If you’re looking for a “reflation” courtesy of the Federal Reserve’s massive money-pumping efforts, you’re going to be hardpressed to find it in the latest economic figures. Let’s get straight to the numbers …
* The Producer Price Index dropped 1.2% in the month of March, compared with expectations for an unchanged reading and a February rise of 0.1%. The year-over-year PPI is now running at MINUS 3.5%, much weaker than the -1.3% reading in February and below expectations for a reading of -2.2%. This is the deepest rate of PPI deflation since January 1950. Meanwhile, the “core” PPI was unchanged last month, compared with a gain of 0.2% in February and expectations for a 0.1% rise. The YOY core PPI is still higher — up 3.8% as of March compared with a 4% gain in February.
* More importantly, retail sales tanked 1.1% in March. That compared with a gain of 0.3% in February and failed to match the 0.3% gain that was expected. If you strip out autos, you get a 0.9% decline in sales, compared with a 1% gain a month prior. And if you want to strip out both autos and gas, you get a -0.8% reading, the biggest drop since December.
Bond prices are off their intraday lows on the news, while stock futures have given up some of their pre-number gains.
{ 5 comments… read them below or add one }
Hmmm, deflation. I’m not seeing it in prices where I live. My health insurance premiums increased 40% in January over 2008.
Grocery prices have inched up. Even groceries at Wal-Mart have gone up. Wal-Mart held the line somewhat last summer when fuel prices skyrocketed, but now even they are moving prices up.
Gasoline, while down from $4.00 a gallon when crude peaked at $147 a barrel, seems high with crude hovering around $50 and regular unleaded up around $2.00 a gallon.
Banks are increasing fees and service charges. Even home prices and rents have held steady.
Deflation; what deflation?
Deflation in cheaply made Chinese goods that most of us can’t afford without credit.
My utilities are up 30% year over year, even though the cost of the utility itself has dropped.
My insurance is up, my unemployment insurance is up, my taxes are up, my regulatory bullsh*t is up.
But the cost of a tv is down. Yeah! We are saved!
Our customers are continually pressuring us to lower the price on our products. Everyone in our company has taken a cut in pay. Most employees are on a 36-hour workweek and have had their company benefits cut. We are also putting the same pressure on our vendors to lower their costs. I feel like we are in a “pressure cooker”, when the lid explodes there will be hyperinflation.
Mike,
A thought: The same people that are now saying this recession is over are the same people who didn’t see it coming. Go figure. I agree with the “what deflation.” I noticed prices in the grocery store have gone up. Are the grocery stores anticipating inflation and trying to get a jump on it? Or are the vendors/stores over compensating for the reduction in sales by making the rest of us pay more? I think we have both inflation and deflation depending at what you are buying or selling or importing and/or exporting.
I agree with Roland and Chris. What deflation? Prices are going up for consumers not down. Try grocery shopping and check the utility bills. I really don’t want to make myself into another hate obama maniac, but did anyone see Larry Summers on Bloomberg today. He was disgustingly deceptive and assumes us to be stupid enough to believe his bull. He insults my intelligence,but signing on with Obama requires him to lie without regret . He kows he is conning us and still can do it with a straight face. Mike, your issues are right on and your radar is honing in on massive ,underlying, economic inconsistencies. But politics is ruling the agenda, not truth, not academic integrity or even right and wrong. Politics overrules all. And David Axlerod, Ron Immanuel, Tim Geithner and Larry Summers along with Obama are leading the world’s grandest propaganda scheme since 1930’s Germany. I reserve judgement on Bernanke since He gives the appearance of academic sincerety. But the others are liars, thieves, and typical lying politicians. May God save us from our very human desire to be led like sheep during times of great crisis and fear. While we go broke prior to our retirement, you can bet their retirement funds look rosier than ever.
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