Archive for the ‘Core CPI’ Category
Unemployment Claims: Back To Reality?
In the week ending February 16, the advance figure for seasonally adjusted initial claims was 362,000, an increase of 20,000 from the previous week’s revised figure of 342,000. The 4-week moving average was 360,750, an increase of 8,000 from the previous week’s revised average of 352,750.
The advance number of actual initial claims under state programs, unadjusted, totaled 346,428 in the week ending February 16, a decrease of -14,758 from the previous week. There were 346,659 initial claims in the comparable week in 2012.
So we have a reasonable actual .vs. “adjusted” number — heh, look at that!
What’s the big table look like?
Interesting — the EUC rolloff continues, now under 2 million total. This is very significant, but note carefully that there is yet to be any evidence that these “newly not-drawing-UE folks” are getting jobs. That, in turn, should be expected to show up in retail spending over the next few months, and not in a good way either.
But this week, which was the first post the February employment report, did show a nearly 77,000 drop in regular claim participants.
Call it a mixed bag with a mild positive bias for today.
CPI (Consumer Price Index): Some Like It Hot(ter)
The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.6 percent before seasonal adjustment.
The index for all items less food and energy increased 0.3 percent in January. This increase offset another decline in the gasoline index and resulted in the seasonally adjusted all items index being unchanged, as it was last month. Increases in the indexes for shelter and apparel accounted for much of the increase in the index for all items less food and energy, with advances in the indexes for recreation, medical care, and airline fares also contributing.
That woud be a 3.66% annualized increase in core, which ought to perk up your ears.
Let’s have a look inside at annualized increases, as we did with the PPI.
The first thing that stands out is that the “target” is “achieved” at a 1.9% core rate annualized. But….
Shelter, particularly rent, is up closer to 3% while hospital services are up 4.7% and transportation is also up 3%, with insurance up nearly 5%. The latter is a big perverse effect of QE, in that insurance companies make a fair bit of their money off fixed-income investments. That’s dead, of course.
If you like to eat, eat lamb. It’s down 15% on the year.
Don’t eat apples. They’re up 11%. Fruits in general are up 4.6%, and vegetables 3.4%.
Electronics continued their dive, with TVs off 17% on the year. Americanus Boobus has his idiot box for another year at an ever-lower price.
Don’t go to college unless you want a textbook shoved up your butt. Their price is up 8% on the year, and the best part of it is that your professor is probably getting a piece of it. That smile on his face? It’s because he’s assaulting you coming and going.
Computers continue their inexorable decline, as do other consumer information items (e.g. cell phones, tablets, etc.) Bye-bye margins.
And don’t start this crap about how “health costs” have “leveled out.” The hell they have. Health insurance is up 8.6% annualized, damned close to the 9% escalation that has been maintained historically over the last 30 years. If you believe that it comprises only 0.658% of the total amount of money you spend as a consumer, which is what the government claims, then you’re dumber than a box of rocks.
Can’t afford a car and need to ride the bus? That’s up considerably more than the so-called “inflation index.” Oh, and that’s a laugable 0.264% of your budget too. Really, for those who actually use it?
Those are the lowlights — enjoy.
Philly Fed: Now You’re F*ed
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a reading ]5.8 in January to ]12.5 this month (see Chart). The demand for manufactured goods also showed slight declines this month: The new orders index declined from a reading of ]4.3 in January to ]7.8 in February. Despite negative readings for general activity and new orders, the shipments index showed improvement: The index remained positive and edged slightly higher to 2.4. The percentage of firms reporting increased shipments (25 percent) was slightly greater than the percentage reporting declines (22 percent).
That’s not good.
There was a small indication of stability — the number of employees basically was flat and the workweek only declined slightly. But….. there is no unfilled order backlog, new orders are declining faster, inventories are drawn down materially below the flat-line and the price paid/received spread is still the wrong way.
These indices have been screaming recession incoming for the last six months. That’s the average lead time — which means it’s here and now, and there are no policy steps remaining available to counteract it as Congress, instead of rationalizing fiscal policy three years ago has instead chosen to “support” phantom and fraudulent “demand” with deficit spending.
Buckle up and keep in mind the average declines in the market during a serious (and severe) recession when there are no effective policy tools available to attempt to counteract it.
Inflation by any other name – Rising rents have pushed up the CPI to highest monthly change in three years. Shifting the Fed bailouts onto the working class and poor.
The Consumer Price Index (CPI) attempts to measure the change in price for a basket of American goods and services. I say attempts because measures like the “owner’s equivalent of rent” are simply an estimation as to what a home owner’s place would rent for. In the early 2000s with home prices surging, it missed a glaring trend that a place that would rent for say $1,000 was now costing the home owner $2,000. This was missed and the data understated this important fact. Since housing is the biggest line item for Americans and the CPI is heavily relied upon, many just assumed overall inflation was “healthy” during this time. Today we are facing a situation very similar to stagflation where unemployment remains elevated while the standard of living decreases. Those that claim inflation is nonexistent or healthy point to the CPI but ignore the headwinds that are starting to emerge. The last two months have seen the biggest increase in the CPI since the middle of 2009.
The CPI is now being impacted by rising rents
There is an odd situation occurring in the US right now. The Federal Reserve essentially owns the mortgage market and has caused interest rates to drop to record lows. This was all in part to conduct a shadow bailout of the too big to fail banking industry but the repercussions are being seen in other areas where the quality of life for most Americans is being squeezed. Just take a look at rents:
Rental rates have gone up strongly since 2008 at a fragile time when household incomes have fallen. So you ask, how is this feasible? First the housing market is now controlled by the Fed and banks while inventory is incredibly low. Many homes are being purchased by Wall Street investors and are put back on the market as rentals for higher prices. The lack of supply and demands of a growing population has simply pushed prices up. Ironically the same financial system that turned a stable American item like housing into a casino are now back at it profiting hand over fist thanks to the Fed and generous rewriting of accounting rules.
It is important to always remember the most important fact and that is household income is stagnant. We are also seeing continued inflation in food and energy:
Yet income remains the same. This is the slow eroding process of losing the standard of living in America. Millions are living this every single day.
Read the rest at My Budget 360
Retail Sales: BIG Gas Sales Increase
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for August, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $406.7 billion, an increase of 0.9 percent (±0.5%) from the previous month and 4.7 percent (±0.7%) above August 2011. Total sales for the June through August 2012 period were up 4.0 percent (±0.5%) from the same period a year ago. The June to July 2012 percent change was revised from 0.8 percent (±0.5%) to 0.6 percent (±0.2%).
If you believe the seasonal adjustments then of the $3,572 (millions) increase $2,387, or two thirds was gasoline.
And that’s not an increase in driving, it’s increases in price.
Oh, and of the rest nearly all of it was car sales.
Discussion (registration required to post)
CPI: Some Like It Smoking Hot
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in August on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.7 percent before seasonal adjustment.
The seasonally adjusted increase in the all items index was the largest since June 2009. About 80 percent of the increase was accounted for by the gasoline index, which rose 9.0 percent and was the major factor in the energy index rising sharply in August after declining in each of the four previous months.
It didn’t rise, it skyrocketed.
Energy as a whole was up 4% on the month, with a 7.2% increase in motor fuels.
Oh yeah, and QE doesn’t tend to make oil prices go up, does it? Well let’s see — as I drove my kid to school this morning I noted that overnight fuel prices were up six cents, or about 1-1/2%.
But don’t worry, “core” inflation is contained.
Of course nobody we know buys gasoline or food, right?
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in July on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.6 percent before seasonal adjustment.
This is “no indication of trouble”, right? 1.005 ^ 12 = 6.2% annualized inflation.
Not a problem, right?
What’s been flying upward? Gasoline, clothing, electricity and groceries.
You don’t need to buy any of those, right? You can hide out in things that aren’t going up much, like commodities less food and energy?
Oh, and Bernanke? He claims he wants to see 1-2% inflation despite clear language in The Federal Reserve Act that mandates stable prices. Well, how’s he doing?
The Consumer Price Index for All Urban Consumers (CPI-U) increased 3.6 percent over the last 12 months to an index level of 225.922 (1982-84=100). For the month, the index increased 0.1 percent prior to seasonal adjustment.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 4.1 percent over the last 12 months to an index level of 222.686 (1982-84=100). For the month, the index increased 0.1 percent prior to seasonal adjustment.
Why did we have The Coinage Act of 1792 again? Oh that might be so that the common man doesn’t get screwed, blued and tattooed by those who would otherwise intentionally destroy his saved capital.
It’s time to bring it back, including the penalty clause, with sentences to be carried out in public on The National Mall.
Does inflation even matter? The growing secrecy of the CPI and how average Americans face budget squeezes through financial maneuvering and the chained CPI.
Things seem to be progressively getting worse for the middle class as most of the debt ceiling talks revolve on sticking it to working Americans as if they were financially able to handle any more austerity moving forward. While the too big to fail banks swim around in pools of bailout money like Scrooge McDuck both sides seek to squeeze more pennies out of working class Americans. One way that the middle class has been hammered over the past few decades comes from the way we measure inflation. The CPI measure through the Bureau of Labor and Statistics does not even examine actual home ownership carrying costs and uses a very open method of calculating home costs by using an owner’s equivalent of rent. This is why during the most obvious housing bubble in history home prices seemed to be increasing at a moderate pace according to the CPI while the more accurate Case Shiller Index was registering annual increases of 15 percent or more. This is important because so much rides on accurately measuring inflation in our country and more is trying to be done to stifle information that reflects the real changes to our overall economy.
Inflation growing slowly if we exclude food and energy
I always find it amazing how some pundits like to remove food and energy from measuring the CPI yet so much spending goes into these two items. This is also important since stagnant paychecks don’t go as far in covering these monthly budget needs. As we go forward we start getting a more inaccurate perception of inflation. For example, housing is the biggest item in the CPI because most Americans spend the largest amount of money on housing per month. So with that said, you would expect an accurate reflection in the CPI for housing. But if we look at the CPI housing measure versus the Case Shiller Index we realize a serious problem is occurring:
We have this gem of an article today from Bloomberg:
“Headline inflation is beginning to have a greater influence on monetary policy, but not yet at the Fed,” said Crescenzi, who helps manage $1.2 trillion at Pimco in Newport Beach, California, as executive vice president. The central bank “remains anchored or hinged to the core rate,” which excludes food and energy costs.
So, Mr. Bernanke is purposely only considering ‘core’ inflation when judging the overall inflation rate. So, the soaring prices in your energy costs to drive your car and heat your house don’t count. Also not considered are your rapidly increasing food prices. I’m sure for you and I it’s no problem to forego heat and food, right? These are apparently, discretionary items to Mr. Bernanke.
The article goes on to specify what would cause Mr. Bernanke to become concerned about inflation:
“The dominant driver” of core inflation “will still be wage inflation.”
High U.S. unemployment will keep salaries in check, limiting the biggest influence on broader prices, Crescenzi said. Bernanke’s strategy of focusing monetary policy on the core rate contrasts with European Central Bank President Jean- Claude Trichet and Bank of England Governor Mervyn King. They are signaling growing discomfort with prices, prompting investors to anticipate faster interest-rate increases in the euro area and U.K.
Uh huh. Essentially, the only thing that will concern the Federal Reserve would be if wages started to rise. Yes, the one thing that might actually relieve a little of the massive financial stress the American people are experiencing would signal a serious problem to Mr. Bernake. It appears that our friends over in Europe have made loud enough objections to this insane and evil policy to cause their Central Banks to at least take note and acknowledge that price inflation in essentials is becoming alarming and concerning.
However, here in the US, this article makes it pretty clear: Ben Bernanke and the Federal Reserve think rising prices, especially in items necessary for survival are a-okay — no problem! Rising wages? Forget it. That will elicit immediate and swift action by the Federal Reserve to stop that in its tracks. They purposely want to keep your wages low and the prices of necessities going up!
Considering wages in the United States have been stagnant at best for the past decade and falling on average 30-40% over the past three years, while core inflation (you know, the necessities Bernanke doesn’t even consider) is running +8-10%, this is clearly a 50% reduction on buying-power. FIFTY PERCENT. Let that sink in.
US monetary policy is robbing you blind and destroying not just you and your family, but your family generations into the future. And why are they doing this? Same reason we’ve been talking about now for 3 years: to hide the insolvency of all the big TARP banks. You know, the same ones that are fraudulently foreclosing on millions of homes. You’d think that Americans would at least be as angry as their European counterparts by now. I guess all that protesting might conflict with American Idol.