Sunday, September 16, 2012

The Latest Economic Data Show A Sharply Bifurcated Economy

The big monthly news this week was that inflation took off, with sharp increases in both producer and consumer prices, while industrial production and capacity utilization fell just as sharply. Retail sales rose slightly more than gasoline prices, but June and July were revised down slightly. Consumer sentiment improved sharply, and in particular expectations, one of the 10 components of the LEI.

The high frequency weekly indicators should show turns before they show up in monthly or quarterly data. Most of these remain quite positive, although employment indicators are concerning, and gas prices are at the highest levels ever for this time of year. Let's start once again with them.

The energy choke collar is solidly engaged, but gasoline usage is holding up:

Gasoline prices rose yet again last week, up $.01 from $3.84 to $3.85. Gas prices have risen $0.49 since their early July bottom, and are now only $0.09 cheaper than at their highest point this spring.Oil prices per barrel rose from $96.42 to $99.00. Gasoline usage was slightly negative on a YoY basis. For one week, it was 8695 M gallons vs. 8848 M a year ago, down -1.7%. The 4 week average at 9004 M vs. 9011 M one year ago, was essentially unchanged.

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