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

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 Producer Price Index (PPI) rose 0.1% in January
Posted Under: Data Watch • PPI
Supporting Image for Blog Post

Implications:  Forget about producer prices for a second.  New claims for unemployment insurance dropped 13,000 last week to 348,000, the lowest level since March 2008. The four-week average dropped to 365,000.  Continuing claims fell 100,000 to 3.43 million, the lowest since August 2008.  These figures suggest continued robust gains in payrolls for February.  On the inflation front, today's figures on producer prices were just plain weird. Given the increase in oil prices in January, the consensus expected a gain of 0.4% in overall producer prices. But the government says energy prices went down instead, mostly due to lower home heating costs, both for natural gas and home heating oil. As a result, the overall PPI was up only 0.1%. Meanwhile, a surge in pharmaceutical drug and light truck prices helped push up "core" producer prices (which excludes food and energy), by 0.4%, which was more than the consensus expected 0.2% gain. Again, just an odd report, with many components that will probably reverse over the next few months. Overall producer prices are up 4.1% from a year ago. However, given the rapid increase in prices early last year, the year-ago comparisons on prices will probably show slower inflation for the next several months. In the meantime, you'll probably see some stories about how the Federal Reserve was right all along and that inflation is not a problem. Don't believe them. Given the loose stance of monetary policy, we think PPI inflation will be heading north again later in the year. Ironically, the Fed itself can't see today's report as good news on inflation. It says it focuses on core prices, which are up 3% from a year ago and up at a 3.2% annual rate in the past three months. We continue to believe the Fed has no room to implement another round of quantitative easing.

Click here for a printable version.
Posted on Thursday, February 16, 2012 @ 10:16 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.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2022 All rights reserved.