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 0.8% in June
Posted Under: Data Watch • PPI
Supporting Image for Blog Post

Implications: Producer prices spiked 0.8% higher in June on top of a large gain in May. Most of the gains in the past two months have been due to energy. It remains to be seen whether this is the start of the persistently higher inflation trend that we think is inevitable given the loose stance of monetary policy. Overall producer prices are up 2.5% in the past year while "core" prices, which exclude food and energy are up 1.7%. Some analysts may suggest that with the "core" PPI only up 1.7% from last year that the Federal Reserve has room to continue quantitative easing at a pace of $85 billion per month. We think this is a mistake, and, given the minutes from the most recent Fed meeting, it seems like more members of the FOMC are starting to think the same thing. Monetary policy is loose enough already. The problems that ail the economy are fiscal and regulatory in nature; adding even more excess reserves to the banking system is not going to boost economic growth. In other recent inflation news, trade prices were subdued in June, with import prices down 0.2% for the month and up only 0.2% from a year ago. Import prices excluding petroleum were down 0.3% in June and down 0.5% from a year ago. Export prices slipped 0.1% in June, but are up 0.8% from a year ago. The small climb in export prices since last year is all due to food; ex-agriculture export prices are down 0.3% from a year ago. For the labor market, new claims for unemployment insurance were up 16,000 last week to 360,000. Continuing claims were up 24,000 to 2.98 million. However, there is nothing unusual about a temporary increase in claims around July 4 and we expect a decline next week. Plugging these data into our employment models generates a very early estimate of a 163,000 gain in nonfarm payrolls in July. More plow horse.

Click here for a PDF version
Posted on Friday, July 12, 2013 @ 10:05 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.