July 14, 2017
It's Friday and that means it's time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don't worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let's take a look at this week's big headlines…
On Friday, the Commerce Department announced that retail sales fell 0.2% last month. This was worse than expected, as economists were forecasting a 0.2% gain. Gas station sales fell 1.3%, while sales at department stores declined 0.7%. Meanwhile, online sales rose 0.4%, reaffirming that Amazon.com is taking over the retailing world. Overall, this was a disappointing report.
On Friday, the Labor Department announced that its Consumer Price Index (CPI) was unchanged in June. Gasoline price declined 2.8% in June, while food prices were unchanged. Excluding food and energy, the core CPI rose 0.1% in June. Economists were expecting the CPI to rise 0.1% in June and for the core CPI to increase 0.2%, so both the CPI and core CPI came in below economists' consensus expectations. In the past 12 months, the CPI has rise 1.6%, while the core CPI has risen 1.7%. The Fed's favorite inflation indicator, the Personal Consumption Expenditure (PCE) index decelerated to only a 1.4% annual pace in the past 12 months. So no matter how you slice it, inflation is decelerating on the consumer level, which is why the Fed is now reluctant to raise key interest rates.
The Labor Department announced on Thursday that its Producer Price Index (PPI) rose 0.1% in June. Wholesale food costs jumped 0.6% in June, while wholesale energy prices declined 0.5%. Excluding food, energy and retail trade margins, the core PPI rose 0.2% in June. In the past 12 months, the PPI rose 2% (down from 2.4% in the previous month) and the core PPI rose 2% (down from 2.1% in the previous month). While the price of raw materials has increased 6.3% in the past 12 months, it isn't significantly impacting wholesale prices, so inflation based on the PPI remains well under control.
That's all I have for you this week; I'll be in touch again next week with the latest ratings updates out of Portfolio Grader.
Have a great weekend,