Skip to main content

Economic Perspectives Update

PPI annual inflation continues to moderate 

The Producer Price Index (PPI) for final demand rebounded 0.4% in October, the most in six months, and above the consensus of 0.3%. It was led by a 0.7% rise in goods PPI, the most since March, as energy prices spiked 2.8%, while food prices advanced 1.3%. Services PPI rose a more modest 0.3%, led by trade margins. PPI for final demand ex-food and energy increased 0.3%, also above the consensus of 0.2%.

Despite the notable monthly increase, annual inflation pressures weakened. On a y/y basis, the PPI for final demand slipped to 1.1%, the slowest pace in more than three years, while PPI ex-food and energy eased to 1.5%, the least since February 2017. Both peaked in 2H 2018 and have been on a downward trend since then. Moreover, intermediate producer prices were lower than a year ago across most stages of the production flow. Falling pipeline pressures suggest continued low PPI inflation in the near-term.

Jobless claims up, consumer comfort down 

Initial claims for unemployment insurance spiked 14,000 last week, the most since April, to 225,000, a five-month high. The consensus was for a 4,000 increase to 215,000. The four-week average of claims picked up 1,750 to 217,000, a four-month high. This is still a very low level compared to history, and indicates that labor markets remain tight. But we are watching this trend closely for early signs of changes in labor demand.

The weekly spike in claims likely weighed on consumer attitudes, with the Bloomberg Consumer Comfort Index falling 1.1 points, down for the fourth straight week, to 58.0, its lowest level since February. The four-week cumulative decline was the biggest since May 2012. All three index components fell, led by worsening views on the state of the economy. The longer-term trend of comfort, as measured by the 52-week average, has also leveled off, following a steady ascent over the past three years. This could weigh on retail sales growth in the upcoming holiday shopping season.

Budget deficit on a widening path 

The federal government posted a budget deficit of $134.5 billion in October, up 33.8% from a year ago. The Office of Management and Budget projects the deficit will reach $1.045 trillion in fiscal year 2020. Indeed, on a 12-month total basis, the deficit is already at $1.018 trillion, representing 4.8% of GDP, the biggest gap since May 2013.

The 12-month total federal outlays increased 7.5% y/y, while receipts picked up a more moderate 3.3% y/y. Notably, health expenditures rose 6.6% on a smoothed y/y basis, the most since March 2017, which was separate from the 6.2% y/y increase in Medicare outlays. Net interest spending growth was still in the double-digits at 14.5%, while its share of total outlays was 8.3%, near its highest level since September 2008. Corporate income tax receipts rose 5.3% on a smoothed y/y basis, up for the first time since December 2017, as the impact of tax cuts wears off.

Source: Ned Davis Research

Comments

Popular posts from this blog

California: A Model for the Rest of the Country, Part 2

Part 1 here . On Leaving the Golden State Guest Post by NicklethroweR . Posted on the Burning Platform. The fabled Ventura Highway is all that separates my artist loft from the beach where surfing first came to the United States. Both my balcony and front patio face the freeway at about eye level and I could easily smack a tennis ball right on to the ever busy 101. Access to the beach and boardwalk is very important to a Tourist Town such as mine and I can see one underpass from my balcony and another underpass from the patio. Further up the street are two pedestrian bridges. Both have been recently remodeled so that people can not use it to kill themselves by leaping down into traffic. The traffic, just like the spice, must flow and the elites that live here do not like to be inconvenienced as they dart about between Malibu and Santa Barbara. Another feature of living where I live would have to be the homeless, the insane and the drug addicts that wander this particular...

Top Five Consumer Cyber Security FAQs

Business, technology, environmental and economic changes are a part of life, and they are coming faster all the time. All of these changes and advancements can be distracting and make us more vulnerable to cyber scams. That's why protecting your credit is a critical part of protecting yourself from cyber security threats. Security researchers have reported that hackers and scammers are using any opportunity or vulnerability to target both individuals and companies. You may have already seen these attempts in the form of fake emails or calls. Here are the top five questions Equifax ®  has received about how individuals can protect themselves from cyber security threats and help to improve your credit protection. 1. How can I better protect my credit? Check your credit reports frequently. You can get free credit reports from the nationwide credit reporting agencies (Equifax, Experian ®  and TransUnion ® ) at annualcreditreport.com. Check your credit reports frequently to closely...

School Choice Passed by Texas Senate

The Texas Senate on Thursday approved a $500 million school choice bill mostly along party lines after hours of passionate debate. It will now head for consideration in the House, where members rejected similar proposals during the regular session. Senators passed Senate Bill 1 by a 18-13 vote, with one Republican joining all Democrats in voting against the measure. The bill will likely face steep resistance in the House, where Democratic members and many rural Republicans have vehemently opposed such proposals. School choice programs, also called education savings accounts or vouchers, use public money to help pay for a child’s private schooling. “We must recognize that a one-size-fits-all approach doesn't fit the needs of our diverse student population,” said Sen. Brandon Creighton, R-Conroe, who authored SB 1 and estimated the proposal could serve about 60,000 students. Texas has about 5.5 million children in public schools. Public schools have failed the American people, especi...