Summary
STOCKS: Can plus 16 points on the DJIA be worse than minus 85 points? Could be, and yesterday (8/25) might have been an example. INFLATION: Last week, the Labor Department reported its latest data for consumer and producer prices, with results through July. Although the CPI and PPI are now well de-linked from reality, it is important to keep track of the "official" numbers anyway.
_____
Stocks
I contemplate a detailed update on the stock market over the weekend, in a new edition of "Last Week in the Markets..." In the meantime, though, I point out that yesterday's feeble 16-point gain in the DJIA, following Wednesday's 85-point decline, was not a good sign. Stocks appear not only to be in trouble, but the trouble appears to be serious and growing.
Government Inflation Data
One area in which I strongly suspect the government continues to lose the public's confidence is in the area of reported inflation data. Month after month, but in over the last several months on balance and in particular, the Labor Department reports results for consumer- and producer-level inflation with which I think the consumer and business sectors have increasing difficulty in identifying.
In addition, though, if the numbers are faulty, then it is entirely possible that the quality of policy (Federal Reserve) and business decisions based on these data will be less than desired.
(NOTE: For those who have not yet visited John Williams' Shadow Government Statistics website, this is a good time to do so. In turn, within the context of the foibles of government inflation and other data, I highly recommend a reading of
"Government Economic Reports: Things You've Suspected... Series Master Introduction," and "Consumer Price Index").
There are three government inflation or inflation-related series I monitor regularly: Import prices, the Consumer Price Index and the Producer Price Index. Although I believe the CPI and PPI are now materially underreporting actual inflation and inflationary pressures in the US economy, keeping track of these series remains important anyway. These are the numbers being hyped incessantly in place like "Tout TV" and the other venues in the regular propaganda loop, and they are among the numbers most frequently cited by Alan Greenspan as the basis for Federal Reserve monetary policy.
Following are the results for these three series over various periods.
Producer, Consumer and Import Prices (Com-
posite Results & Annual PPI, CPI Results)
------------------------------------------------
Producer Consumer Import
Price Index Price Index Prices
Month/ ----------------------------------------
Year Y/Y L3Mos* Y/Y L3Mos* Y/Y L3Mos*
------------------------------------------------
07/05 4.6% 1.6% 3.1% 1.9% 7.7% 4.5%
06/05 3.6% -0.5% 2.5% 1.9% 7.0% 3.8%
05/05 3.5% 2.6% 2.8% 4.4% 5.7% 8.6%
04/05 4.8% 7.0% 3.5% 6.2% 8.4% 17.1%
03/05 5.0% 5.4% 3.2% 4.3% 7.6% 15.4%
02/05 4.7% 1.1% 2.9% 1.7% 6.1% 0.0%
01/05 4.2% 2.1% 2.9% 1.3% 5.7% -4.5%
================================================
07/04 3.9% 2.5% 2.3% 3.9% 5.6% 6.9%
------------------------------------------------
*Trailing three-month com-
pound annual rate of change.
------------------------------------------------
Producer Price Index
(Finished Goods)
-- Y/Y Change
---------------------------
Excl. Food
Year All Items & Energy
---------------------------
2005 -- 7 Months
----------------
[1] 2.2% 1.5%
[2] 3.8% 2.6%
===========================
2004 4.3% 2.2%
2003 4.0% 1.0%
2002 1.2% -0.6%
2001 -1.8% 1.0%
2000 4.1% 1.6%
---------------------------
Consumer Price Index
(All Urban,
All Items)
-- Y/Y Change
---------------------------
Excl. Food
Year All Items & Energy
---------------------------
2005 -- 7 Months
----------------
[1] 2.0% 1.3%
[2] 3.5% 2.2%
===========================
2004 3.4% 2.2%
2003 1.9% 1.1%
2002 2.4% 2.0%
2001 1.5% 2.7%
2000 3.4% 2.6%
---------------------------
[1]Nonannualized.
[2]Annualized.
---------------------------
Import Prices (Detail)
-----------------------------------------------------
U.S. IMPORT PRICES - % CHANGE
(3-Mo.= Three-month Compound Annual Rate)
-----------------------------------------------------
All Imports, Petroleum
All Imports Excl. Petrol. Imports Only
Month/ -------------- --------------- ---------------
Year Mo. 3-Mo. Y/Y Mo. 3-Mo. Y/Y Mo. 3-Mo. Y/Y
-----------------------------------------------------
07/05 1.1 4.5 7.7 -0.1 -1.9 2.2 6.6 40.3 32.7
06/05 1.0 3.8 7.0 -0.2 0.0 2.3 7.9 25.1 37.2
05/05 -1.0 8.6 5.7 -0.2 2.0 2.6 -5.4 52.5 25.7
04/05 0.9 17.1 8.4 0.4 3.2 3.0 3.6 132.7 45.5
03/05 2.2 15.4 7.6 0.3 2.8 2.9 13.4 120.6 40.1
02/05 0.9 0.0 6.1 0.1 3.2 2.8 5.1 -17.9 29.8
01/05 0.6 -4.5 5.7 0.3 6.6 3.1 2.2 -47.4 24.2
=====================================================
07/04 0.4 6.9 5.6 0.0 1.2 2.5 2.3 50.0 30.9
-----------------------------------------------------
NOTE: I will soon publish results, dealing with price data in particular, contained in the latest manufacturing and service-sector reports from the Institute for Supply Management.
_____
| 