{"id":1501,"date":"2019-04-11T10:02:01","date_gmt":"2019-04-11T14:02:01","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1501"},"modified":"2019-04-11T10:02:01","modified_gmt":"2019-04-11T14:02:01","slug":"march-wholesale-prices-and-weekly-jobless-claims","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1501","title":{"rendered":"March Wholesale Prices and Weekly Jobless Claims"},"content":{"rendered":"\n

KEY DATA:<\/strong> PPI: +0.6%; Energy: +5.6%;\nPersonal Consumption Ex-Food and Energy: +0.4%\/ Claims: -8,000 <\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cProducer costs are rising a little faster,\nbut not enough to cause inflation to accelerate significantly.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  With the administration screaming for a rate\ncut, inflation pressures have become even critical to the discussion and the\nFed.  Producer prices surged in March,\nbut most of that came from a jump in energy costs.   Food prices rebounded, but that was after\nmuch larger declines in the previous two months.<\/em><\/strong>  Indeed, over the year, finished consumer food\ncosts are up less than one percent. \nTransportation and warehousing costs were off sharply despite the rise\nin energy prices.  That could change.  Services prices were also up moderately,\nmeaning that there was some pressure on wholesale costs.  The measure I like to watch is the index for\npersonal consumption excluding food and energy. \nIt rose fairly solidly in March<\/em><\/strong> and was up 2.4% from March\n2018.  While the pathway from wholesale\nto retail prices is hardly straight and often a dead end, if wholesale prices\nof core consumer goods keep rising moderately, some of that is likely to bleed\nin retail prices.  That would point to a\nslow acceleration in consumer inflation.<\/em><\/strong><\/p>\n\n\n\n

New claims for unemployment insurance broke below\nthe magical 200,000 number last week to hit the lowest level since October\n1969.<\/em><\/strong>\nThat was near the peak in the Viet Nam War when not having a job often meant\nwinding up in the military.  And to\nreally put that number in perspective, the labor force was one-half the size\nthat it is currently.   In other words,\nthe labor market remains incredibly tight. \n<\/em><\/strong>MARKETS AND FED POLICY IMPLICATIONS:<\/strong>The\nrecent consumer and producer price data don\u2019t point to any major acceleration\nor deceleration in inflation.  Therefore,\nthe Fed will feel no economic pressure to do anything.  While that may be good news for Chair\nPowell\u2019s rate policy, it further exposes the Fed to the slings and arrows of\noutrageous politicians.<\/em><\/strong>  Apparently,\napplying political pressure on the Fed has become an acceptable form of\nbehavior.  That includes not just\nspeaking out about what Fed policy should be but also potentially nominating\npeople who are perceived to be being willing to impose political beliefs on the\nFed.  Keep in mind; if those currently\npoliticizing Fed policy get away with it now, it opens the door for all future\npoliticians to politicize the Fed.  And\nif they are successful, the markets will not be able to determine the true\npurpose of Fed policy, reducing its credibility and effectiveness.<\/em><\/strong>  So I ask you, do you really want politicians\nrunning both monetary and fiscal policy? \n<\/em><\/strong>We have seen how well Washington does with budgets and fiscal policy;\ndo we really want that same approach to determine interest rates and\nliquidity?  I understand that investors\nand politicians all want the lowest rates and the fastest growth, regardless of\nthe longer-term implications.  But that\nis not why we have a Fed.  Its purpose is\nnot to create the maximum growth rate for the current group of politicians to\nrun on but to look out over the future and minimize the ups and downs so longer-run\ngrowth can be maximized.  If that means\nraising rates and reducing balance sheets, so be it. \n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: PPI: +0.6%; Energy: +5.6%; Personal Consumption Ex-Food and Energy: +0.4%\/ Claims: -8,000 IN A NUTSHELL:  \u201cProducer costs are rising a little faster, but not enough to cause inflation to accelerate significantly.\u201d WHAT IT MEANS:  With the administration screaming for a rate cut, inflation pressures have become even critical to the discussion and the … Continue reading March Wholesale Prices and Weekly Jobless Claims<\/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-1501","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1501","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=1501"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1501\/revisions"}],"predecessor-version":[{"id":1502,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1501\/revisions\/1502"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1501"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1501"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1501"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}