{"id":1594,"date":"2019-09-12T12:31:20","date_gmt":"2019-09-12T16:31:20","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1594"},"modified":"2019-09-12T12:31:20","modified_gmt":"2019-09-12T16:31:20","slug":"august-consumer-prices-and-real-earnings-and-weekly-jobless-claims","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1594","title":{"rendered":"August Consumer Prices and Real Earnings and Weekly Jobless Claims"},"content":{"rendered":"\n

KEY DATA:<\/strong> CPI: +0.1%; Over-Year:\n+1.7%; Ex-Food and Energy: +0.3%; Over-Year: +2.4%\/ Real Earnings: +0.4%;\nOver-Year: +1.5%\/ Claims: -15,000<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cWhether or not inflation is low depends upon\nthe measure you use.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  Is inflation tame?  The answer is, as it usually is with economic\ndata, it depends.  Today\u2019s inflation report was the\nAugust Consumer Price Index.  The rise\nwas modest, as long as you include food and energy<\/em><\/strong>, which tend to\nbounce around.  Indeed, energy\ncosts fell sharply while food costs were flat. \nExcluding those components, though, consumer prices were up fairly\nsharply. <\/em><\/strong>What is driving that increase? \nIn August, it was a number of factors. \nIf you eat out, your tab keeps rising faster than most other goods.  If you are feeding a cake, cupcake and cookie\nhabit, like me, you are paying more for those as well.  Medical expenses are once again soaring. <\/em><\/strong> Men\u2019s clothing prices are jumping as are\nwomen\u2019s footwear.  Information expenses\nhave risen solidly three of the past four months.  Shelter costs are seemingly always rising<\/em><\/strong>\nand if you travel, not only are airplanes uncomfortable but they are more\nexpensive.  And used vehicle prices are\nsoaring.  In other words, there are lots\nof goods and services whose costs are moving upward<\/em><\/strong>, at least according\nto the Consumer Price Index.<\/p>\n\n\n\n

One of the problems with rising inflation is that it\neats into consumer spending power.  At\nleast in August, the modest top line increase allowed inflation-adjusted\nearnings to surge. <\/em><\/strong> Both hourly wages and hours\nworked were up nicely and the inflation offset was limited.  That led to a strong gain in consumer\nspending power.  That said, the\n1.5% rise over the year is nothing great and makes it hard to see how consumers\ncan continue to keep the economy growing strongly without some help from other\nsectors.<\/em><\/strong><\/p>\n\n\n\n

One bit of really good news was the sharp decline in\nweekly jobless claims.  It is near its\nhistoric low level.<\/em><\/strong>  That shows that the\nlabor market remains tight<\/em><\/strong>, which should limit the deceleration in wage\ngains.  MARKETS AND FED\nPOLICY IMPLICATIONS:<\/strong>  The Fed is\nalways mentioning that inflation remains below target, though they continuously\nstate that it will eventually get back there. \nThe Fed uses the Personal Consumption Expenditure deflator as its\nbenchmark and indeed, when you exclude the volatile food and energy components,\ninflation is below the 2% target.  But\nthat is not the case with other measures. \n<\/em><\/strong>The core Consumer Price Index, which excludes food and energy,\nis now rising faster than it has in eleven years.  There are a number of other indices that use\nthe CPI but try to factor out volatile elements.  The Cleveland Fed\u2019s median and trimmed mean\nCPIs and the Atlanta Fed\u2019s Sticky Price CPI are also up at their highest pace\nthis decade. <\/em><\/strong>In\nother words, there are some reasons to believe inflation is not nearly as tame\nas Mr. Powell thinks.<\/em><\/strong>  We will\nget the next reading of the PCE price index in two weeks and that is likely to\nremain below target.  What will be\nimportant is how much the core index rises and how close it gets to 2%.  The July increase over the year was only\n1.6%, so it still has a way to go.  As\nfor the markets, it is still all about trade and when hopes rise that the war\nwill not go nuclear, markets do well. \nWhen threats of a greater war are raised, the fallout shelter becomes a\nfavorite place to hide.<\/em><\/strong>Right\nnow, the news is positive.  If you know\nwhat it will be tomorrow, please tell me so we both know.  <\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: CPI: +0.1%; Over-Year: +1.7%; Ex-Food and Energy: +0.3%; Over-Year: +2.4%\/ Real Earnings: +0.4%; Over-Year: +1.5%\/ Claims: -15,000 IN A NUTSHELL:  \u201cWhether or not inflation is low depends upon the measure you use.\u201d WHAT IT MEANS:  Is inflation tame?  The answer is, as it usually is with economic data, it depends.  Today\u2019s inflation report … Continue reading August Consumer Prices and Real Earnings 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":[1],"tags":[],"class_list":["post-1594","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1594","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=1594"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1594\/revisions"}],"predecessor-version":[{"id":1595,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1594\/revisions\/1595"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1594"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1594"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1594"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}