It’s Friday and that means it’s time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don’t worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let’s take a look at this week’s big headlines…
Consumer Price Index
On Thursday, The Labor Department released a positive Consumer Price Index report. With mixed year-on-year rates, overall prices went up 0.2 to 1.9% while the core holding remained flat at only 1.7%. However, this was the first time in over six months that this indicator didn’t come in under expectations. In fact, core consumer prices posted a 0.2% gain.
Housing picked up 0.4% in August, and recent contractions in wireless telephone services eased this month with only a 0.1% decline. Used vehicle prices also dipped 0.2% while new vehicle prices remained flat. With a 1.0% jump in insurance, transportation prices went up 0.4%. Due to pressure from Hurricane Harvey, energy costs rose 2.8% with gasoline alone going up 6.3%.
There weren’t many signs of fundamental strength in Friday’s Retail Sales report. Headline sales fell 0.2% while ex-auto sales came in just below the estimate at 0.2%. Even though the Commerce Department couldn’t isolate all the impacts of Hurricane Harvey, its effects are already showing up. With gasoline up 2.5% as a result of the storm, auto sales fell 1.6%. Also down were nonstore retailers, with a 1.1% downward slide. Building materials were also down 0.5%, and apparel was down 1.0%.
On the plus side, restaurants and furniture were up 0.3% and 0.4% respectively while general merchandise came in at +0.2%. However, the overall effects of Harvey, not to mention Hurricane Irma, still have yet to play out.
The biggest hit from the recent hurricanes, however, is on the production side of the economy. Industrial production fell 0.9% in August. In fact, all three components of this month’s Industrial Production report show declines. Utilities are down 5.5%. Mining is down 0.8%, and manufacturing is down 0.3% despite a rise in vehicle production.
Consumer Sentiment Index
On the lighter side, neither of the past two months’ hurricanes did much damage to overall consumer sentiment. The University of Michigan’s preliminary sentiment index fell to just 95.3 points from 96.8 points. The biggest decline was in expectations, which fell 4.3 points to 83.4. On the other hand, the current conditions component went up 3 points to hit the best level in nearly 17 years at 113.9. Both one and five year expectations are also up to 2.7 and 2.6 points respectively. However, even with the strong consumer sentiment, consumer spending hasn’t much of a lift yet.
That’s all I have for you this week. I’ll be in touch again next week with the latest ratings out of Portfolio Grader.
Have a great weekend,