Consumer Goods Prices and Inflation

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Consumer prices rose 0.6 percent in July

Gasoline cost more while food prices went down

The cost of living rose in July by more than most economists expected, but there’s not a lot of concern that we’re about to experience a burst of inflation.

While it’s true the government is pumping a lot of money into the economy, unemployment remains high and the economy isn’t growing. In fact, it’s moving in the other direction.

The Labor Department reports its Consumer Price Index (CPI) rose 0.6 percent in July, fueled mostly by an increase in gasoline prices. However, prices at the pump have leveled off in the last couple of weeks and have actually drifted lower. The government reports that the energy index increased 2.5 percent in July as the Index tracking gasoline prices rose 5.6 percent. 

Lower food costs

Food prices for July moved lower, with the food index declining by 0.4 percent. It was driven lower by a 1.1 percent decline in food prepared at home.

The cost of car insurance moved sharply higher last month as the steep discounts offered by major carriers during the initial pandemic expired. Consumers also paid more last month for rent, communication, used cars and trucks, and health care services.

Over a 12-month period, inflation is rising at 1.0 percent, not nearly enough to set off alarm bells. The Federal Reserve would actually like prices to rise at a 2.0 percent rate. Economists are generally pleased with the July report. Paul Ashworth, chief U.S. economist at Capital Economics in Toronto, told Reuters that inflation in July appeared to be in a healthy spot.

“This should end any speculation that the pandemic-related slump in demand will quickly push the economy into a deflationary spiral,” he said. “But this is not a sign that the U.S. is instead about to experience a bout of much high inflation because of supply restrictions.”

Inflation over the last 12 months

When the July numbers are placed in the context of the last 12 months, the cost of food has risen 4.1 percent since July 2019. Even though it rose in July, the cost of energy has actually declined 11.2 percent over the last year.

There are areas of the economy where consumers have faced rising costs and may be likely to do so in the coming months. While the price of prescription drugs dipped slightly last month, the cost of physician services jumped 0.7 percent and hospital services cost 0.2 percent more.

There was a big jump in the cost of wireless communication services, which rose 3.6 percent. Used vehicle prices rose 2.3 percent, ending three straight months of declines.

The cost of living rose in July by more than most economists expected, but there’s not a lot of concern that we’re about to experience a burst of inflation...

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The cost of living rose slightly in December

The Labor Department reports that 2019’s inflation rate was 2.3 percent

The Labor Department reports its Consumer Price Index (CPI), the chief way it measures inflation, rose 0.2 percent in December, a slowdown from the 0.3 percent rise the month before.

Taking the previous 11 months into consideration, the official inflation rate for all of 2019 was 2.3 percent, in line with the Federal Reserve’s target. Even so, it was the largest 12-month increase in prices since 2018.

But whether or not you felt financially stressed last month all depends on what you purchased. The cost of gasoline, housing, and health care all went up last month, accounting for most of the increase in the overall CPI.

The food index, which measures costs for food consumed at home and in restaurants, also went up by 0.2 percent. When food and energy are removed from the equation, prices rose just 0.1 percent.

The monthly report shows that consumers also paid more last month for clothing, car insurance, new vehicles, and recreation. They paid less for used cars and trucks, household furnishings and operations, and airline fares.

Energy led the increase

Energy costs made the biggest move last month, primarily due to rising gasoline prices. The energy index was up 1.4 percent in December, its third straight increase. 

Energy was driven higher by a 2.8 percent jump in the gasoline component, as prices at the pump drifted higher at a time they were predicted to fall. By the end of the year, the average price of gasoline was about 36 cents a gallon higher than the year before.

Food costs were pushed higher by increases in prices for meats, poultry, fish, and eggs. It was the only grocery store group to go up in price, rising 1.3 percent. Within that group, beef and eggs posted the largest increases.

Analysts say the overall inflation number, which remains tame, is likely to persuade the Fed that it’s on the right course and there should be no adjustment in interest rates, at least in the near term.

The Labor Department reports its Consumer Price Index (CPI), the chief way it measures inflation, rose 0.2 percent in December, a slowdown from the 0.3 per...

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Inflation remains tame, but not for everyone

A new survey shows women are pressured by rising prices more than men

The latest report from the government on consumer prices shows inflation remains tame, but a survey of consumers shows something different. Many consumers, especially women, don’t think they’re keeping up.

The Bureau of Labor Statistics reports that the Consumer Price Index (CPI) rose in October by 0.4 percent, creating an inflation rate of 1.8 percent over the last 12 months. That’s slightly below where the Federal Reserve would like to see prices.

The official inflation rate rose last month largely because of higher gasoline prices, which have begun to slowly come down -- except in California. The index covering all forms of energy jumped 2.7 percent last month. The cost of medical care, recreation, and restaurants also rose.

More than half don’t think they’re keeping up

The prices consumers paid for clothing, household furnishings, new cars and trucks, and airline tickets went down in October. But if you didn’t buy any of those things, it might not feel like inflation is so tame.

That’s the conclusion of a survey of consumers conducted by CPI Inflation Calculator, a private online tool that analyzes inflation trends using official government data. A survey of 1,500 consumers between the ages of 18 and 65 found 56.1 percent don’t believe they’re keeping up with the rising cost of living.

Women were even more likely to say inflation isn’t so tame, with more than 63 percent of female respondents giving that response. Women 18 to 24 years of age feel the pinch even more, with 75 percent saying they aren’t keeping up with the cost of living. Fewer than 60 percent of men in that same age group gave that response.

Only 30 percent of the consumers participating in the survey said they are able to keep up with inflation. But again, when broken down demographically, more men than women declared that inflation is not a problem. Forty-two percent of men between the ages of 45 and 64 were not concerned about rising prices.

It often depends on what you buy

Whether a consumer is affected by inflation often comes down to where the individual consumer spends their money. If they have health problems or a child in college, they are most likely to think inflation is a problem. The costs of both of those categories are rising much faster than the rate of inflation.

Geography may also have something to do with it. Consumers who live in large coastal cities likely encounter a generally higher cost of living than people living in small- to medium-sized cities.

The latest report from the government on consumer prices shows inflation remains tame, but a survey of consumers shows something different. Many consumers,...

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Inflation rose in July, but rates are still below the Fed’s desired levels

Gasoline and housing led the increase

Inflation picked up its pace in July but is still relatively low, according to the latest report from the Labor Department.

The Consumer Price Index (CPI) rose 0.3 percent in July after going up just 0.1 percent in June. Over the last 12 months, the inflation rate is 1.8 percent, just below the Federal Reserve’s desired inflation rate of 2 percent.

July prices rose mainly on the basis of more expensive housing and gasoline, though gas prices have dropped in August and are expected to keep falling. The index for food was unchanged for the second month in a row. It cost less to prepare meals at home last month, but the cost of visiting restaurants went up.

“The index for all items less food and energy rose 0.3 in July, the same increase as in June,” the Labor Department said in its release. "The July rise was broad-based, with increases in the indexes for shelter, medical care, airline fares, household furnishings and operations, apparel, and personal care all contributing to the increase. The index for new

vehicles was one of the few to decline in July.”

More expensive fruit and vegetables

Consumers paid more last month for fresh fruits and vegetables, with the prices of those items rising 0.3 percent. The cost of cereals and bakery products increased by the same amount, with the price of meats, poultry, fish, and eggs going up 0.1 percent.

But three of the major grocery store food group indexes declined last month. The cost of nonalcoholic beverages fell for the second straight month, declining 0.4 percent. The index for dairy and related products fell 0.3 percent after rising in each of the previous five months.

The report may have an uncertain impact on the Fed’s decision to cut interest rates or leave them at present levels. Prices rose, but not by that much. Another interest rate cut could push the inflation rate to 2 percent, the Fed’s desired target.

Inflation picked up its pace in July but is still relatively low, according to the latest report from the Labor Department.The Consumer Price Index (CP...

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Inflation continued its slow pace in April

There’s little in the government’s report that would lead the Fed to hike rates

Even with sharply rising gasoline prices in much of the nation, inflation was fairly tame last month. The Labor Department reports that the Consumer Price Index rose 0.3 percent in April following a 0.4 percent increase in March.

Gasoline accounted for much of the increase, rising 5.7 percent. The overall energy index was up 2.9 percent.

Partially offsetting more expensive gasoline, food prices actually went down in April, recording their first decline in nearly two years.

The cost of housing, medical care, education,  and new vehicles all went up in April. But the cost of used cars and trucks, apparel, and household furnishings and operations were among those that declined during the month.   

‘Happy story for families’

“The inflation story continues to be a happy one for American families, coming in tame for another month,” Robert Frick, corporate economist for Navy Federal Credit Union, said in an email to ConsumerAffairs. “With wages rising above 3 percent and the Consumer Price Index hovering around 2 percent,  real wages are rising from an average of 1.2 percent for low-skilled workers to 1.6 percent for high-skill workers.”

Frick says workers aren't seeing wage increases as high as in previous late-stage expansions because of slack in the labor force, but he said wages could rise if the labor market tightens again.

The slow rise in consumer prices, along with more modest increases in wage growth, will likely influence the Federal Reserve to hold the line of further rate hikes this year.

Even with sharply rising gasoline prices in much of the nation, inflation was fairly tame last month. The Labor Department reports that the Consumer Price...

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The Federal Reserve thinks economic weakness is only ‘transitory’

The prospect of higher inflation means the Fed isn’t going to cut interest rates

For months it’s been an article of faith that inflation is low and the Federal Reserve will hold off on any further rate hikes.

But one simple comment from Federal Reserve Chairman Jerome Powell has economists -- and the financial markets -- second-guessing that assumption.

Following the Fed’s two-day meeting, Powell told reporters the Fed believes the economy is showing some signs of weakness but said it is because of “transitory” issues. In other words, the Fed doesn’t expect that weakness to last.

That’s actually pretty good news, but the financial markets didn’t see it that way since it is hoping the Fed will actually cut interest rates. Powell made it pretty clear that’s off the table if there is a chance inflation can start to rise. And if the economy gains more traction prices could go higher.

The Fed would like a little inflation in the economy and has set a target of 2 percent inflation as ideal. So far, however, inflation remains well short of that goal at 1.6 percent.

“If we did see inflation running persistently below, that is something the committee would be concerned about and something we would take into account when setting policy,” Powell said.

But Powell said the Fed doesn’t expect that to happen and therefore probably won’t be cutting rates anytime soon.

Tame inflation so far this year

In its most recent inflation gauge, the Labor Department reported the Consumer Price Index, a measure of inflation at the retail level, rose 0.2 percent in February after being flat the month before. In the last 12 months, the CPI is up just 1.5 percent.

But some consumers complain that the prices of some goods and services are moving up at a faster rate. Despite the low numbers for February, government economists said consumers faced higher costs for housing, food, and gasoline.

Food costs were up 0.4 percent, their largest monthly increase since May 2014, as both the food at home and food away from home indexes increased.

The index tracking the cost of gasoline rose 1.5 percent in February, following three consecutive monthly declines. That pushed the overall cost of energy up 0.4 percent despite declines in the electricity and natural gas indexes.

For months it’s been an article of faith that inflation is low and the Federal Reserve will hold off on any further rate hikes.But one simple comment f...

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Cost of living rises at fastest rate of the year in March

But most of the increase was fueled by gasoline prices

Inflation jumped in March due to higher gasoline prices and rising food costs.

The Labor Department reports that the Consumer Price Index (CPI) rose 0.4 percent in March, twice the rate of February’s increase. Despite the sizable increase, inflation over the last 12 months is still running just under the Federal Reserve’s target of 2 percent.

Consumers saw the biggest price hikes last month in gasoline and other energy costs. That category was up 3.5 percent, accounting for about 60 percent of the seasonally adjusted all items monthly increase.

The index tracking gasoline prices rose sharply, along with the electricity index. With the heating season mostly over, natural gas prices were slightly lower.

Higher food costs

Food costs were higher last month, rising 0.3 percent. That follows a 0.4 percent increase in February. Most of the higher costs were in the produce section, with fresh vegetables rising 2 percent and fresh fruit going up 1.2 percent.

Despite the monthly rise in the CPI, Robert Frick, corporate economist for Navy Federal Credit Union, says inflation is still fairly tame, given the slow rise in wages.

“The index for all items except food and energy was up just 0.1 percent,” Frick told ConsumerAffairs. “The difference between this core number and headline number was mainly due to the energy index rising 3.5 percent in March. The food index also showed an increase, and in the last year that portion of CPI was up 2.1 percent, the most since 2015.”

Nothing to alarm the Fed

The CPI strips out food and energy costs from its main inflation number because those two sectors tend to be highly volatile. Frick says rising food costs may be a sign of economic health because consumers feel confident enough to splurge at the supermarket and at restaurants.

“These steady-as-it-goes numbers should have little effect on the Federal Reserve's decision to raise, lower or stand pat on rates,” he said.

Two sectors that were down in February were back up in March. Medical care costs rose 0.3 percent last month, largely due to a 0.6 percent jump in the cost of prescription drugs.

New car costs were 0.4 percent higher last month after giving ground in February. Meanwhile, clothing prices dropped 1.9 percent in March after going up in February.

Inflation jumped in March due to higher gasoline prices and rising food costs.The Labor Department reports that the Consumer Price Index (CPI) rose 0.4...

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The Federal Reserve forecasts clear skies for the near future

Inflation for non-food and non-energy items hold steady near 2 percent

Borrowers and lenders alike breathed a collective sigh of relief on Wednesday as Federal Reserve Chairman Jerome Powell’s forecast gave two thumbs up. In a nutshell, Powell’s outlook was affirmative.

“My colleagues and I have one over-arching goal: to sustain the economic expansion with a strong job market and stable prices for the benefit of the American people. The U.S. economy is in a good place, and we will continue to use our monetary policy tools to keep it there,” he said.

As far as interest rates and inflation go, Powell envisioned that interest rates will be in a holding pattern for a while and confirmed that inflation continues to be in check.

“We don’t see data coming in that suggests that we should move in either direction,” Powell commented after officials lowered their projected 2019 interest-rate increases this year to zero from two. “They suggest that we should remain patient and let the situation clarify itself over time. It may be some time before the outlook for jobs and inflation calls clearly for a change in policy.”

The Fed reports that on a 12-month basis, inflation has declined across the board, pegging the shift on lower energy prices. Looking further down the balance sheet, inflation for non-food and non-energy items are holding steady near 2 percent.

“On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed,” wrote the agency in its review of the current financial climate.

The deeper dive

While low inflation sounds like a good thing from a consumer angle, Powell called out global price pressures as being weak -- in his words, “one of the major challenges of our time.”

“I don’t feel that we have kind of convincingly achieved our 2 percent mandate in a symmetrical way,” Powell reflected. “That gives us the ability to be patient, and not move until we see that our target goals are being achieved.”

The jury might be out for a while trying to decipher Powell’s request for patience. “It was very dovish,’’ Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, told Bloomberg. “It suggests that the Fed has jumped to the conclusion that the weakening we have seen since the start of the year will be more fundamental and more persistent, rather than being temporary crosscurrents.”

“Policy makers appear to have cooled on the notion of any meaningful, lasting impact from last year’s tax reforms and instead project a return to trend growth, a stabilization of the unemployment rate and little pickup in price pressures. Amid this backdrop, they do not see much need to further normalize interest rates,” wrote Bloomberg economists Carl Riccadonna, Yelena Shulyatyeva, and Tim Mahedy.

Borrowers and lenders alike breathed a collective sigh of relief on Wednesday as Federal Reserve Chairman Jerome Powell’s forecast gave two thumbs up. In a...

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Inflation remains tame in February

The outcome likely means that the Federal Reserve won’t be hiking interest rates

The Consumer Price Index (CPI), the government’s primary inflation gauge, rose 0.2 percent in February after being flat the month before. In the last 12 months, the CPI is up 1.5 percent, well below the Federal Reserve’s inflation target.

The means the Fed is even more likely to hit the pause button on additional interest rate hikes for the rest of 2019. Robert Frick, corporate economist at Navy Federal Credit Union, says the numbers were up but not as much as expected.

“Inflation doesn’t appear to be heating up enough to trigger the Fed to raise interest rates, and it also shows that increases in wages aren’t pushing up prices much,” Frick said in an email to ConsumerAffairs. “No Fed action, tame inflation, and a good wages and jobs situation mean we remain in the Goldilocks zone for American workers and consumers.”

Some rising costs

Despite the low numbers consumers faced higher costs last month for housing, food, and gasoline. Food costs were up 0.4 percent, their largest monthly increase since May 2014, as both the food at home and food away from home indexes increased.

The index tracking the cost of gasoline rose 1.5 percent in February, following three consecutive monthly declines. That pushed the overall cost of energy up 0.4 percent despite declines in the electricity and natural gas indexes.   

While it’s always good for consumers when prices remain stable, the best news in the report is the influence on the Fed’s interest rate policy. The Fed’s discount rate directly correlates to credit card interest rates.

If the Fed holds off on rate hikes for the rest of 2019, it means consumers’ interest rates on their credit card balances won’t be going up.

The Consumer Price Index (CPI), the government’s primary inflation gauge, rose 0.2 percent in February after being flat the month before. In the last 12 mo...

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There was almost no inflation in the economy in January

Increases in the cost of food and health care were balanced by cheaper gasoline

You might not notice any change in the high cost of college or health care, but the overall inflation rate didn’t budge in January.

The Bureau of Labor Statistics reports that the Consumer Price Index (CPI) was unchanged last month. For the year, the CPI is up only 1.6 percent, well below the Federal Reserve’s target of 2 percent.

Food and energy costs, which together were lower in January, kept the CPI in check. When those two categories are removed, prices were up 0.2 percent. Robert Frick, corporate economist at Navy Federal Credit Union, says it’s almost as though Goldilocks wrote the CPI report since it was “just right.”

“The overall index was unchanged for January, and all items were up just 1.6% over the last year,” Frick said in an email to ConsumerAffairs. “Just as important, wages again ticked up, rising 0.1 percent in January. No increase in inflation combined with a rise in wages means American workers' real wages -- nominal wages minus inflation -- increased for another month.”

Moving in the right direction

While wages were higher, Frick says consumers haven’t seen the kind of real wage gains that have been present in other late-stage expansions. Even so, he says paychecks are moving in the right direction -- and the report holds more good news for consumers.

“This also argues against the Fed raising rates soon, at least, keeping the expansion expanding to the benefit of workers,” Frick said. “They should expect a continued strong jobs market together with rising real wages for the foreseeable future."

If the Fed decides there is no need to raise interest rates again, it means the interest rate on credit cards will likely remain stable over the next few months. Consumers carrying large credit card balances have seen their credit card interest payments rise every time the Fed hiked the federal funds rate.

Gasoline prices fall

In a big break for consumers, energy costs went down for a third consecutive month. The price of gasoline was down 5.5 percent.

The price of food was slightly higher last month, rising 0.2 percent from December. The biggest increase in food costs came in the restaurant sector.

Consumers paid more for housing, clothing, medical care, recreation, and household furnishings and operations last month. Airfares were cheaper and so were car insurance policies.

You might not notice any change in the high cost of college or health care, but the overall inflation rate didn’t budge in January.The Bureau of Labor...

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There was little sign of inflation in the economy last month

A government report may settle nervous stock traders

Despite the stock market's recent hand-wringing over inflation, there was little evidence of it in the U.S. economy last month.

The government's Consumer Price Index (CPI) rose a modest 0.1 percent in September, a slowdown from August's 0.2 percent rise. For the last 12 months, the nation's inflation rate is 2.3 percent.

Fears of rising prices have driven stock prices sharply lower this week, mainly because interest rates paid on government bonds have moved significantly higher. Stock traders have worried that rising bond yields – sometimes a sign of inflation – would prompt the Federal Reserve to double-down on its policy of raising the federal funds rate.

Robert Frick, corporate economist at Navy Federal Credit Union, says low inflation and a strong economy should ease fears of an overly-aggressive Fed.

“Inflation fears right now are based on historical models, not data, and the data says price and wage growth are not in danger of overheating the economy,” Frick told ConsumerAffairs. “This CPI report supports the Fed's plan of gradual rate increases, and Fed Chair Powell's wait-and-see strategy before changing that plan.”

And even though bond yields have been rising, Frick notes they remain well below historical averages.

What little inflation there was in the economy last month had mostly to do with housing. The CPI report shows shelter accounted for half of the seasonally adjusted increase.

Despite the rise in gasoline prices the energy sector was lower in September. Food prices were largely unchanged.

Despite the stock market's recent hand-wringing over inflation, there was little evidence of it in the U.S. economy last month.The government's Consume...

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Consumers face another rising cost: interest rates

After years of being cheap, the cost of money is going up

Just as consumers are finally increasing their incomes, they face another rising cost. Just about every type of consumer loan is getting more expensive.

This week, the yield on the Treasury Department's 10-year bond rose above three percent and appears poised to keep climbing. Even if you don't have money invested in bonds, it could affect you if you're buying a home or refinancing.

That's because mortgage rates are tied to the 10-year note. When its yield goes up, so do mortgage rates. The Mortgage Bankers Association (MBA) reports the 30-year fixed rate mortgage rate averaged 4.88 percent last week, the highest since 2011.

That's still low by historical standards, but since the financial crisis a decade ago, mortgage rates have bounced between 3 percent and 4 percent. When the mortgage rate is 5 percent or more -- a normal rate during the housing boom -- consumers face a higher monthly payment for the same house they could have purchased with a 3 percent mortgage.

Fed keeps hiking

Unfortunately, that's not the only loan that's becoming more costly. The Federal Reserve continues on its path of gradually raising the federal funds rate -- the rate it charges member banks. Those increases get passed along to consumers who carry a credit card balance.

The average credit card rate is already at a record high and will go up each time the Fed hikes rates. The credit bureau TransUnion estimates that affects about 92 million consumers who carry credit card balances and will create a financial hardship for 9 million of them.

Higher car payments

Auto loans are also influenced by the federal funds rate, as are just about all loans consumers get from a bank. With the Fed's tightening policy, the monthly payment on new and used cars will get more expensive.

What's it mean for consumers? If you've begun shopping for a house, you might have to lower the price range in which you're looking. If you're selling a home, you might need to be flexible on the price. If you're thinking about buying a new car, it might pay to consider a late model used car.

And interest rates are likely to move higher before they go down again. The Fed meets next week and is expected to hike its key interest rate for the third time this year.

Just as consumers are finally increasing their incomes, they face another rising cost. Just about every type of consumer loan is getting more expensive....

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Despite growing economy, there's little sign of inflation

But the costs of gasoline and shelter continue to go higher

The government reports the Consumer Price Index (CPI) rose 0.2 percent in August, the same as July, suggesting inflation is largely absent from most of the economy. Much of the increase came in the form of more costly housing and energy.

The Bureau of Labor Statistics' (BLS) energy index rose 1.9 percent, largely due to rising gasoline prices. The cost of shelter rose even more. As we reported Wednesday, consumers paying rent and making mortgage payments are encountering rising costs. The BLS' shelter index jumped 3.0 percent last month.

Food costs were up last month, but only slightly. The cost of food prepared at home was roughly the same as the month before.

The CPI excluding both food and energy -- both highly volatile components -- rose only 0.1 percent in August, the smallest monthly increase since April. Consumers faced lower costs last month for apparel, medical care, communication, recreation, and personal care.

Producer prices fall

On Wednesday, BLS reported the Producer Price Index (PPI), a measure of costs facing producers and wholesalers, actually went down, falling 0.1 percent. The report shows the index was pulled lower by a decline in the cost of services.

The PPI is often viewed as an early indicator of future inflation, since higher costs paid by producers are normally passed on to consumers.

Amid this backdrop of stable prices, consumers' incomes rose slightly last month. The BLS reports real average hourly earnings for all employees increased 0.1 percent from July to August.

Incomes slowly rise

The agency attributes the gain to a 0.4-percent increase in average hourly earnings combined with a 0.2-percent increase in the CPI. Robert Frick, corporate economist at Navy Federal Credit Union, says consumers are getting ahead, but just barely.

"In the race between wage growth and inflation growth, wages edged ahead by a nose, with an annualized gain of 2.9 percent versus 2.7 percent for inflation, so real wage increases are now 0.2 percent, annualized," Frick told ConsumerAffairs. "That's scant comfort for American workers, but with the labor force continuing to tighten and inflation subdued, we may begin to see real wage growth climb to a percentage point or more in the next year, which would be typical - and welcome - for this late stage of an expansion."

Consumers may be taking home a little more money because they're working harder. The BLS report shows there was a 0.6 percent increase in the average workweek over the last 12 months.

The government reports the Consumer Price Index (CPI) rose 0.2 percent in August, the same as July, suggesting inflation is largely absent from most of the...

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Consumer spending and inflation both up in July

A government report suggests the economy is still growing

On the heels of the Conference Board's finding that consumer confidence is at an 18-year high, the government reports consumers increased their spending again in July.

The Commerce Department's Bureau of Economic Analysis (BEA) reports consumer spending rose 0.4 percent in July, matching June's increase. As a result, government economists say it put upward pressure on prices. The underlying inflation rate hit 2 percent in July, which is right where the Federal Reserve wants it.

Economists say the strong spending number suggests the economy is still expanding in the third quarter, after the government this week reported second quarter gross domestic product (GDP) rose 4.2 percent.

The numbers are likely to keep the Federal Reserve on its path of slowly raising interest rates, a policy recently criticized by President Trump as potentially harmful to the economy. But Fed Chairman Jerome Powell has defended the policy, saying the economy is growing to the point that it no longer needs cheap money.

Two headwinds

Economists say the economy is doing well in spite of two headwinds – the impact of the trade war and a slowdown in the housing market. In terms of the latter, Economist Joel Naroff says the slowdown may have a silver lining for people looking for a home.

“With housing sales ebbing, it should not be surprising that the surge in prices is fading as well,” Naroff wrote in his blog. “The S&P CoreLogic Case-Shiller national home price index rose modestly in June. Over the year, prices are still going up solidly, but it looks like the rate of gain may have peaked.”

But houses may be the only thing that isn't getting more expensive. The BEA data shows a rising trend in the personal consumption index (PCE) in July, double the increase from June.

The year-over-year increase of the core PCE price index, which excludes food costs, rose slightly from June and hit the Fed's 2 percent target for the second month this year.

Incomes lagging

Consumers may be spending more, but they aren't earning that much more. July's personal income rose 0.3 percent in July, slightly lower than June's gain. The savings rate declined from 6.8 percent to 6.7 percent.

That suggests much of the increase in July consumer spending was done with credit cards, which isn't a problem as long as consumers can pay it back.

In one troubling note, however, a new study by NerdWallet suggests consumers were having a difficult time paying for last year's holiday purchases. According to the study, credit card delinquencies totaled $23 billion in the first quarter of the year.

On the heels of the Conference Board's finding that consumer confidence is at an 18-year high, the government reports consumers increased their spending ag...

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Fed chairman defends interest rate policy

Jerome Powell says raising rates in growing economy is justified

Wall Street tends to obsess over whether the Federal Reserve will raise interest rates, but most consumers pay little attention. Rates are still low by any historical measure.

But lately President Trump has entered the conversation, criticizing Fed Chairman Jerome Powell, a man he appointed, for continuing to raise the federal funds rate, which is now fluctuating between 1.75 and 2 percent.

In a speech today at the Fed's retreat in Jackson Hole, Wyo., Powell suggested the policymakers would stick to their schedule of slowly raising the key interest rate. The reason, he said, is simple. The economy is strong and the Fed must walk a tight line between not snuffing out growth and not allowing an overheated economy to produce runaway inflation.

“Over the course of a long recovery, the U.S. economy has strengthened substantially,” Powell said. “The unemployment rate has declined steadily for almost nine years and, at 3.9 percent, is now near a 20-year low. Most people who want jobs can find them. Inflation has moved up and is now near the Federal Open Market Committee's (FOMC) objective of 2 percent after running generally below that level for six years.”

Good times should continue

Powell says the Fed expects those positive economic trends to continue, especially with the added stimulus of last December's big tax cut.

There are troubling issues facing the economy, however. Powell notes that wage growth has lagged behind the rest of the economy. He also expressed concern about the growing federal deficit, especially now that so many baby boomers are drawing Social Security and Medicare.

While it might seem odd that there is debate over whether a 2 percent interest rate is too high, it should be remembered that the key rate spent years at zero percent following the financial crisis. The Fed has raised the rate seven times since late 2015 and is projected to raise it again two more times this year.

Dissenting view

Not all of Powell's Fed colleagues are on board with his policy of continuing to boost the federal funds rate. In an interview with CNBC, St. Louis Fed President James Bullard said he thinks there should be no more rate hikes for the remainder of this year.

"I just don't see much inflation pressure,” Bullard said. “I'm an inflation hawk, but I just don't see that developing.”

Even so, Fed watchers fully expect another quarter-point hike in the federal funds rate at the September meeting.

Wall Street tends to obsess over whether the Federal Reserve will raise interest rates, but most consumers pay little attention. Rates are still low by any...

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Cost of living rose faster than incomes in July

A government report puts the annual inflation rate at 2.9 percent

The Consumer Price Index (CPI) rose 0.2 percent in July, putting the inflation rate for the last 12 months at 2.9 percent, slightly above the Federal Reserve's target.

July's increase in the cost of living was led by the cost of putting a roof over your head. The shelter index jumped 0.3 percent last month, accounting for nearly 60 percent of the seasonally adjusted monthly increase in the Bureau of Labor Statistics' all items index.

Food costs were up by a more modest amount last month while energy prices were sharply lower.

Consumers' paychecks were mostly the same last month. Real average hourly earnings for all employees were unchanged from June to July on a seasonally adjusted basis.

Most consumers aren't getting ahead

Robert Frick, corporate economist at Navy Federal Credit Union, says the inflation and income numbers are a mix of good news and bad news.

"The CPI numbers reflect a strong economy, and are in line with estimates," Frick told ConsumerAffairs. "Most of the pressure on prices is coming from robust consumer spending fueled by more Americans working, and from continued high consumer confidence. Unfortunately, the rate of inflation at 2.9 percent annually now slightly exceeds average wage gains, so real wages just ticked to negative."

That means workers' paychecks are not keeping up with inflation and could cause more consumers to fall behind financially.

"For Americans to benefit more from the expansion, real wage growth needs to be positive as it usually is in this phase of an expansion," Frick said. "Americans are being hit particularly hard in shelter costs, which are up 3.5 percent in the last year.

Record high home prices

In fact, even though home sales have slowed in recent months, the rise in home prices hasn't. Earlier this week, the National Association of Realtors (NAR) reported that the median sale price for an existing home in the second quarter hit a record high of $269,000, 5.3 percent more than in the second quarter of 2017.

"The unaffordable conditions in many of the largest metro areas – especially in the West – continues to be a growing concern for many middle-class households aspiring to buy a home," said Lawrence Yun, NAR's chief economist.

"Homebuilders, facing higher costs and labor shortages, are simply not producing enough affordable homes to satisfy demand. Local governments need to acknowledge this glaring issue and ease some of the zoning laws, permitting processes and regulations that are slowing construction."

But home prices and rents weren't the only consumer expenses moving higher last month. The government report shows consumers also paid more for new and used cars and trucks, airline fares, household furnishings, and recreation.

The Consumer Price Index (CPI) rose 0.2 percent in July, putting the inflation rate for the last 12 months at 2.9 percent, slightly above the Federal Reser...

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Fed keeps interest rates at current level

But the rate that influences mortgages crosses a key threshold

The Federal Reserve Open Market Committee concluded its regular meeting today, saying it was keeping the federal funds interest rate at its present level, between 1.75 percent and 2 percent.

The Fed has been raising the rate about three times a year since late 2016 after a decade of keeping it near zero percent. As the economy has recovered, the Fed has said it wants to “normalize” rates so they can be lowered again in the event of another recession.

In its statement following its meeting, the Fed said all indications show the labor market has continued to strengthen and economic activity has been rising at a strong rate. Other positives include strong increases in household spending and business investment.

Inflation remains near 2 percent

“On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on balance,” the Fed said in a statement.

A hike to the discount rate was not expected. Nonetheless, it is good news for consumers carrying credit card balances. Credit card rates usually move in tandem with the discount rate, as do banks' prime rates.

Meanwhile, mortgage rates may be moving higher, and it has nothing to do with the Federal Reserve. Mortgage rates are closely tied to the yield on the Treasury's 10-year bond, which rose to 3 percent today for the first time since June.

The yield rose when a report showed private payrolls increased more than expected last month. In digesting that news, bond traders pushed yields higher on the belief that the economy is heating up, raising the prospect of higher inflation.

The Federal Reserve Open Market Committee concluded its regular meeting today, saying it was keeping the federal funds interest rate at its present level,...

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Producer prices jump in June

Last month's increase was the largest in seven years

The government's Producer Price Index (PPI), a measure of inflation for goods and services at the wholesale level, rose 0.3 percent in June after rising 0.5 percent in May.

On a year-over-year basis, costs at the production level are up 3.5 percent, the highest since 2011. Price increases at the production level are usually passed on to consumers in the form of higher retail prices.

The Bureau of Labor Statistics reports most of the June increase came in the form of higher costs for services.

Prices for services rose 0.4 percent in June, the largest gain since a 0.5 percent rise in January. In June, half of the broad-based increase in the index for services took the form of trade services, where acute labor shortages have recently been reported.

Higher oil costs a main driver

Not surprisingly, more than 40 percent of the price increase in services can be traced to a 21.8 percent jump in fuels and lubricants. With the steady rise in oil prices over the last couple of months, refiners have faced higher costs in producing gasoline and diesel fuel.

But inflation wasn't limited to energy. The June Index shows rising prices for hospital outpatient care; health, beauty, and optical goods retailing; truck transportation of freight; automobiles and automobile parts retailing; and food retailing.

However, there were some notable price declines last month at the production level for apparel, footwear, and accessories retailing. The indexes for inpatient care and airline passenger services also decreased last month.

The producer prices for actual goods barely moved higher last month. The biggest increase came in the wholesale price of motor fuels. But that was largely offset by a large drop in the cost of food products, which fell 1.1 percent.

Costs at the production level usually get passed on to consumers, but not always. In competitive areas, like food and apparel, some wholesalers absorb small price increases if they think consumers will be unwilling or unable to pay them.

The government's Producer Price Index (PPI), a measure of inflation for goods and services at the wholesale level, rose 0.3 percent in June after rising 0....

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Inflation rises in May, but so do incomes

An economist says a Commerce Department report shows a still-healthy economy

Inflation ticked up in May, hitting the Federal Reserve's target of 2 percent for the first time since 2012. But in good news for consumers, a government report shows incomes rose even more.

The Commerce Department reports the personal consumption expenditures (PCE) price index rose 0.2 percent last month on the heels of a similar gain in April. In the last 12 months, the PCE price index – which is closely monitored by the Fed – is up 2.3 percent.

At the same time, consumers' incomes rose 0.4 percent in May, following a 0.2 percent gain in April. Wages were up 0.3 percent and the savings rate climbed to 3.2 percent.

Healthy expansion

Robert Frick, corporate economist with Navy Federal Credit Union, says the report paints a mostly upbeat picture.

“Nothing in the Personal Income and Outlays report this morning casts doubt on the health of the expansion, or on the Fed's plan to raise interest rates two more times this year,” Frick said in an email to ConsumerAffairs. “The good news for American workers is personal income increased as expected, so hope remains that wages— which have been eroded by inflation the last year — will rise above their current level and workers' purchasing power will increase.”

Frick says the rise in inflation is no cause for concern because it is still at a relatively low rate. Besides, it is only now hitting the level the Fed has decided is healthy for a growing economy.

Consumer spending was down

“That consumer expenditures dipped is also not a cause for concern,” Frick said. “That is a particularly volatile figure, and if accurate reflects that consumers are channeling more towards savings, which has been bumping at historically low levels.”

Consumers also spent less on their utility bills in May, since most areas of the country fell between the heating and air conditioning seasons last month. The savings likely contributed to the increase in savings.

The report may quell rising concern on Wall Street in recent days that a potential recession is looming. Stocks have fallen in the last week as traders have fretted over the narrowing gap between the yield on the Treasury's two-year and 10-year bonds, a traditional sign of an economic slowdown.

Inflation ticked up in May, hitting the Federal Reserve's target of 2 percent for the first time since 2012. But in good news for consumers, a government r...

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Consumer prices rise faster than incomes in May

The inflation rate for the last 12 months is 2.8 percent

In case you hadn't noticed, inflation is on the rise.

The government reports the Consumer Price Index (CPI) for May rose 0.2 percent on the heels of a similar increase in April. Over the last 12 months, the inflation rate is 2.8 percent, with prices rising faster than incomes.

Costs for gasoline and shelter rose fastest during the month. The gasoline index was up 1.7 percent, even as some other energy costs went down. The overall energy index gained 0.9 percent in May.

The cost of putting a roof over your head, both through rents and purchase prices, rose 0.3 percent last month. Medical costs were also higher, rising 0.2 percent. The index tracking food prices was unchanged.

Incomes don't keep up

Consumers' average hourly earnings posted a small increase in May, rising 0.1 percent. This was mostly due to an increase in the real hourly earnings, combined with an unchanged average work week.

The costs of some things went down in May, but most are not things consumers purchase every month. For example, household furnishings and used cars and trucks cost less in May. Prices for clothing, recreation, and personal care were the same as April.

While the food index was unchanged in May, food inflation over the last 12 months is running at 2.7 percent. Consumers got some relief last month when they purchased food to prepare at home -- including, meat, poultry, fish, and eggs, which dropped 0.7 percent.

Meanwhile, the index for nonalcoholic beverages rose 0.4 percent last month, with cereal and bakery products prices were essentially unchanged.

The latest inflation numbers come as the Federal Reserve's Open Market Committee begins a two-day meeting in Washington, at which it will consider whether to hike the discount rate again. The consensus among economists is a June rate hike is almost a certainty, and that the May inflation numbers have done nothing to change the equation.

In case you hadn't noticed, inflation is on the rise.The government reports the Consumer Price Index (CPI) for May rose 0.2 percent on the heels of a s...

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Federal Reserve officials not overly concerned about inflation

Minutes from the agency’s last meeting suggest a willingness to let prices rise for a while

Federal Reserve officials say that if inflation rises more than their target, that's not such a bad thing.

The release of the minutes from the latest Fed meeting, normally of interest only to Wall Street, has implications for consumers as well. The record suggests that the Fed isn't as eager to raise interest rates as most economists thought.

For years, Fed policymakers have set 2 percent as a desired inflation rate. That would help businesses expand and, theoretically at least, give workers modest wage increases.

But for years, there was very little inflation in the economy. In fact, in some cases there was deflation, when prices actually went down.

While that sounds like a good thing, it's not. Think back to the housing crisis, when the price of homes plunged, leaving millions of homeowners owing more than their homes were worth, and you begin to see the dangers of deflation.

Temporary inflation is okay

While there are beginning to be signs of inflation in the U.S. economy, Fed officials say that's fine, as long as it's temporary. Oil prices have surged over the last couple of months, for example, but they dropped sharply this week when the government unexpectedly reported a big increase in U.S. oil stockpiles.

Overall, the minutes reflect the belief among Fed officials that inflation will continue to rise, but that modestly rising prices – even if they exceed the 2 percent target – wouldn't hurt the economy.

The Fed's major tool for fighting inflation is its key discount interest rate – the rate it charges banks. Raising it tends to slow economic growth. Lowering it tends to speed it up. After being at zero percent for years, the Fed began slowly raising that rate in 2016 as the economy showed signs of improvement.

If the Fed raises that rate more slowly than expected, consumers won't see some of their interest rates rise as quickly. For example, the discount rate is tied almost directly to adjustable rate loans, auto loans, and credit card rates.

Currently, the discount rate fluctuates between 1.5 and 1.75 percent. Despite the “dovish” sentiment expressed by the Fed officials, the policymakers appear on track to raise their discount rate again in June. The real question is how many more times they do it in the second half of the year.

Federal Reserve officials say that if inflation rises more than their target, that's not such a bad thing.The release of the minutes from the latest Fe...

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Inflation warning signs are beginning to appear

Higher oil prices and economic growth may add up to higher prices for consumers

Inflation hasn't been a factor in the U.S. economy since the financial crisis, but that could soon change.

Two indicators – oil prices and freight transportation – suggest the economy is heating up, and that's usually followed by rising prices.

Oil prices, which have been relatively low since 2014, have surged in the last few weeks. Prices have risen to over $80 a barrel this week, an increase of nearly 48 percent in the last 12 months. UBS, the Swiss investment bank, is warning that the price of oil could go back to $100 a barrel.

Should that happen, consumers would not only face higher gasoline prices; the price of just about everything would go up. UBS warns that a recession can be triggered when prices rise too quickly.

"We should take seriously the possibility of an oil price spike, not least because oil spikes preceded five of the last six recessions in the U.S," UBS economist said in a research note.

Tight shipping market

Economists often find early signs of inflation in the freight transportation industry. And right now, the trucking industry is flashing a warning.

DAT, a freight marketplace, matches trucking companies with loads of freight and has been a reliable indicator of supply and demand. Right now, DAT reports the market is extremely tight.

In the spot market, where vendors look for drivers to move their products, demand has doubled from April 2017 to April 2018. With capacity pressure building in the marketplace, it may only be a matter of time before it will cost more to ship products, which could raise the price of just about everything.

Inflation watch

Economist Joel Naroff, of Naroff Economic Advisors, warned of an inflationary threat last December when Congress slashed tax rates, saying it would further stimulate an already growing economy. Today, he hasn't seen solid evidence that firms are raising prices in the face of increased demand or higher energy prices.

“But backlogs are growing and delivery times are lengthening greatly,” Naroff told ConsumerAffairs. “That is, in effect, a price hike.”

If the trend continues, consumers might soon see higher prices at the supermarket, as well as when they shop online. Air fares might also rise to cover higher fuel costs.

Inflation hasn't been a factor in the U.S. economy since the financial crisis, but that could soon change.Two indicators – oil prices and freight trans...

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Consumer prices rise less than expected in April

Besides the jump in gas prices, inflation was tame last month

Consumer prices rose a less-than-expected 0.2 percent in April, with gasoline, housing, and food contributing most to the increase.

The Bureau of Labor Statistics puts the Consumer Price Index (CPI) at 2.5 percent over the last 12 months, within the target range set by the Federal Reserve.

Robert Frick, corporate economist with Navy Federal Credit Union, says the core CPI for April -- which strips out food and energy costs -- came in at an even lower 0.1 percent, good news for both consumers and investors.

"With inflation rising slowly, unemployment still falling at a healthy rate, and the Fed unlikely to hit the breaks from inflation fears, the economy still has plenty of room to run," Frick told ConsumerAffairs.

Consumers paid more to fill their tanks last month

For consumers, gasoline was one of the most expensive items in April. Because of the rise in oil prices, which broke $70 a barrel last week, consumers are paying significantly more for fuel than at this time last year. In April, gasoline prices jumped 3.0 percent, even as other energy costs went down.

Food costs were also higher, rising 0.3 percent. But in April, the cost of dining out actually rose slower than the cost of eating at home.

The cost of putting a roof over your head also rose in April. The CPI shelter index gained 0.3 percent, followed by price increases for home furnishings, medical care, and personal care.

Among the categories where prices declined were airfares, new and used cars and trucks, and recreation.

Wall Street cheered the news because the tame inflation number makes the Fed less likely to aggressively raise its discount rate. That not only helps the stock market, consumers also benefit when they add to their credit card balance, finance a car, or take out an adjustable rate mortgage.

Consumer prices rose a less-than-expected 0.2 percent in April, with gasoline, housing, and food contributing most to the increase.The Bureau of Labor...

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Inflation gauge shows decline in March

Falling gasoline prices offset rising costs for food, shelter, and healthcare

The government's gauge of consumer prices fell in March, pulled lower by an unexpected decline in gasoline prices.

The Consumer Price Index (CPI) fell 0.1 percent after rising 0.2 percent in February. It was the first drop in prices in almost a year.

That's not to say everything was cheaper last month. The costs of food, shelter, and medical care were all higher in March, but they were outweighed in the CPI by a 4.9 percent drop in prices at the pump.

When you strip out food and energy from the March index, prices were up a modest 0.2 percent, in line with estimates. Over the last 12 months, inflation is running at a rate of 2.4 percent.

That's the largest 12-month increase since March 2017 and higher than the 1.6 percent average annual rate over the past 10 years. Energy prices were up 7.0 percent over the past 12 months, with gasoline up 11 percent.

Rising food costs

Overall food costs rose 1.3 percent last month, with prices for meats, poultry, fish, and eggs rising 0.8 percent. Prices of cereals and bakery products rose 0.4 percent. The cost of dairy products was up 0.3 percent after being up the same amount in February.

The Bureau of Labor Statistics report shows prices for new cars and trucks showed no increase in March, while prices of used vehicles fell 0.3 percent. Prices consumers paid for clothing went down 0.6 percent.

Overall prices were a little softer than most economists predicted. The consensus estimate was for the CPI to match February's level. However, prices could soon resume their upward movement.

On Tuesday the Producer Price Index (PPI), a measure of inflation at the wholesale level, ticked up 0.3 percent, suggesting building price pressure among producers. While those higher prices normally get passed along to consumers, economist Joel Naroff, of Naroff Economic Advisers, says that it's not clear they will in this case.

The government's gauge of consumer prices fell in March, pulled lower by an unexpected decline in gasoline prices.The Consumer Price Index (CPI) fell 0...

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Cost of living slows in February

Gasoline and rents kept inflation in check

The cost of living rose in February, but not as much as in January. Lower gasoline prices and moderating rents helped keep inflation in check.

The Labor Department reports the Consumer Price Index (CPI), a measure of the cost of goods and services at the retail level, rose a modest .02 percent last month, slowing from .05 percent in January.

Over the last 12 months, the nation's inflation rate sits at 2.2 percent, just above the Federal Reserve's inflation target of 2.0 percent.

The cost of housing, clothing, and car insurance were all up for the month, while food costs remained the same as in January. In fact, the cost of food prepared at home actually went down last month.

'No cause for alarm'

"Inflation growth moved back into 'no cause for alarm' territory with the February CPI report," Robert Frick, Navy Federal Credit Union’s corporate economist, told ConsumerAffairs.

Frick said many analysts were bracing for bad news based on the big increase in the January CPI. But the February numbers were largely reassuring.

"We saw that auto prices were down significantly, which shows that the impact of the hurricanes last year is finally wearing off, and the trend toward lower vehicle prices is finally kicking in, as predicted," Frick said.

With millions of cars coming off lease, together with slightly lower demand after recent record years, Frick predicts smart car shoppers will find bargains for the rest of the year, and that should offset any increase in car loan rates that have been edging up lately.

Oversized effect of gas prices

But the February numbers may have been influenced by an unusual drop in gasoline prices. A volatile crude oil market and robust refining activity sent retail gasoline prices down nearly a full percent in February. Those prices have largely rebounded this month.

But in some good news for consumers, Frick notes that the tame inflation numbers may persuade the Fed that it doesn't need to boost its discount rate more than three times this year.

Since credit card companies base their interest rates on the Fed's discount rate, that means credit card rates may not rise as much as expected in 2018.

The cost of living rose in February, but not as much as in January. Lower gasoline prices and moderating rents helped keep inflation in check.The Labor...

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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...

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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...

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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...

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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...

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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...

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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...

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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...

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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 ...

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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...

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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...

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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...

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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 ...

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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 ...

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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...

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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 ...

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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 ...

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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...

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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...

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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...

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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...

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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...

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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...

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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...

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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...

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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...

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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%....

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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...

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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...

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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...

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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...

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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...

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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 ...

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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...

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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...

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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%...

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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...

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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...

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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 ...

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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...

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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...

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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...

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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% ...

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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...

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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...

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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...

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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. ...

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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...

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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)...

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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 ...

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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...

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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...

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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 ...

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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...

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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...

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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 we