Consumer inflation remained above the Fed’s target in March. Here are the five things we learned from U.S. economic data released during the week ending April 12.
Consumer prices continued to rise in March. The Bureau of Labor Statistics reports the Consumer Price Index (CPI) grew a seasonally adjusted 0.4 percent, matching its February gain and above January’s 0.3 percent bump. CPI has risen 3.5 percent over the past year. Food CPI was up a modest 0.1 percent, while energy prices jumped 1.1 percent (including 1.7 percent at the gas pump). Core CPI jumped 0.4 percent for a third consecutive month, up 3.8 percent since March 2023. Jumping were prices for transportation services (+1.5 percent), apparel (+0.7 percent), medical care services (+0.6 percent), shelter (+0.4 percent), and medical care commodities (+0.2 percent). Prices fell for new (-0.2 percent) and used (-1.1 percent) vehicles. Gasoline and shelter were responsible for more than half of the gain in overall CPI.
Wholesale prices, however, grew at a moderate rate. The Producer Price Index (PPI) for final demand grew a seasonally adjusted 0.2 percent in March, down from gains of 0.4 percent and 0.6 percent in January and February. The Bureau of Labor Statistics index has risen 2.1 percent over the past year. Core PPI, which removes food, energy, and trade services, also gained 0.2 percent (an improvement over 0.6 percent and 0.2 percent increases during the two previous months). Goods PPI declined 0.1 percent, pulled down by a 1.6 percent decline in wholesale energy prices. Food PPI jumped 0.8 percent. Services PPI increased 0.3 percent, with gains for transportation/wholesale and trade services of 0.8 percent and 0.3 percent, respectively.
Consumer sentiment slipped as inflation expectations inched up in early April. The University of Michigan’s Index of Consumer Sentiment lost 1.5 points to a seasonally adjusted 77.9 (1966Q1=100). Even with the decline, the index was up 22.3 percent from a year earlier, although it has stayed within a tight 2.5-point range since January. The current conditions index lost 2.8 points to 79.3, while the expectations measure had a more modest 4/10ths of a point decline to 77.0. One-year inflation expectations edged up 2/10ths of a percentage point to +3.1 percent, with long-term anticipated inflation at +3.0 percent. The press release notes that consumers were “reserving judgment about the economy in light of the upcoming election.”
The federal government has been running a slightly smaller budget deficit thus far in FY2024. Through the first six months of fiscal year 2024, the federal government has collected $2.188 trillion in receipts. The Department of Treasury indicates receipts were up 6.8 percent over the comparable FY2023 months. FY2024 receipts have included $1.089 trillion in individual income tax, $802 billion in social insurance & retirement receipts, $189 billion in corporation income taxes, and $42 billion in excise taxes. Outlays thus far in the fiscal year have totaled $3.253 trillion, up 3.3 percent from the comparable months. The biggest expenditures were for Social Security ($715 billion), health ($449 billion), national defense ($433 billion), net interest ($429 billion), Medicare ($391 billion), and income security ($356 billion).
Small business owners continued to feel meh about business conditions in March. The Small Business Optimism Index from the National Federation of Independent Business lost 9/10ths of a point to a seasonally adjusted 88.5. This was the lowest reading for the index in more than 11 years. Among the index’s ten components, six declined during the month (including a sharp drop in expected sales). Two components increased (expectations for the economy and earnings trends), and two held steady (current job openings and plans to increase inventories). The press release notes that inflation was “the top business problem” reported.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending April 6, 2024, First-Time Claims, seasonally adjusted): 211,000, -11,000 vs. the previous week, -9,000 vs. the same week a year earlier). 4-week moving average: 214,250 (-4.4% vs. the same week a year earlier).
- Import Prices (March 2024, All Imports, not seasonally adjusted): +0.4% vs. February 2024; +0.4% vs. March 2023. Nonfuel Imports: +0.1% vs. February 2024; Unchanged vs. March 2023.
- Export Prices (March 2024, All Exports, not seasonally adjusted): +0.3% vs. February 2024; -1.4% vs. March 2023. Nonagricultural Exports: +0.4% vs. February 2024; -0.6% vs. March 2023.
- Wholesale Trade (February 2024, Merchant Wholesalers’ Inventories, seasonally adjusted) $901.1 billion (+0.5% vs. January 2024; -1.5% vs. February 2023).
- FOMC Minutes
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What We Learned About the U.S. Economy Last Week 