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 Declined 0.2% in May
Posted Under: Data Watch • Government • PPI • Fed Reserve

Implications: One thing for sure: The government's new measure of producer prices, which now includes services, is just as volatile as the old one. Following two months of large gains, producer prices dipped 0.2% in May, led lower by a 0.5% decline in the index for trade services. In the past year, producer prices have increased a moderate 2.0%. But, in the past three months, producer prices are up at a 3.7% annual rate. The acceleration is most prevalent in prices for services, which account for over 60% of the total index. Services prices are up 2.2% in the past year but have climbed at a 4.5% annual rate in the past three months. By contrast, goods are up 1.9% from a year ago and have climbed at a similar 1.8% rate in the past three months. Prices further back in the production pipeline (intermediate demand) are mixed. Prices for processed goods are down over the past three months, both overall and excluding food and energy. Prices for unprocessed goods are up at a 1.2% annual rate in the past three months, a slower pace than the 4.5% increase in the past year. Taken as a whole, the trend in producer price inflation is hovering around 2%. Given loose monetary policy, this trend will likely move higher in the year ahead. If anything, the Federal Reserve should be tapering quantitative easing faster than it already is. The problems that ail the economy are fiscal and regulatory in nature; continuing to add more excess reserves to the banking system is not going to boost economic growth. Loose monetary policy is gaining traction and we expect both real GDP growth and inflation to accelerate in the year ahead.

Click here for PDF version
Posted on Friday, June 13, 2014 @ 10:01 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.