Still There: October 9 – 13

Inflation remains above targeted levels. Here are the five things we learned from U.S. economic data released during the week ending October 13.

Energy spurred consumer prices to rise in September. According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) rose a seasonally adjusted 0.4 percent. That gain, combined with August’s 0.6 percent increase, kept CPI up 3.7 percent over the past year. Energy prices surged 1.5 percent, with significant rises for fuel oil (+8.5 percent), gasoline (+2.1 percent), and electricity (+1.3 percent). Food prices were up 0.2 percent. Net of energy and food, core CPI jumped 0.3 percent, matching its August increase. Core CPI has risen 3.7 percent over the past 12 months. Growing were prices for transportation services (+0.7 percent), shelter (+0.6 percent), new vehicles (+0.3 percent), and medical care services (+0.3 percent). Prices fell for used cars/trucks (-2.5 percent), apparel (-0.8 percent), and medical care commodities (-0.3 percent). 

Wholesale prices also increased in September. The Bureau of Labor Statistics reports that the Producer Price Index (PPI) for final demand jumped a seasonally adjusted 0.5 percent. This follows July and August gains of 0.6 percent and 0.7 percent, respectively, and left the index up 2.2 percent over the past year. Core PPI, which removes energy, food, and trade services, increased 0.2 percent for the month (matching its August increase) and 2.8 percent over the past year. Wholesale energy prices rose 3.3 percent (gasoline: +5.4 percent), while those for food surged 0.9 percent (pushed up by chicken and meat). 

Consumer sentiment faltered in early October. The University of Michigan’s Index of Consumer Sentiment lost 5.1 points to a seasonally adjusted 63.0 (1966Q1=100). Even with the decline, the index remained 5.2 percent above year-ago levels. The current conditions index declined 4.7 points to 66.7 (October 2022: 65.6), while the expectations index shed 5.3 points to 60.7. One-year inflation expectations surged by 6/10^ths of a percentage point to +3.8 percent. Long-run inflation expectations increased by 2/10^ths of a percentage point to +3.0 percent. The press release noted that inflation concerns led to lower assessments of personal finances. 

Prices weighed on small business owners’ optimism in September. The Small Business Optimism Index from the National Federation of Independent Business dropped by a half point to a seasonally adjusted 90.8 (1986=100). The index has failed to top the century mark for 27 straight months. Five of ten index components improved in September, led by a gain for current job openings. Four others fell (including a sharp decline for expected economic conditions) and the plans to make capital outlays component held steady. Nearly a quarter of business owners indicate that inflation was the “single most important problem in operation their business.”

Wholesale inventories slipped in August. Merchant wholesalers’ inventories decreased 0.1 percent to a seasonally adjusted $900.2 billion. The Census Bureau measure was down 1.0 percent from a year earlier. Nondurable wholesale inventories contracted 0.4 percent, while those for durables held steady. Wholesale sales jumped 1.8 percent in August to a seasonally adjusted $662.3 billion (-1.7 percent versus August 2022). Nondurable wholesale sales surged 3.3 percent (boosted by petroleum and drugs), while durable sales edged up 0.2 percent. The inventory-to-sales (I/S) ratio declined by three basis points to 1.36 (August 2022: 1.35). The nondurables I/S ratio fell by four basis points to 0.95, while the durables ratio was steady at 1.84.

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

• Jobless Claims (Week ending October 7, 2023, First-Time Claims, seasonally adjusted): 209,000, Unchanged vs. the previous week, +3,000 vs. the same week a year earlier). 4-week moving average: 206,250 (+6.2% vs. the same week a year earlier). 
• Import Prices (September 2023, All Imports, not seasonally adjusted): +0.1% vs. August 2023; -1.7% vs. September 2022. Nonfuel Imports: -0.2% vs. August 2023; -0.8% vs. September 2022. 
• Export Prices (September 203, All Exports, not seasonally adjusted): +0.7% vs. August 2023; -7.8% vs. September 2022. Nonagricultural Exports: +1.0% vs. August 2023; -3.8% vs. September 2022. 
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