Inflation Kept in Check: October 7 – 11

Inflation remained in check during the fall’s opening days. Here are the five things we learned from U.S. economic data released during the week ending October 11.

Consumer prices grew moderately in September. The Consumer Price Index (CPI) grew at a seasonally adjusted 0.2 percent for a third consecutive month, leaving the Bureau of Labor Statistics measure up 2.4 percent over the past year. Energy prices fell 1.9 percent (gasoline: -4.1 percent), while those for food jumped 0.4 percent. Net of both, core CPI rose 0.3 percent for the month (matching August’s gain) and 3.3 percent over the past year. Prices increased for transportation services (+1.4 percent), apparel (+1.1 percent), medical care services (+0.7 percent), used cars/trucks (+0.3 percent), new vehicles (+0.2 percent), and shelter (+0.2 percent). Medical care commodities prices declined 0.7 percent.

Wholesale prices held steady in September. The Producer Price Index (PPI) for final demand was unchanged following a 0.2 percent advance in August. The BLS measure has risen 1.8 percent over the past year. The core measure, which nets out energy, goods, and trade services, inched up 0.1 percent after increasing 0.2 percent in August. Core PPI was up 3.2 percent over the past year. Final demand goods PPI declined 0.2 percent, pulled down by a 2.7 percent decline for energy prices. Services PPI grew 0.2 percent, half of its August 0.4 percent gain.

Consumer confidence dipped in early October. The University of Michigan’s Index of Consumer Sentiment lost 1.2 points to a seasonally adjusted 68.9 (1966Q1=100). Even with the slip, the index remained 8.0 percent ahead of its year-ago mark. The current conditions index lost 6/10^ths of a point to 62.7 (-11.2 percent versus October 2023), while the expectations measure fell 1.5 points to 72.9 (+22.9 percent versus October 2023). The press release noted that “some consumers appear to be withholding judgment about the longer term trajectory of the economy.”

The trade deficit narrowed in August. The Census Bureau and the Bureau of Economic Analysis report exports jumped 2.0 percent to a seasonally adjusted $271.8 billion and imports slowed 0.9 percent to $342.2 billion. The resulting trade deficit of -$70.4 billion was down 10.8 percent for the month. The deficit over the first eight months of this year of -$575.8 billion was up 8.9 percent over the comparable 2023 months. The goods deficit contracted by $8.4 billion to -$94.9 billion, while the services surplus increased by $0.1 billion to +$24.4 billion. The former resulted from increased exports of capital goods, consumer goods, industrial supplies/materials, and automotive vehicles/parts, along with lower imports of industrial supplies/materials and automotive vehicles/parts. The U.S. had its largest trade deficits with China, the European Union, Mexico, and Vietnam.

Small business owner sentiment remained stuck in neutral in September. The Small Business Optimism Index from the National Federation of Independent Business inched up 3/10^ths of a point to a seasonally adjusted 91.5 (1986=100). Five of the ten index components made positive contributions: expected real sales, earnings trends, plans to increase employment, expectations for the economy, and current inventories. Three were drags: current job openings, capital outlay plans, and expansion inventories. The press release claims that “[s]mall business owners are feeling more uncertain than ever.”

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

• Jobless Claims (Week ending October 5, 2024, First-Time Claims, seasonally adjusted): 258,000, +33,000 vs. the previous week, +47,000 vs. the same week a year earlier). 4-week moving average: 231,000 (+8.7% vs. the same week a year earlier).
• Consumer Credit (August 2024, Outstanding Consumer Credit Balances (not including mortgages), seasonally adjusted): $5.098 trillion (+$8.9 billion vs. July 2024; +2.3% vs. August 2023).
• Wholesale Trade (August 2024, Inventories of Merchant Wholesalers, seasonally adjusted): $904.8 billion (+0.1% vs. July 2024; +0.6% vs. August 2023).
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