U.S. Inflation Firms Amid Rising Gas Prices, Rents U.S. consumer prices rose in May for the third straight month as the damping effects of cheap oil and a strong dollar fade.
The consumer-price index, which measures what Americans pay for everything from car repairs to potatoes, increased a seasonally adjusted 0.2% in May from the prior month, the Labor Department said Thursday. It was the third straight monthly rise in overall prices as the damping effects of low oil prices and a strong dollar faded.
Consumer prices excluding the often-volatile food and energy categories also rose 0.2% in May, propelled by a 0.4% increase in shelter costs—the largest one-month jump since February 2007. (…)
Energy prices rose 1.2% from April, including a 2.3% jump in gas prices. But food prices fell 0.2% including a 0.5% decline in food purchased for home consumption. It was the fifth time in the past seven months that grocery prices had declined. Apparel prices rose, while prices declined for both new and used vehicles.
The overall price index rose 1.0% in May from a year earlier, slipping from 1.1% annual growth in April. Prices excluding food and energy climbed 2.2% on the year, marking the seventh consecutive month that annual core inflation matched or exceeded 2%.
The firming in core prices has largely reflecting a swift rise in the cost of shelter, especially rent. Shelter prices rose 3.4% last month from a year earlier, the largest annual gain for the category since September 2007. (…)
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MEDIAN CPI UP 0.3% IN MAY
According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.3% (3.2% annualized rate) in May. The 16% trimmed-mean Consumer Price Index rose 0.2% (2.1% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report.
Over the last 12 months, the median CPI rose 2.5%, the trimmed-mean CPI rose 2.0%, the CPI rose 1.0%, and the CPI less food and energy rose 2.2%.
- CPI last 3 months annualized: +2.8%
- Core CPI last 6 months annualized: +2.6%
- Median CPI last 3 months annualized: +3.2%.
Are we at 2.0%+ or not?
- CLEVELAND FED INFLATION NOWCAST AS OF JUNE 16
Meanwhile, the Atlanta Fed wage tracker hit +3.5% in May…
…while PMI data suggest that the rebound reflected in some April data faded in May.
Stagflation?
Home-Builder Sentiment Rose in June, NAHB Says A gauge of home-builder sentiment rose in June, a sign of solid growth in the nation’s housing market.
The National Association of Home Builders housing market index rose to a seasonally adjusted level of 60 in June, the trade group said Thursday, up from 58 in May and the highest reading since January. (…)
The sales expectations component of the index climbed five points in June to 70, the highest level since October, indicating home builders are optimistic about the next six months.
Traffic has recovered and is showing some momentum, especially in the West and South. (Charts from Haver Analytics)
THE UNFUNNY JOKE
I started a joke which started the whole world crying
But I didn’t see that the joke was on me oh no
I started to cry which started the whole world laughing
Oh If I’d only seen that the joke was on me (The Bee Gees)
Mrs. Yellen went from “in coming months” to “I don’t know what the timetable will be”. This is becoming an unfunny joke.
But the herd reaction from “market participants” is even more unfunny. These pundits seem to merely react to what the “Fed participants” say. No need to research and analyse what’s actually going on in the U.S. and the world, Mrs. Yellen and her FOMC folks do the job for them.
So the odds on rate hikes simply yo-yo along the Fed’s mood…which just changed radically even if its own economic projections declined by 0.2% for 2016 and 0.1% for 2017. Rounding errors! The end result is an economic electrocardiogram flat at 2.0% for 3 years. Why not? After all, it has averaged 2.1% since 2010…to everybody’s surprise.
After the low volatility ETF, here’s the low vol economy. The patient is more stable than ever…even though he’s nearly dying.
Funny thing, while investors are loading themselves with the “riskless” low vol ETF, they run away from normal equity funds like if it were …2008. YTD withdrawals are $73B, pretty close to 2008. Professional investors are not any more attracted by this low vol economy, their cash level being very high at the moment as this BoAML chart reveals:
Tempting for the contrarians!
But we soon have Brexit which is more a referendum on immigration and border management than on economics (hence the high “leave” odds). Then, in November, we have The Donald who is trying as hard as he can to give the USA a totally Democrat government, President, Congress and Senate. Wow! And we have Xi Jinping looking more and more like good old Mao. And Merkel fast losing support as 2017 arrives.
After drones and driverless cars, it’s only natural to get driverless everything. Why not Google in complete and irrevocable charge? These two guys seem to know what they are doing.
