Flash Update
FLASH UPDATE - June 17, 2007
JOHN WILLIAMS' SHADOW GOVERNMENT STATISTICS
FLASH UPDATE
June 17, 2007
__________
Alternate CPI Notches up to 10.3% Annual Inflation
May M3 Annual Growth at 13.3%
Industrial Production Falters, Retail Sales Get Seasonal-Factor Boost
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The SGS Alternate Consumer Price Measure has been updated for May, and the May SGS Ongoing M3 growth has been revised based on full monthly data, with both series posted to the Alternate Data Series tab at www.shadowstats.com. -- Best wishes to all, John Williams
Inflationary Recession Deteriorates Anew
With May CPI and PPI topping expectations, and with industrial production faltering, the combination of inflation and recession -- a disquieting concept for the financial markets -- is not about to disappear. Inflation factors appear to have been rattling the credit markets recently, but the rise in long-term U.S. rates likely reflects more of a waning foreign enthusiasm for buying U.S. Treasuries, than it does expectations of a pending U.S. economic boom. Any such expectations should disappear along with downside surprises in economic reporting of the next month or two.
M3. With a full month of underlying data in place, the SGS Ongoing M3 estimate of annual growth was in line with the preliminary estimate of 13.3%, up from 12.8% in April. For those who use the estimate of the seasonally-adjusted monthly average level, the levels estimated for May, April and March, respectively, were $11.933 trillion, $11.791 trillion and $11.610 trillion.
CPI and PPI. The seasonally-adjusted May CPI-U rose 0.67% (0.61% unadjusted) +/- 0.12% (95% confidence interval) for the month, following April's 0.42% (0.65% unadjusted) gain. Annual inflation (unadjusted) notched higher to 2.69% from 2.57% in April. Restated to Pre-Clinton (1990) methodologies, annual inflation was roughly 6.0%; restated to Pre-Reagan (1980) methodologies (SGS Alternate Measure), annual inflation in May was about 10.3% versus 10.2% in April.
Updating last month's calculations, on a seasonally-adjusted basis the annualized rate of CPI inflation for May versus December was 5.51%. The same number on an unadjusted basis was 7.47%. These numbers give a hint of where the annual inflation numbers are headed. Straight inflation remains far from contained.
The Chained-CPI-U (the fully substitution-based index being groomed to takeover for the CPI-U) showed May annual inflation of 2.33% against 2.35% in April.
The seasonally-adjusted May PPI also was worse than expected, up by 0.9% (1.2% unadjusted), following April's 0.7% adjusted gain. Annual inflation jumped to 4.1% in May from 3.2% in April. Intermediate goods in May rose by 1.1% for the month, crude goods were up by 2.0%.
Industrial Production. Seasonally-adjusted May industrial production was on the downside of flat (down by 0.03%) and was down by 0.3% net of revisions. The previously-reported April monthly gain of 0.7% was revised to a gain of 0.4%. Importantly, May's annual growth continued to sink into recession territory, to 1.6%. While that was the same level as current April reporting, April initially was reported up by 1.9%.
Retail Sales. Likely boosted by seasonal-factor distortions tied to the timing of Easter, May retail sales rose by 1.4% (1.6% net of revisions) +/- 0.8% (95% confidence interval) following a revised 0.1% decline in April (previously a drop of 0.2%). Annual growth for May was 5.0% versus 3.1% in April. Those same numbers net of CPI-U inflation were 2.37% and 0.54%. Look for retail sales to fall back in June as the seasonals reverse.
Week Ahead: Housing Starts. The May housing starts release on Tuesday (June 19th) is at fair risk of surprising market expectations on the downside, with a monthly contraction. If the economy indeed is as weak as most indicators suggest, those series that have seen recent, sporadic gains (such as April's housing starts) will reverse as weather and seasonal distortions run their courses.
Further details will follow in the newsletter.
___________________________________________
The June/July "Shadow Government Statistics" monthly newsletter should be posted during the week of July 9th. An e-mail advice of same will be sent.
FLASH UPDATE
June 17, 2007
__________
Alternate CPI Notches up to 10.3% Annual Inflation
May M3 Annual Growth at 13.3%
Industrial Production Falters, Retail Sales Get Seasonal-Factor Boost
__________
The SGS Alternate Consumer Price Measure has been updated for May, and the May SGS Ongoing M3 growth has been revised based on full monthly data, with both series posted to the Alternate Data Series tab at www.shadowstats.com. -- Best wishes to all, John Williams
With May CPI and PPI topping expectations, and with industrial production faltering, the combination of inflation and recession -- a disquieting concept for the financial markets -- is not about to disappear. Inflation factors appear to have been rattling the credit markets recently, but the rise in long-term U.S. rates likely reflects more of a waning foreign enthusiasm for buying U.S. Treasuries, than it does expectations of a pending U.S. economic boom. Any such expectations should disappear along with downside surprises in economic reporting of the next month or two.
M3. With a full month of underlying data in place, the SGS Ongoing M3 estimate of annual growth was in line with the preliminary estimate of 13.3%, up from 12.8% in April. For those who use the estimate of the seasonally-adjusted monthly average level, the levels estimated for May, April and March, respectively, were $11.933 trillion, $11.791 trillion and $11.610 trillion.
CPI and PPI. The seasonally-adjusted May CPI-U rose 0.67% (0.61% unadjusted) +/- 0.12% (95% confidence interval) for the month, following April's 0.42% (0.65% unadjusted) gain. Annual inflation (unadjusted) notched higher to 2.69% from 2.57% in April. Restated to Pre-Clinton (1990) methodologies, annual inflation was roughly 6.0%; restated to Pre-Reagan (1980) methodologies (SGS Alternate Measure), annual inflation in May was about 10.3% versus 10.2% in April.
Updating last month's calculations, on a seasonally-adjusted basis the annualized rate of CPI inflation for May versus December was 5.51%. The same number on an unadjusted basis was 7.47%. These numbers give a hint of where the annual inflation numbers are headed. Straight inflation remains far from contained.
The Chained-CPI-U (the fully substitution-based index being groomed to takeover for the CPI-U) showed May annual inflation of 2.33% against 2.35% in April.
The seasonally-adjusted May PPI also was worse than expected, up by 0.9% (1.2% unadjusted), following April's 0.7% adjusted gain. Annual inflation jumped to 4.1% in May from 3.2% in April. Intermediate goods in May rose by 1.1% for the month, crude goods were up by 2.0%.
Industrial Production. Seasonally-adjusted May industrial production was on the downside of flat (down by 0.03%) and was down by 0.3% net of revisions. The previously-reported April monthly gain of 0.7% was revised to a gain of 0.4%. Importantly, May's annual growth continued to sink into recession territory, to 1.6%. While that was the same level as current April reporting, April initially was reported up by 1.9%.
Retail Sales. Likely boosted by seasonal-factor distortions tied to the timing of Easter, May retail sales rose by 1.4% (1.6% net of revisions) +/- 0.8% (95% confidence interval) following a revised 0.1% decline in April (previously a drop of 0.2%). Annual growth for May was 5.0% versus 3.1% in April. Those same numbers net of CPI-U inflation were 2.37% and 0.54%. Look for retail sales to fall back in June as the seasonals reverse.
Week Ahead: Housing Starts. The May housing starts release on Tuesday (June 19th) is at fair risk of surprising market expectations on the downside, with a monthly contraction. If the economy indeed is as weak as most indicators suggest, those series that have seen recent, sporadic gains (such as April's housing starts) will reverse as weather and seasonal distortions run their courses.
Further details will follow in the newsletter.
The June/July "Shadow Government Statistics" monthly newsletter should be posted during the week of July 9th. An e-mail advice of same will be sent.