Inflation Remains Resilient: March 13 – 17

Prices rose at the store but declined at the warehouse. Here are the five things we learned from U.S. economic data released during the week ending March 17.


Consumer prices rose again in February. The Consumer Price Index (CPI) jumped a seasonally adjusted 0.4 percent following a 0.5 percent increase in January. The Bureau of Labor Statistics index has risen 6.0 percent over the past year. Energy prices fell 0.6 percent (even as gasoline prices gained 1.0 percent) and food prices gained 0.4 percent (despite a 6.7 percent drop for eggs). Net of both, core CPI surged 0.5 percent, following three consecutive 0.4 percent gains, leaving the measure up 5.5 percent over the past 12 months. Prices rose for transportation services (+1.1 percent), apparel (+0.8 percent), shelter (+0.8 percent), new vehicles (+0.2 percent), and medical care commodities (+0.1 percent). Prices plummeted 2.8 percent for used cars/trucks and 0.7 percent for medical care services. 

…While wholesale prices mellowed. The Producer Price Index (PPI) for final demand declined a seasonally adjusted 0.1 percent, the second drop for the Bureau of Labor Statistics metric over the past three months. The core wholesale price measure, which removes food, energy, and trade services, grew 0.2 percent. PPI for final demand goods declined 0.2 percent, pulled down by drops for food (-2.2 percent) and energy (-0.2 percent). PPI for final demand services slipped 0.1 percent. Headline PPI has risen 4.6 percent over the past year, with the 12-month comparable for core PPI up 4.4 percent. 

Retail sales sagged in February. Retail and food services sales declined 0.4 percent to a seasonally adjusted $697.9 billion. The Census Bureau data series was 6.4 percent ahead of year-ago levels. Sales dropped 1.8 percent at auto dealers/parts stores and 0.6 percent at gas stations. Net of both, core retail sales held steady with January and were up 8.2 percent from a year earlier. Sales slumped at retailers focused on furniture (-2.5 percent), apparel (-0.8 percent), sporting goods (-0.5 percent), and building materials (-0.1 percent). Restaurants/bars suffered a 2.2 percent drop. Sales improved at health/personal care retailers (+0.9 percent), grocery stores (+0.6 percent), general merchandisers (+0.5 percent), and electronics/appliances stores (+0.3 percent). Note that this report does not adjust for inflation. 

Manufacturing output was flat in February. The Federal Reserve reports manufacturing production eked out a seasonally adjusted 0.1 percent increase, following a 1.3 percent advance in January. Durable and nondurable goods production grew 0.1 percent and 0.2 percent, respectively. Overall industrial production held steady in February, with mining output slipping 0.6 percent and utility output gaining 0.6 percent. Manufacturing was off 1.0 percent from a year earlier, with overall industrial production off 0.2 percent. Manufacturing capacity slipped by 1/10th of a percentage point to 77.6 percent (its 50-year average is 78.2 percent). Overall industrial capacity utilization held steady at 78.0 percent (versus its 50-year average of 79.6 percent). 

Consumer sentiment pulled back in early March. The University of Michigan’s Index of Consumer Sentiment lost 3.6 points to a seasonally adjusted 63.4 (1966Q1=100). The measure was at 59.4 a year earlier. The current conditions index dropped 4.3 points to 66.4 (March 2022: 67.2), while the expectations index shed 3.2 points to 61.5 (March 2022: 54.3). The press release notes that lower-income survey respondents were more likely to have a dour view of the economy. Inflation expectations dropped to their lowest point in nearly two years at 3.8 percent. (Note that the survey closed before the failure of Silicon Valley Bank). 

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending March 11, 2023, First-Time Claims, seasonally adjusted): 192,000, -20,000 vs. the previous week, +15,000 vs. the same week a year earlier). 4-week moving average: 196,500 (+4.1% vs. the same week a year earlier). 
  • Import Prices (February 2023, All Imports, not seasonally adjusted): -0.1% vs. January 2023; -1.1% vs. February 2022. Nonfuel Imports: +0.4% vs. January 2023; +0.2% vs. February 2022.
  • Export Prices (February 2023, All Exports, not seasonally adjusted): +0.2% vs. January 2023; -0.8% vs. January 2023. Nonagricultural Exports: +0.1% vs. January 2023; -1.5% vs. February 2022. 
  • State Employment (January 2023, Nonfarm Payrolls, seasonally adjusted): Increased in 20 states and unchanged in 30 states and the District of Columbia vs. December 2022. Increased in 47 states and unchanged in 3 states and the District of Columbia.
  • Housing Starts (February 2023, Privately-Owned Housing Starts, seasonally adjusted annualized rate): 1.450 million (+9.8% vs. January 2023; -18.4% vs. February 2022). 
  • Housing Market Index (March 2023, Index: >50=More Homebuilders Say the Housing Market Is “Good” Than Say It Is “Poor,” seasonally adjusted) 44 (February 2023: 32; March 2023: 79). 
  • Business Inventories (January 2023, Manufacturers’ and Trade Inventories, seasonally adjusted): $2.480 trillion (-0.1% vs. December 2022; +11.1% vs. January 2022). 
  • Small Business Optimism (February 2023; Index (1985=100), seasonally adjusted): 90.9 (January 2023: 90.3; February 2022: 95.7). 
  • Treasury International Capital (January 2023, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$31.7 billion (December 2022: +$103.3 billion; January 2022: +$54.3 billion.

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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