Inflating More: March 11 – 15

Inflation remained in February. Here are five things we learned from U.S. economic data released during the week ending March 15.

Consumer prices accelerated in February. The Consumer Price Index (CPI) jumped a seasonally adjusted 0.4 percent, following 0.2 percent and 0.3 percent rises in December and January. The Bureau of Labor Statistics measure was up 3.2 percent over the past year. Energy prices rose 3.2 percent (gasoline: +3.8 percent), while food CPI held steady. Net of energy and food, core CPI increased 0.4 percent, matching its January gain and up from December’s 0.3 percent bump. Core CPI has risen 3.8 percent over the past year. Prices grew for transportation services (+1.4 percent), apparel (+0.6 percent), used cars/trucks (+0.5 percent), shelter (+0.4 percent), and medical care commodities (+0.1 percent). Falling 0.1 percent were prices for new vehicles and medical care services.

Wholesale prices also showed some pop in February. The Bureau of Labor Statistics reports the Producer Price Index (PPI) for final demand surged a seasonally adjusted 0.6 percent, following January’s 0.3 percent gain. The core measure, which nets out food, energy, and trade services, advanced 0.4 percent in February. Energy (+4.4 percent) and food (+1.0 percent) experienced significant wholesale price gains, while core goods saw a more minor 0.3 percent increase. PPI has risen 1.6 percent over the past year, during which the core wholesale price measure has jumped 2.8 percent.

Retail sales rebounded in February. Retail and food services sales grew 0.6 percent to a seasonally adjusted $700.7 billion. The Census Bureau measure was up 1.5 percent from a year earlier. As this data series does not adjust for price changes, retail sales have not kept up with inflation over the past year. Sales rose at auto dealers/parts stores (+1.6 percent) and gas stations (+0.9 percent). Net of both, core retail sales increased 0.3 percent in February and 2.2 percent from a year earlier. Sales improved at building materials (+2.2 percent) and electronics (+1.5 percent) retailers and at restaurants/bars (+0.4 percent). Sales declined at furniture retailers (-1.1 percent), apparel stores (-0.5 percent), health/personal care retailers (-0.3 percent), and grocery stores (-0.1 percent).

Manufacturing picked up in February. The Federal Reserve estimates manufacturing output rose a seasonally adjusted 0.8 percent after falling 1.1 percent in January. Durable (+1.0 percent) and nondurable (+0.7 percent) production rose. There were sizable gains in output for wood products (+2.4 percent), motor vehicles/parts (+1.8 percent), chemicals (+1.6 percent), printing (+1.5 percent), and paper (+1.1 percent). Overall industrial production eked out a 0.1 percent increase, which included a 2.2 percent jump in mining output and a 7.5 percent drop in utilities output. Both manufacturing (-0.7 percent) and industrial (-0.2 percent) production remain below year-ago levels.

Consumer sentiment held steady in early March. The University of Michigan’s Index of Consumer Sentiment slipped 4/10^ths of a point to a seasonally adjusted 76.5. The index was up 23.4 percent from a year earlier. The current conditions index stayed at 79.4 (+19.8 percent versus March 2023), while the expectations measure lost 6/10^ths of a point to 74.6 (+26.0 percent versus March 2023). Noting that sentiment has “stabilized into a holding pattern,” the press release states that consumers were “withholding judgment about the trajectory of the economy, particularly in the long term, pending the results of this November’s election.”

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

• Jobless Claims (Week ending March 9, 2024, First-Time Claims, seasonally adjusted): 209,000, -1,000 vs. the previous week, -12,000 vs. the same week a year earlier). 4-week moving average: 208,000 (-4.5% vs. the same week a year earlier).
• Import Prices (February 2024, All Imports, not seasonally adjusted): +0.3% vs. January 2024 -0.8% vs. February 2023. Nonfuel Imports: +0.2% vs. January 2024; -0.5% vs. February 2023.
• Export Prices (February 2024, All Exports, not seasonally adjusted): +0.8% vs. January 2024; -1.8% vs. February 2023. Nonagricultural Exports: +0.8% vs. January 2024; -1.0% vs. February 2023.
• State Employment (January 2024, Nonfarm Payrolls, seasonally adjusted): Increased in 8 states and unchanged in 42 states and the District of Columbia vs. December 2023. Increased in 27 states and unchanged in 23 states and the District of Columbia vs. January 2023.
• Small Business Optimism (February 2024, Index (1986=100), seasonally adjusted): 76 (January 2024: 73; February 2023: 71).
• Business Inventories (January 2024, Manufacturers’ and Trade Inventories, seasonally adjusted): $2.555 trillion (Unchanged vs. December 2023; +0.4% vs. January 2023).
• Monthly Treasury Statement (February 2024, Federal Budget Deficit): -$828.1 billion through the 1^st 5 months of FY24 (+14.6% vs. 1^st 5 months of FY23).

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