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donsutherland1 · 07-15-08, 09:57 AM

Morning Data: A Hint of Stagflation?

This morning's data offered a possible hint of stagflation. Even as the economy showed signs of slowing with retail sales rising just 0.1% in June and 0.8% excluding autos, two reports showed quickening inflation.

The Producer Price Index (PPI) increased 1.8% for June. That was well above the consensus forecast of 1.4%. Moreover, the change from June 2007 amounted to 9.2%. That is the highest year-over-year change since June 1981 when the PPI registered a 12-month change of 10.1%.

The New York Federal Reserve's Empire State Manufacturing Survey also revealed rising inflation pressures even as that index contracted for another month. The survey revealed:

The prices paid index shot up 12 points to 77.9, a new record, with 79 percent of respondents reporting higher prices. The prices received index, which had jumped in June, rose further in July, to a record-high 32.6. Forty-one percent of respondents said that they had raised prices.

Earlier in the morning, the U.S. dollar fell to a record low against the Euro. Should worries about the health of the U.S. financial system and the trajectory of its overall economy worsen, the falling dollar could provide a fresh round of inflationary pressures.

This morning's testimony by Fed Chairman Ben Bernanke on the state of the economy (10:00 am EDT) and later his testimony and that of Treasury Secretary Henry Paulson (11:30 am EDT) will likely be widely monitored by market participants for indications concerning the economy and health of the nation's financial system.

07-15-08, 09:57 AM	#35 (permalink)
donsutherland1 Moderator Mod team member Join Date: Oct 2007 Last Online: Yesterday 11:36 PM Location: New York Posts: 2,465 Thanks: 812 Thanked 1,567 Times in 874 Posts Lean: Centrist Gender: Awards:	Re: U.S. Stocks Tumble: Some Comparisons from Past Recessions Morning Data: A Hint of Stagflation? This morning's data offered a possible hint of stagflation. Even as the economy showed signs of slowing with retail sales rising just 0.1% in June and 0.8% excluding autos, two reports showed quickening inflation. The Producer Price Index (PPI) increased 1.8% for June. That was well above the consensus forecast of 1.4%. Moreover, the change from June 2007 amounted to 9.2%. That is the highest year-over-year change since June 1981 when the PPI registered a 12-month change of 10.1%. The New York Federal Reserve's Empire State Manufacturing Survey also revealed rising inflation pressures even as that index contracted for another month. The survey revealed: The prices paid index shot up 12 points to 77.9, a new record, with 79 percent of respondents reporting higher prices. The prices received index, which had jumped in June, rose further in July, to a record-high 32.6. Forty-one percent of respondents said that they had raised prices. Earlier in the morning, the U.S. dollar fell to a record low against the Euro. Should worries about the health of the U.S. financial system and the trajectory of its overall economy worsen, the falling dollar could provide a fresh round of inflationary pressures. This morning's testimony by Fed Chairman Ben Bernanke on the state of the economy (10:00 am EDT) and later his testimony and that of Treasury Secretary Henry Paulson (11:30 am EDT) will likely be widely monitored by market participants for indications concerning the economy and health of the nation's financial system.