US Producer index: inflation below than expected

Discussion in 'General Trading Discussion' started by WaveWage, Sep 12, 2015.

  1. WaveWage

    WaveWage Well-Known Member

    Joined:
    Sep 2015
    Posts:
    243
    Likes Received:
    2
    It seems Fed will have to answer a lot of dilemmas, given how much the interests rate are waited and their hope of inflation. For the recall, US Fed is for 2% inflation each year.
    This month, globally, the producer (and not consumer) price index is unchanged, meaning that there was no inflation at all between July & August. For June & July, the producer price index rose (PPI) rose of 0.2%


    Without food & without energy, often judged to be volatile according to markets, it rose of 0.3% in August. The thing is energy prices fell of 7.7% (you remember the oil price fall?) meanwhile egg prices rose of 23.2%. But any of these events aren't enough.
    Do you think that it will change the Fed decision? How hard Federal Reserve wants this 2% inflation?
     
  2. Hyperion

    Hyperion Well-Known Member

    Joined:
    Aug 2015
    Posts:
    49
    Likes Received:
    0
    I was looking at inflation statistics the other day and saw that 0.2% statistic. It surprised me because it feels like everything except for gas has been getting more and more expensive faster than ever. Inflation is bad for the average consumer, and especially in recent times since wages haven't been climbing much at all. I enjoy watching videos of people who produce their own food at home, or live on homesteads. It seems like a pretty good life, and with the way things are going in the world, I may become a mini-'prepper' myself. I think a lot of people have lost their ability to be self-sustainable and if an economic collapse ever happened, I think things could get extremely violent very quickly.
     
  3. crimsonghost747

    crimsonghost747 Senior Investor

    Joined:
    Mar 2014
    Posts:
    1,722
    Likes Received:
    6
    As long as inflation is positive, there is nothing to worry about. I'm a bit surprised to hear how low it is... but hey it's still positive so it's all good. I don't think the FED will raise rates right now since in general they have been pretty damn cautious about it for a long time now. It's time... it has been time for a while... but they won't act because they are afraid of the effects it will create.
     
  4. JR Ewing

    JR Ewing Super Moderator Staff Member

    Joined:
    Feb 2014
    Posts:
    4,950
    Likes Received:
    39
    There was some interesting discussion this morning on "Sunday Morning Futures" about how some economists are predicting a recession here by 2018. They are saying that the recent sharp declines across the various commodities is very alarming and is a major factor in their calculations.
     
  5. baudwalk

    baudwalk Senior Investor

    Joined:
    May 2015
    Posts:
    1,459
    Likes Received:
    13
    Who airs "Sunday Morning Futures"?
     
  6. Nox

    Nox Guest

    Joined:
    Aug 2015
    Posts:
    65
    Likes Received:
    1
    Upward inflationary power will have to come from the consumption expenditure if they are expecting that level of inflation. In order for this to happen you would have to see quite a significant rise in the purchasing power or income of consumers. The prices of input factors should remain relatively subdued. Oil prices are currently very low amid steady supply and other commodities are experiencing sharp declines, in the wake of a mild slow down in the Chinese economy. Rest of the world still remains relatively frail. I don't think inflation will place any upward significant upward pressure on interest rates. Upward pressure will come largely from the desire to increase the yields in the market.
     
  7. WaveWage

    WaveWage Well-Known Member

    Joined:
    Sep 2015
    Posts:
    243
    Likes Received:
    2
    Notice it is producer index, not consumer price index. But those should be related, it's right.


    Maybe we shouldn't expect that much terrible effects and it is what Fed could be expecting as well. I mean, I read an article few days ago telling that the raise of interests rates (and should we recall that in fact, is a way more complicated thing than pushing the button and set +1%) are more a non-event than anything else, and wouldn't change much things. Maybe with this mindset, Fed will push the button now? After all, outside of the fact it is unpredictable, what horrible event may happen?


    Recession, once again, in 2018? It depends of what they call recession but I find it to be a pessimistic assumption.
     
  8. crimsonghost747

    crimsonghost747 Senior Investor

    Joined:
    Mar 2014
    Posts:
    1,722
    Likes Received:
    6
    The generally accepted definition of a recession is at least two successive quarters of declining GDP.
     
  9. JR Ewing

    JR Ewing Super Moderator Staff Member

    Joined:
    Feb 2014
    Posts:
    4,950
    Likes Received:
    39
  10. JR Ewing

    JR Ewing Super Moderator Staff Member

    Joined:
    Feb 2014
    Posts:
    4,950
    Likes Received:
    39
    Fox - hosted Maria Bartiromo.
     

Share This Page