{"id":1474,"date":"2019-03-13T12:24:27","date_gmt":"2019-03-13T16:24:27","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1474"},"modified":"2019-03-13T12:24:27","modified_gmt":"2019-03-13T16:24:27","slug":"february-wholesale-prices-and-january-durable-goods-orders-and-construction-spending","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1474","title":{"rendered":"February Wholesale Prices and January Durable Goods Orders and Construction Spending"},"content":{"rendered":"\n

KEY DATA:<\/strong> PPI: +0.1%; Ex-Food and\nEnergy: +0.1%\/ Orders: +0.4%; Ex-Aircraft: -0.6%; Capital Spending: +0.8%\/\nConstruction: +1.3%; Public: +4.9%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cDespite some decent headline numbers, the\ndata still indicate that growth is moderating while inflation remains tame.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  The Fed is trying to read the economic tea\nleaves before deciding on what to do next and one thing they are watching\ncarefully is inflation.  Well, they can\nprobably start focusing on something else. \nWholesale prices went largely nowhere in February.<\/em><\/strong>  Energy costs did jump, but they were largely\noffset by a decline in food prices. \nExcluding those categories, there were few places where prices rose with\nany gusto.  There were some large\nincreases in chemical products, electronic components, appliances and cable\nservices, of course, but otherwise, producer costs we well contained.  As for the pipeline, it is largely empty.<\/p>\n\n\n\n

Will demand pick up sharply enough to move the\nneedle on inflation?  I don\u2019t think\nso.  Durable goods orders rose moderately\nin January but that was due to a surge in aircraft demand.<\/em><\/strong>  Excluding planes, demand for big-ticket items\nfell sharply.  The measure that most closely\nmirrors business capital spending did jump. \nBut that came after very large declines in new orders the previous two\nmonths.<\/em><\/strong>  Even with that increase,\ncapital spending was up only 3.1% from the January 2018 level.  Since these data are not adjusted for prices,\nyou can see that orders are no soaring.<\/p>\n\n\n\n

Despite the terrible weather, construction spending\njumped in January.  But again, you have\nto put that into perspective.  There were\nsignificant decline in both December and November<\/em><\/strong> and the level of\nconstruction was still below the October pace. \nIn addition, just about all the gain came from a surge in public\nconstruction as private sector activity rose minimally.  <\/em><\/strong>MARKETS AND FED POLICY IMPLICATIONS:<\/strong>It\u2019s\nnice to get some decent improvement in the economic indicators, but given how\nsoft the previous data were, you cannot read too much into those increases.<\/em><\/strong>The rise in retail sales in January,\nreported earlier this week, tells us only that we ended the year on a major\ndown beat.<\/em><\/strong>The December number was revised\nsharply lower and that may mean fourth quarter growth was slower than initially\nestimated.  <\/em><\/strong>The revision will\ncome out in two weeks and could show growth closer to 2% and it\nlooks like first quarter growth could be well below 2%.  <\/em><\/strong>Indeed, many forecasters have it\ncloser to 1%, a pace that as of now cannot be ruled out.  In other words, the economy lost steam at the end\nof last year <\/em><\/strong>and the while the fire in the engine has not gone out, it\nis not roaring either. \nSince inflation is also showing no signs of becoming a problem anytime\nsoon, the Fed members will have little to do at their meetings for quite a\nwhile.<\/em><\/strong>  Washington in the spring\nis very pleasant, so I suspect they will be taking lots of walks, especially if\nthe cherry blossoms are in bloom.  As\nfor investors, they have little to cheer about and lots to worry about.  There is Brexit and trade, Boeing and\nconsumer lethargy.  March Madness cannot\nbe coming at a better time <\/em><\/strong>as there are now lots of game watching to be\ndone over the next few weeks.  Since my\ntwo alma maters, Stony Brook and Brown, didn\u2019t make the tournament (as usual),\nI am stuck rooting only for local Philadelphia teams.  Of course with Villanova being one of them,\nthere is always hope. \n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: PPI: +0.1%; Ex-Food and Energy: +0.1%\/ Orders: +0.4%; Ex-Aircraft: -0.6%; Capital Spending: +0.8%\/ Construction: +1.3%; Public: +4.9% IN A NUTSHELL:  \u201cDespite some decent headline numbers, the data still indicate that growth is moderating while inflation remains tame.\u201d WHAT IT MEANS:  The Fed is trying to read the economic tea leaves before deciding on … Continue reading February Wholesale Prices and January Durable Goods Orders and Construction Spending<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1474","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1474","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1474"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1474\/revisions"}],"predecessor-version":[{"id":1475,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1474\/revisions\/1475"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1474"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1474"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1474"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}