Concerns were spiking a couple of months ago that the Fed’s easy money policies, and the recovering economy, finally had inflation showing up. The PPI, CPI, and PCE inflation indexes jumped above the Fed’s comfort level of 2%, while the employment cost index also unexpectedly jumped in the 2nd quarter.
In the background commodity prices were rising, crude oil back above $100 a barrel. And the historic hedge against inflation, gold, was rallying again.
However, last week it was reported that the Producer Price Index (PPI), which was up 2.1% in April, 2.0% in May, and 1.9% in June, was up only 0.1% in July.
And yesterday, it was reported that the Consumer Price Index (CPI), which was up 2.1% in June, was up only 0.1% in July.
Was it just a one month reprieve?
Perhaps not, at least based on the the way crude oil prices and gold have given up their rally attempts.
New Housing Starts – the longer-term picture.
Housing starts created some excitement this week, jumping 15.7% in July to an annual rate of 1.09 million from 945,000 in June, better than the consensus forecast of 975,000.
They’re not quite as exciting when looked at from a longer-term view, better than they were at the worst of the financial meltdown, but still depressed, well below their level of 15 years ago, about where they were in early 2008.
To read my weekend newspaper column click here: Bonds Persist in Their Warning About the U.S. Economy
Images: Flickr (licence attribution)
Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!
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