and energy because of their volatility, was up 0.2% -- the third straight such increase. Over the last year, the core rate of inflation is up 1.7%

Analysts expect inflation will remain tame as long as the economy continues to limp along. The annual rate of growth in the second quarter was 1.7%.

The complete CPI report for July is available on the Labor Department website.

Jobless claims


Separately, the government reports first-time applications for unemployment benefits dipped by 15,000 last week to a seasonally adjusted 320,000. At the same time, the total number of initial claims for the week ending August 3 was revised to 335,000 -- 2,000 more than previously reported.

The 4-week moving average, which is less volatile and considered a more accurate gauge of the labor market, totaled 332,000, a drop of 4,000 from the previous week'.

The full report can be found on the Labor Department website.

Consumer prices edged higher in July as Americans shelled out more for food, gasoline and shelter. Figures released by the Bureau of Labor Statistics show...

Holding the line on inflation

Producer prices were unchanged in July after rising in June and May

Following fairly hefty increases the two previous months, prices one step shy of the retail level held steady in July.

Figures from the Bureau of Labor Statistics show the producer price index (PPI) for finished goods was unchanged last month. The PPI was up 0.8% in June and 0.5% in May. Economists surveyed by Briefing.com had been forecasting a gain of 0.3% for July.

Energy and food

Major factors in the July showing include drop of 0.2% for energy products, which shot up 2.9% the month before. Most of the energy decline was the result of a 3.9% plunge in the cost of residential natural gas. Gasoline and lubricant prices also fell.

Consumer foods, meanwhile, were unchanged last month after rising 0.2% June. A 5.6%t increase in the price of pork in June partially offset a 10.6% slide in prices for fresh vegetables, except potatoes.

The so-called “core” rate of wholesale inflation, which strips out the volatile food and energy sectors, inched up 0.1% -- the ninth consecutive increase. The advance was led by higher prices for pharmaceutical preparations, light motor trucks and for communication and related equipment.

For the 12 months ended in July, the PPI is up 2.1%

The complete report is available on the Labor Department website.

Following fairly hefty increases the two previous months, prices one step shy of the retail level held steady in July. Figures from the Bureau of Labor St...

Rising gasoline costs send consumer prices higher in June

Food prices posted a modest increase

A sharp increase in gasoline prices sent the government's consumer price index (CPI) up 0.5% in June following a miniscule 0.1% advance the month before.

The June increase came as a surprise to economists surveyed by Briefing.com, who had forecast a gain of 0.3%. For the 12 months ending in June, inflation is running at an annual rate of 1.8%

Energy and food

Energy costs were up 3.4% last month after increasing just 0.4% in May. Almost all of that was due to a jump of 6.3% in the price of gasoline, which was unchanged in May. In fact, the gasoline price surge accounted for about two- thirds of the rise in the overall CPI. Other energy categories were mixed, with electricity rising, but natural gas and fuel oil declining.

Food prices rose 0.2% in June following a 0.1% dip in May. Costs for cereals and bakery products, and for meats, poultry, fish, and eggs all increased 0.4%. The costs of fruits and vegetables, and for dairy and related products fell 0.1%.

The “core rate” of inflation, which strips out the volatile energy and categories, increased 0.2% -- the same increase as in May.

The full June CIP report is available on the Labor Department website

A sharp increase in gasoline prices sent the government's consumer price index (CPI) up 0.5% in June following a miniscule 0.1% advance the month before. ...

Rising energy costs send wholesale prices surging in June

The price of gasoline is leading the charge

Prices one step shy of the consumer level shot higher in June, do largely to a surge in energy costs.

The Labor Department reports its Producer Price Index (PPI) was up 0.8% last month, following a gain of 0.5% in May and a drop of 0.7% in April. Analysts had been calling for a more modest June advance of 0.3%

Energy and food on the rise

A 2.9% rise in energy costs was a major factor in the overall PPI surge. That constituted the the largest advance rise since a 3.2% increase in February 2013. The June was largely due to 7.2% in gasoline costs. Prices for home heating oil and diesel fuel were higher as well.

Food prices were higher in June, rising 0.2% following a 0.6% increase in May. The June rise was led by a 4.2% jump in the cost of meat.

The core rate of inflation, which strips out the volatile energy and food sectors, move up 0.2% -- the straight monthly advance.

The full PPI report for June is available at the Bureau of Labor Statistics website.

Prices one step shy of the consumer level shot higher in June, do largely to a surge in energy costs. The Labor Department reports its Producer Price Inde...

Consumer prices, new home construction rise in May

Gasoline prices held the line, while the cost of food fell

Higher costs for housing and energy products sent prices on the consumer level slightly higher in May.

Government figures show the Consumer Price Index (CPI) inched up 0.% last month, bring the rate of inflation over the last 12 months to 1.4%. Economists surveyed by Briefing.com had expected the CPI to show a gain of 0.2% following an 0.4% decline in April

The cost of housing, which rose 0.3% accounted for more than half of the increase in May. Energy prices were up modes modestly, with gasoline prices unchanged but increases showing up in the cost of electricity and natural gas. Higher prices for airline fares, recreation and apparel also contributed to the rise.

Food prices were lower in May index, however, turned down in May, with the food at home index falling 0.3 percent. Nonalcoholic beverages, dairy and related products, and cereals and bakery products posted declines, while meats, poultry, fish and eggs, which increased in April, were was unchanged in May. The only increase was for fruits and vegetables (0.4%) after a 1.4% decline in April.

The “core rate” of inflation, which strips out the volatile food and energy sectors, was up 0.2%.

The full CPI report is available at the Bureau of Labor Statistics website.

New home construction

Home builders were hard at work last month as housing starts jumped 6.8% in May to a seasonally adjusted annual rate of 914,000. That's 28.6% the rate of 711,000 a year ago. Ground was broken for single-family homes at a rate of 599,000 in May -- 0.3% above the revised April figure of 597,000. The May rate for units in buildings with five units or more was 306,000.

Looking ahead, meanwhile. Things aren't quite so rosy.

Building permits for privately-owned housing units, an indicator of builders' plans for construction in the months ahead, totaled 974,000 -- down 3.1% from the revised April rate of 1,005,000. Still, that's 20.8% above the May 2012 estimate of 806,000.

Permits for single-family homes were up 1.3% to 622,000. Authorizations of units in buildings with five units or more were at a rate of 325,000 in May.

Higher costs for housing and energy products sent prices on the consumer level slightly higher in May. Government figures show the Consumer Price Index (C...

Rising gasoline costs send wholesale prices higher in May

It's the first increase in three months

The cost of living on the wholesale level moved higher in May after posting declines in the two previous months.

Government figures show the Producer Price Index (PPI) for finished goods rose 0.5% last month, surprising economists surveyed by Briefing.com, who were calling for a gain of just 0.1%. The PPI had fallen 0.7% in April and 0.6% in March. For the 12 months ended May in May, wholesale prices are up 1.7%.

Contributing factors

More than 60% of the May PPI increase was due to energy costs, which advanced 1.3%. Forty percent of that was due to a 1.5% increase in gasoline prices. Prices for residential natural gas and residential electric power were also higher.

Food prices were up 0.6%, thanks to a surge of 41.6% in the cost of eggs. Prices for natural, processed, and imitation cheese were also higher.

The “core rate” of inflation, which strips out the volatile food and energy segments, was up just 0.1%, in line with analysts expectations.

More information on the rise in producer prices is available on the Bureau of Labor Statistics website.

The cost of living on the wholesale level moved higher in May after posting declines in the two previous months. Government figures show the Producer Pric...

Are electronic gadgets cheaper now than ever before?

If you think that a computer costs a lot now, you should have seen the price 30 years ago

As most people probably know, once May and June hit, we're in the thick of graduation season. That usually means many of us will be signing graduation cards, heading to ceremonies and searching for the right gift for the graduate we know.

Some folks will just buy balloons for the graduate or stuff some cash inside a card. Others will try to buy something the graduates will need in their next phase of life.

Whether a person is graduating from middle school, high school or college, he or she will probably be looking for some sort of electronic gadget as a gift, as smartphones, tablets and other electronics are what many folks want these days.

But will buying one of these items for a graduate break the bank for you or even put a dent in it?

Flashback

According to the folks at Ben's Bargain, a website that features daily deals each week, buying a popular electronic device is cheaper now than it was in the 1980s.

For example, the Motorola DynaTAC 800x mobile phone, released in 1983, costs $3,995 at the time. In 2013 that equates to $9,312.

Ten years later the Bellsouth/IBM Simon Personal Communicator was released. The clunky 18 ounce mobile phone cost $900 at the time, which is $2,098 in today's dollars.

How times have changed

Now let's look at how much some of today's smartphones cost.

On the lower-end, there's the HTC One Android Quad-Core Smartphone that can be purchased on HSN's website for about $200.

On the higher-end, there's the Samsung Galaxy S III I9300 Smartphone that costs $629.99 on Walmart's site.

Both of these phones are far less expensive than the phones from back in the day and they obviously do way more.

The 1983 Motorola Dyna weighed 28 ounces and only offered 30 minutes of talk time before it had to be recharged. The 1993 Bellsouth phone weighed 18 ounces and offered just an hour of talk time before it needed  to be charged again.

Simply put, buying a smartphone for a graduate these days doesn't have to break the bank and may not require a lot of saving, which is probably a big relief for most parents.

But in the 80s and 90s a personal loan might have been needed to buy a mobile phone and that phone only allowed you to talk for a very short time.

The world of computers

And it's the same for computers.

In 1983 the IBM PC/XT 5160, which was a desktop that had only 128 kilobytes of RAM, was releasedThe cost in 1983 was $8,000 which equates to $18,648 today.

Flash to 2013 where you can purchase the Lenovo IdeaPad Yogo. It's a laptop and tablet in one and has 8 gigabytes of RAM, which pretty much allows you to do anything you want on it.

The Lenovo costs $1,099, a far cry from the IBM PC which was a whopping $6,091 more.

And if you like Lenovo tablets you can get one even cheaper.

On Best Buy's site, you can get the Lenovo Idea Tablet, with 8 gigabytes of memory for about $130, which might be another cool gift for a person graduating this year.

Tube time

Televisions have come a long way too. 

In 1993, there was the RCA 31-inch, which was one of the first TVs that came with an on-screen menu. Back then you could purchase one for $1,200.

Today you can buy an LG 39-inch LED TV for just $430. It gives you a better picture, better sound and has a much sleeker appearance. 

TVs have really come down in price from a decade ago.

The Toshiba HDTV 34-inch went for $2,699 in 2003 and didn't provide half of the good picture and sound that some of today's flat screens do.

Timing the market

One thing that's tricky about purchasing a new electronic device is knowing exactly when the price will drop. For example, some may wonder if they should buy that new laptop when it first hits the shelf or if they should wait for the cost to go down.

Rojeh Avanesian, the vice president of marketing at PriceGrabber said as long as consumers keep buying a particular gadget, the price of it won't come down.

He says this happened recently with some of today's high-end digital cameras.

"We are seeing a lot of people trading up their camera gear to something better. They are looking for advanced features and more megapixels and are willing to pay more," said Avanesian in an interview with TechHive.

And that means prices won't budge anytime soon. So you may want to wait until the mad rush for a product ends, if you want to pay less. 

For gamers

The gadget that has remained close in price over the years is video game consoles. 

In 1983 the Atari 2600 went for $125 and in 2013 the Sony PlayStation 3 Super Slim game console goes for $250. That's only a $125 difference over the last 30 years.

Of course the differences between the Atari 2600 and the Sony Play Station are night and day in terms of functionality. Perhaps some may be surprised that the price difference is so low.

When it comes to buying one of today's game consoles for a low price, you might have to wait until the holiday season, says gaming expert Michael Pachter of Wedbush Securities.

"All of the price cuts for game consoles are for holiday only," he said.

So if you're looking to purchase a gadget for a graduation gift this year, it'll be far less expensive than buying a gadget that was made in 1983, which may not be that surprising, but it might be good to know.

As most people probably know, once May and June hits we're in the thick of graduation season. That usually means many of us will be signing graduati...

Economy flashing mixed signals

Initial jobless claims were up, consumer prices fell and new home construction lagged

The labor market is continuing to struggle, with more people than expected filing for first-time jobless benefits last month.

The government reports there were 360,000 initial applications for benefits in the week ending May 11 -- an increase of 32,000 from the revised figure of 328,000 the week before. The consensus estimate from Briefing.com was for 330,000 new claims.

The 4-week moving average, which is less volatile and consider a more accurate reading of the labor market, was 339,250 -- an increase of 1,250 from the previous week., a decrease of 21,000 from the preceding week's revised average of 3,036,250.

The full report can be found on the Labor Department's website.

Inflation

Much like inflation on the wholesale level, consumer prices were on the decline in April.

According to the Labor Department, the Consumer Price Index (CPI) fell 0.4% -- the second decline in as many months and twice the decline expected by Briefing.com.

A sharp drop in gasoline prices was major factor. The energy sector overall was down 4.3%, even though electricity and natural gas costs were up decrease in the energy index. Food prices, after showing no change in March, rose 0.2%.

After stripping out food and energy because of their volatility, the “core rate” of inflation was up 0.1% -- the same as in March.

Prices for shelter, used cars and trucks, new vehicles and tobacco all increased in April, while apparel, airline fares and recreation were lower.

The full CPI report is on the Bureau of Labor Statistics website.

Housing starts

The pace of new home construction slowed last month.

Housing starts plunged 16.5% in April to a seasonally adjusted annual rate of 853,000, according to the Commerce Department -- well shy of the consensus estimate of 970,000 from Briefing.com, but more than 12% above the rate posted a year ago.

A breakdown of the figures show construction was started on 610,000 single-family homes and 234,000 for units in buildings with five units or more.

Building permits, an indicator of what developers and considering in the months ahead, shot up 14.3% to 1,017,000.  

The labor market is continuing to struggle, with more people than expected filing for first-time jobless benefits last month. The government reports ther...

Wholesale inflation hits the skids -- again

Lower energy prices led the move downward

Inflation on the wholesale level was pretty much absent in April, just as it was in March.

Figures released by the Labor Department show the producer price index (PPI) plunged 0,7% last month, following a slide of 0.6% the month before.

Over 80% percent of the decrease was due to a drop of 2.5% in the price of energy products -- mostly gasoline, which was down 6%. Lower prices for home heating oil and residential electric power also were factors.

Also contributing to the decline was a dip of 0.8% percent in food prices.

The “core rate” of inflation, which strips out the food and energy components, inched up 0.1% after rising 0.2% in March.

The complete PPI report can be found on the Bureau of Labor Statistics web page.

Inflation on the wholesale level was pretty much absent in April, just as it was in March. Figures released by the Labor Department show the producer pric...

Consumer prices fall in March as new home construction surges

The upbeat news sent stocks higher in the early going

Overall inflation in March was nowhere to be found.

The Labor Department reports its Consumer Price Index (CPI) dipped 0.2%, bringing the inflation rate for the past 12 months down to a tame 1.5%. The March number was better that the 0.1% decline forecast by Briefing.com and the market.

The decline was led by a 4.4% plunge in the cost of gasoline, along with drops in the prices of electricity and fuel oil. In total, energy prices were down 2.6%. Food prices were unchanged in March.

Stripping out those two volatile categories, the “core rate” of inflation was up 0.1%

Outside the core items, costs for shelter, used cars and trucks, medical care, personal care and airline fares were higher in March, while prices for apparel, household furnishings and operations, and tobacco were lower.

The full CPI report can be found at the Labor Department website.

Housing starts

In a separate report, the Commerce Department says housing starts shot up 7.0% last month to a seasonally adjusted annual rate of 1,036,000 homes. That came as something of a surprise to analysts, who were expecting a rate of 935,000.

Ground-breaking for single-family homes were at a rate of 619,000 -- 4.8% below the revised February figure of 650,000. Apartment units were at an annual rate of 392,000.

Applications for building permits, an indication of plans for future construction, were down 3.9% to an annual rate of 902,000.

More on the March construction report is available on the Commerce Department website.

Overall inflation in March was nowhere to be found. The Labor Department reports its Consumer Price Index (CPI) dipped 0.2%, bringing the inflation rate f...

Wholesale prices, retail sales down in March

Sales decline raises questions about consumers' willingness to spend

After rising in the first two months of the year, the Producer Price Index (PPI), for finished goods fell a sharp 0.6%. Economists surveyed by Briefing.com were calling for an increase of 0.1%

Figures released by the Labor Department show the decline was led by a 3.4% plunge in energy costs, thanks largely to a 6.8% drop in the prices of gasoline. Lower prices for diesel fuel and home heating oil also played a part.

Food prices -- on the other hand -- rose 0.8%, the sharpest advance since a 1.1-percent rise in November 2012. Costs for fresh and dry vegetables were major factors with a surge of 21.5%. Higher prices for strawberries also contributed to the overall increase in food prices.

The core rate of inflation, which strips out the volatile energy and food components,rose 0.2% for the third consecutive month.

The full PPI report can be found on the Bureau of Labor Statistics website. 

Retail sales

In a separate report, the Commerce Department said retail sales were down 0.4% in March, surprising analysts who had expected sales to be flat. At the same time, the government made a slight downward revision in it's February estimated -- to an advance of 1.0% from its previous report of a gain of 1.1%.

The biggest sales decline last month -- 2.2% was at gasoline stations, followed by dips of 1.6% at electronics and appliance stores and 1.2% at department stores. Grocery store sales were unchanged.

For more information, check the Commerce Department website.

After rising in the first two months of the year, the Producer Price Index (PPI), for finished goods fell a sharp 0.6%. Economists surveyed by Briefing.com...

Wholesale prices continued their rise in February

Weekly jobless claims post a surprising drop

Prices one step short of the retail level rose in February for the second straight month.

Figures released by the Labor Department show the Producer Price Index (PPI) for finished goods was up 0.7% last month following an advance of 0.2% in January. Economists at Briefing.com had projected a rise of 0.8%. For the 12 months ended in February, the PPI is up 1.7 percent -- the largest 12-month increase since a 2.3-percent rise in October 2012.

Energy leads the way

The February advance in the PPI was led by energy prices, which rose 3.0 percent%. The cost of gasoline accounted for most of this advance, jumping 7.2%. Rising prices for home heating oil and diesel fuel also were factors.

Prices for consumer foods helped take the sting out of the overall increase, falling 0.5% after rising 0.7% in January. Fresh and dry vegetable costs accounted for most of the decrease, falling 18.0%.

Core inflation

When the volatile food and energy sectors are stripped out, the “cor rate” of inflation was up 0.2% -- on target with economists' forecasts and the fourth consecutive advance. About 20% percent of the February increase can be traced to prices for pharmaceutical preparations, which were up 0.2%. An advance in the cost of plastic products also contributed to higher a higher core rate.

Weekly jobless claims

Separately the government reports the number of people standing in the unemployment line during the week ending March 9 fell by 10,000 from the previous week as 332,000 people filed initial claims for jobless benefits. Economists at Briefing.com were calling for increase to 350,000. The previous week's figure was revised upward by 2000.

The 4-week moving average, which is less volatile and considered a more accurate gauge of the labor market, was 346,750 -- down 2,750 from the previous week's revised average of 349,500.

Prices one step short of the retail level rose in February for the second straight month. Figures released by the Labor Department show the Producer Price...

Inflation holds the line in January, while weekly jobless claims rise

A drop in energy costs and steady food prices are major factors in the inflation number

Not much sign of inflation last month as the Labor Department's Consumer Price Index (CPI) was unchanged for a second straight month.

A major factor in the decline was a 1.7 percent drop in energy costs, thanks to decreasing prices for gasoline (3.0 percent) and natural gas (2.5 percent). The price of fuel oil rose (2.0 percent) as did the cost of electricity prices (0.5 percent ).

Food prices were unchanged in January after rising in each of the previous 10 months. Three major grocery store food group indexes increased in January. Dairy and related products rose 0.4 percent in January -- its sixth increase in a row. Fruits and vegetables rose 0.3 percent, and cereals and bakery products increased 0.1 percent.

In contrast to these increases, prices for nonalcoholic beverages declined 0.5 percent in January, and the cost of meats, poultry, fish and eggs was unchanged.

'Core inflation'

The “core rate,” which strips out the volatile food and energy sectors increased 0.3 percent in

January. Increases in price of shelter and apparel accounted for much of the increase, with advances in recreation, medical care, and airline fares also contributing.

Overall, consumer prices are up 1.6 percent over the last 12 months, with an increase in food prices of 1.6 percent over the last 12 months and energy prices down 1.0 percent.

Jobless claims

Separately, the government reports the number of people applying for unemployment benefits for the first time jumped by 20,000 in the week ended Feb. 16 -- to 362,000.

The 4-week moving average was 360,750 -- an increase of 8,000 from the previous week's revised average of 352,750. Economists consider the 4-week moving average a more accurate barometer of the labor market as it is not as volatile as the weekly reports.

Not much sign of inflation last month as the Labor Department's Consumer Price Index (CPI) was unchanged for a second straight month. A major factor in t...

Inflation Pressure Building

High gas prices pushing up inflationary pressures

The latest economic data from the U.S. Government does little to reassure consumers, who are already coping with record high gasoline prices. And one private economist says inflationary pressures that appeared at the end of last year are becoming more pronounced.

"While Newton may have concluded that what goes up must come down, we are still waiting for his law of gravity to be proved in the oil market," said Joel Naroff, of Naroff Economic Advisors. "Right now, what goes up must go up even more and that is creating real hardship for many people and businesses. With prices for energy so high for so long, spending is being cut and that is lowering estimates for economic growth."

The sudden and rapid rise in fuel prices, says Naroff, is like a tax. Consumers have less money to spend on other things. Adding to the economic uncertainty, the rise in oil prices is beginning to have a ripple effect through the economy.

"Businesses are also being pressured by rising energy prices and feel they can only swallow so much of it. As a result, they're now beginning to look for ways to raise prices. So the consumer is not only paying more at the pump, but soon will be paying more everywhere," Naroff told ConsumerAffairs.com.

The inflation alarm bells have been ringing at the Federal Reserve for the last couple of months. At its latest meeting, March 22, the Fed's Open Market Committee formally recognized the potential of inflation.

"The Fed's rate setting committee did what was expected: It raised the funds rate one-quarter percent. But in its closely watched statement, it noted that 'pressures on inflation have picked up in recent months and pricing power is more evident,'" Naroff said.

So, while inflation creates a drag on the economy, making consumer goods and services more expensive, it will likely make borrowing money more expensive too. Naroff said he expects interest rates will continue to creep higher, especially long term rates like mortgages.



Inflation Pressure Building...