Inflation remained an issue as summer ended. Here are the five things we learned from U.S. economic data released during the week ending September 15.
Consumer prices rose in August at their quickest pace. The Consumer Price Index (CPI) rose 0.6 percent on a seasonally adjusted basis, its biggest gain in 2023. The Bureau of Labor Statistics measure was up 3.7 percent from a year earlier. Energy prices swelled 5.6 percent, boosted by a 10.6 percent surge in gasoline prices. Food prices gained 0.2 percent. Net of energy and food, core CPI jumped 0.3 percent for the month (its fastest rise since May) and 4.3 percent over the past year. Growing were prices for transportation services (+2.0 percent), medical care commodities (+0.6 percent), new vehicles (+0.3 percent), and medical care services (+0.1 percent. Used car/truck prices fell 1.2 percent.
Meanwhile, wholesale prices also soared in August. The Producer Price Index (PPI) for final demand jumped a seasonally adjusted 0.7 percent, the largest gain for the Bureau of Labor Statistics measure since June 2022. Over 60 percent of the rise resulted from gas prices skyrocketing 20.0 percent (energy PPI: +10.5 percent). The core PPI measure, which nets out energy, food, and trade services, grew 0.3 percent (matching its July increase). Final demand goods PPI gained 2.0 percent (food: -0.5 percent), while final demand services PPI increased 0.2 percent. PPI was up 1.6 percent from a year earlier. The core wholesale price metric had a +3.0 percent 12-month comparable.
Higher prices at the pump fueled August retail sales. According to the Census Bureau, retail and food services sales jumped 0.6 percent to a seasonally adjusted $697.6 billion, per the Census Bureau. Sales over the past three months were 2.2 percent ahead of the comparable 2022 months. Sales at gas stations surged 5.2 percent, thanks to the recent rise in gas prices. Removing that and the 0.4 percent increase at auto dealers/parts stores leaves core retail sales up a more modest 0.2 percent for the month. June – August core retail sales were up 4.4 percent over the same 2022 months. Sales grew at retailers focused on apparel (+0.9 percent), electronics (+0.7 percent), health/personal care (+0.5 percent), groceries (+0.4 percent), and building materials (+0.1 percent). Restaurants/bars enjoyed a 0.3 percent bump. Sales declined 1.6 percent at sporting goods/hobby retailers and 1.0 percent at furniture stores.
August was a flat month for manufacturing. The Federal Reserve reports that manufacturing output edged up a seasonally adjusted 0.1 percent, following July’s 0.4 percent advance. Production for durable and nondurable goods grew 0.1 percent and 0.2 percent, respectively. In the case of the former, the five-percent drop for automobiles nearly counterbalanced sizable gains for primary metals, machinery, aerospace, and furniture. Overall industrial production grew 0.4 percent (July 2023: +0.7 percent), as mining (+1.4 percent) and utilities (+0.9 percent) output rose. Manufacturing output was 0.6 percent below year-ago levels, while industrial production was up 0.2 percent from a year earlier.
Consumer sentiment slipped in early September, as did inflation expectations. The University of Michigan’s Index of Consumer Sentiment lost 1.8 points to a seasonally adjusted 67.7. Even with the drop, the measure was up 15.5 percent from a year earlier. The current conditions index fell by 5.9 points to 69.8 (September 2022: 59.7), while the expectations index added 8/10ths of a point to 66.3 (September 2022: 58.0). Consumers anticipate a slower pace of inflation. Survey respondents expect prices will rise 3.1 percent over the next 12 months (down from a 3.5 percent anticipated hike last month). Long-run inflation expectations were at +2.7 percent, below the recent range of +2.9-3.1 percent.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending September 9, 2023, First-Time Claims, seasonally adjusted): 220,000, +3,000 vs. the previous week, +28,000 vs. the same week a year earlier). 4-week moving average: 229,250 (+11.8% vs. the same week a year earlier).
- Import Prices (August 2023, All Imports, not seasonally adjusted): +0.5% vs. July 2023; -3.0% vs. August 2022. Nonfuel Imports: -0.1% vs. July 2023; -0.8% vs. August 2022.
- Export Prices (August 2023, All Exports, not seasonally adjusted): +1.3% vs. July 2023; -5.5% vs. August 2022. Nonagricultural Exports: +1.7% vs. July 2023; -5.3% vs. August 2022.
- Business Inventories (July 2023, Manufacturers’ and Trade Inventories, seasonally adjusted annualized rate): $2.538 trillion (Unchanged vs. June 2023; +1.4% vs. July 2022).
- Small Business Optimism (August 2023, Index (1986=100), seasonally adjusted): 91.3 (July 2023: 91.9; August 2022: 91.8).
- Monthly Treasury Statement (August 2023, Federal Budget Deficit Over the 1st 11 Months of FY2023): -$1.524 trillion (+61.2% vs. 1st 11 Months of FY2022).
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What We Learned About the U.S. Economy Last Week 