Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  The Consumer Price Index (CPI) Increased 0.3% in April
Posted Under: CPI • Data Watch
Supporting Image for Blog Post

 
Implications: Consumer price inflation, up 0.3% in April, is starting to show signs of the loose monetary policy of the past several years. Although consumer prices are up a moderate 2% from a year ago, they're up at a 2.3% annual rate in the past three months. The price gains in April were led by food and shelter costs and we expect this trend to continue. Droughts and unusually cold winter weather are pushing up prices for farm products. Meanwhile, owners' equivalent rent (the government's estimate of what homeowners would charge themselves for rent), which makes up about ¼ of the overall CPI, is up 2.6% from a year ago versus a 2.1% gain in the previous twelve months. This measure will be a key source of the acceleration in inflation in the year ahead, in large part fueled by a shift toward renting rather than owning. Lurking in the background, of course, is that monetary policy has been loose and is putting upward pressure on inflation. The Fed's preferred measure of inflation, the PCE deflator, was up only 1.1% in the year that ended in March. But, given the increase in the CPI in April, we are now estimating that the PCE deflator will be up 1.6% from a year ago when that data arrives in two weeks, much closer to the Fed's target of 2%. Inflation should hit that 2% target late this year or early next year, consistent with our view that the Fed starts raising short-term interest rates in the first half of 2015. In other news this morning, initial claims for unemployment insurance fell 24,000 last week to 297,000, the lowest level in seven years. Continuing claims declined 9,000 to 2.67 million. Plugging these figures into our payroll models puts our early forecast for May job gains at 198,000. The forecast will evolve over the next three week as we get more data, but it looks like another solid month for job growth.

Click here for a PDF version
Posted on Thursday, May 15, 2014 @ 11:14 AM • Post Link 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.
Follow First Trust:  
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 © 2024 All rights reserved.