{"id":1610,"date":"2019-10-10T15:41:52","date_gmt":"2019-10-10T19:41:52","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1610"},"modified":"2019-10-10T15:41:52","modified_gmt":"2019-10-10T19:41:52","slug":"september-consumer-prices-inflation-adjusted-wages-and-weekly-jobless-claims","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1610","title":{"rendered":"September Consumer Prices, Inflation-Adjusted Wages and Weekly Jobless Claims"},"content":{"rendered":"\n

KEY DATA:<\/strong>  CPI: 0%; Over-Year: 1.7%; Ex-Food and Energy:\n+0.1%; Over-Year: +2.4%\/ Real Wages: 0%; Over-Year: +1.2%\/ Claims: -10,000<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cLimited inflation pressure gives the Fed some\nroom if the divided committee can manage to come up with an agreement.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  Clearly, the economy is not growing too fast\nfor firms to keep up with demand. \nOtherwise we wouldn\u2019t have consumer costs rising so modestly.  The Consumer Price Index was flat in\nSeptember and removing the volatile food and energy components left us with\nonly a minimal gain.<\/em><\/strong>  Food prices\nbroke a string of three consecutive flat months with a limited 0.1%\nincrease.  Not much pressure there,\nunless you are eating out or, as in my case, you like cakes and cupcakes.  They are up way too much since September 2018\nand the cost of feeding my bakery sweet tooth is getting out of hand.  Energy prices, meanwhile, fell sharply.  About the only places where inflation is an\nissue are medical care and shelter.  So,\nas long as you don\u2019t have to see a doctor or live in a house or apartment, there\nis basically no inflation.  <\/em><\/strong><\/p>\n\n\n\n

With overall inflation flat and wages going nowhere,\nit was hardly a surprise that inflation-adjusted, or real wages were also flat.<\/em><\/strong>  The over-the-year rise keeps moderating and\nthat is not good news for future consumer demand.<\/em><\/strong>  Worse, hours worked have declined over the\npast year and that has meant a slowdown in weekly earnings growth.  In other words, household spending power is not\nrising fast enough to support strong consumption unless families dip into\nsavings and it is not clear they have any inclination to do that.<\/em><\/strong><\/p>\n\n\n\n

The sharp drop in jobless claims last week\nreinforces the view that the slow job growth is due more to a lack of supply\nthan a faltering in demand.  <\/em><\/strong><\/p>\n\n\n\n

MARKETS AND\nFED POLICY IMPLICATIONS:<\/strong> No inflation really does little to change\nthe feelings of either investors or Fed members.  For investors, it is all about trade and\ntariffs.<\/em><\/strong>  Indeed, the idea that a\n\u201cmore puff than pastry\u201d agreement, something I have argued was the most likely\nagreement if the two sides ever manage one, is now considered to be the last\ngreat hope for the markets.  It is\nbecoming quite clear that a major trade agreement with China is nowhere in\nsight if it is even possible.<\/em><\/strong>  Signs\nof progress (however that is defined) or backpedaling lead to major ups and\ndowns in the markets.  Since that yo-yo\neffect has been going on for quite some time, I can repeat another of my\nfavorite sayings: The markets may be efficient but that hardly means they are\nrational.  Right now, investors are simply\ngrasping for any hope that a total meltdown doesn\u2019t happen.  <\/em><\/strong>As for the Fed, the data do not\nsupport a rate cut and they haven\u2019t for months, so I don\u2019t know why I even\ndiscuss that.  The minutes from the last FOMC\nmeeting indicate that the only thing driving rate cuts is tariffs.  But the Committee is extremely divided <\/em><\/strong>with\njust about every view, from sharp reductions to nothing being represented.  Does Jay Powell have an insurrection on his\nhands?  I don\u2019t think we can go that far\njust yet, but making additional moves is becoming harder and harder. <\/em><\/strong> I expect no more cuts this year, despite what\nthe markets think.  <\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  CPI: 0%; Over-Year: 1.7%; Ex-Food and Energy: +0.1%; Over-Year: +2.4%\/ Real Wages: 0%; Over-Year: +1.2%\/ Claims: -10,000 IN A NUTSHELL:  \u201cLimited inflation pressure gives the Fed some room if the divided committee can manage to come up with an agreement.\u201d WHAT IT MEANS:  Clearly, the economy is not growing too fast for firms … Continue reading September Consumer Prices, Inflation-Adjusted Wages 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-1610","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1610","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=1610"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1610\/revisions"}],"predecessor-version":[{"id":1611,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1610\/revisions\/1611"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1610"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1610"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1610"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}