Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow First Trust: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  The Consumer Price Index (CPI) was Unchanged in January
Posted Under: CPI • Data Watch

 
Implications: For the time being, overall consumer price inflation remains quiet. Consumer prices were unchanged in January and are up only 1.6% from a year ago. Once again, falling energy prices offset gains in most other major categories. That’s been the recent theme, with the overall CPI down at a 0.7% annual rate in the past three months, all due to energy. The reason that’s important is that energy prices have spiked higher in February, so we are likely to see overall prices move higher as well when that data arrives in a month. “Core” prices, which exclude food and energy, were up 0.3% in January, coming in above consensus expectations and the largest monthly increase since May 2011. Core prices are up 1.9% from a year ago. Neither overall or core price gains in the past year sets off alarm bells. Instead, they suggest the Federal Reserve’s preferred measure of inflation, the PCE deflator (which usually runs a ¼ point below the CPI) remains comfortably below the Fed’s target of 2%. We don’t expect this to last. However, for the Fed, the key measure of inflation is its own forecast of future inflation. So even if inflation goes to roughly 3% within the next year, as long as the Fed projects the rise to be temporary it will not react by raising short-term interest rates. The Fed is more focused on the labor market and, we believe, is willing to let inflation exceed its long-term target of 2% for a prolonged period of time in order to get the unemployment rate down. The best news in today’s report was that “real” (inflation-adjusted) average hourly earnings rose 0.2% in January. In the past three months they are up at a 4.4% annual rate. In other news this morning, new claims for unemployment insurance increased 20,000 last week to 362,000, very close to the four-week moving average of 361,000. Continuing claims for regular state benefits increased 11,000 to 3.15 million. These figures are consistent with continued moderate payroll growth in February.

Click here for a PDF version
Posted on Thursday, February 21, 2013 @ 10:27 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L. P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
 PREVIOUS POSTS
Housing Starts Fell 8.5% in January to 890,000 Units at an Annual Rate
The Producer Price Index (PPI) Rose 0.2% in January
Don't Fear the Sequester
Industrial production declined 0.1% in January
The Plow Horse State of the Economy
Retail Sales Increased 0.1% in January, Matching Consensus Expectations
Economy Not As Bad As Bears Think?
There the Bears Go Again
The Trade Deficit in Goods and Services came in at $38.5 Billion in December
Nonfarm Productivity (Output Per Hour) Declined at a 2.0% Annual Rate in Q4
Archive
Skip Navigation Links.
Tags
 
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
Home |  Important Legal Information |  Privacy Policy |  Business Continuity Plan
Copyright © 2014 All rights reserved.