In today’s release, headline m/m CPI inflation was down sharply, from 11.4% to 5.8%, annualized. Various measures derived from the data in the release, including the inflation rate of the sticky price CPI — that focuses on infrequently changed prices — declined slightly, suggesting easing pressures. The trimmed CPI — which excises highly volatile components — was also falling indicating it’s not outliers driving July decreases.
Deceleration – The July CPI Release
From BLS today:
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in July on a seasonally adjusted basis after rising 0.9 percent in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 5.4 percent before seasonal adjustment.
IPCC Projections and Simulations
The Economist has a summary of what yesterday’s IPCC report says. Here is a graphic that Deutsche Bank research is circulating.
China Growth in Question
The FT article “China Covid outbreak linked to Delta variant weighs on economy” (Hale, White, Shepherd) makes some grim reading, with several other articles having a similar take, citing Goldman Sachs. I was gripped by a sense of déjà vu. In my first lecture in January 2020 I cited the uncertainties for the trade/macro outlook given events in Wuhan. From FT:
A Rebound in Lumber Prices?
Reader JohnH points us to an article entitled “Lumber prices have fallen, but the stage is set for a potential 65% rally through the end of the year, an expert says”. What do markets say about this?
GDP at (Covid) Risk? – and State and Behavioral Response
As of last week, GDP originating in counties with rising death rates accounts for 60% of total; still below the 80% recorded in the Winter.
Wisconsin’s Economic Forecast
The Wisconsin Department of Revenue released the latest Economic Forecast on Thursday.
Decelerating Florida Economic Activity thru 7/31 and Covid-19 Fatalities Rising
Florida is decelerating faster than the US, according to the Baumeister et al. Weekly Economic Conditions Index (discussed in this post) just released today.
Perspective on the Employment Release
Some observations: (1) The blockbuster number (943 K vs 870K fm Bloomberg consensus) has to be kept in perspective, as NFP employment is far below trend, (2) high contact intensive services employment was recovering quickly through the reference period before the delta variant surge, (3) both average nominal wages and aggregate hours continued to rise, and (4) average real wages likely stabilized in July, at about 1.5% above 2016-19 trend.
Predicting the Lumber PPI for July-September
Calculated Risk (h/t pgl) noted the decline in futures lumber prices. Joseph has argued that this won’t necessarily show up in actual prices paid by the consumer for a while. I don’t have retail prices, but I have the BLS measure one step removed from consumers, the PPI for lumber.