CNN: Wholesale prices soar

[kysrsoze]

NEW YORK (CNN/Money) - Wholesale prices soared in October, as rising energy prices resulted in the largest increase since 1990, the government reported Tuesday. The latest inflation reading came in well above Wall Street expectations.

The Labor Department's overall Producer Price Index gained 1.7 percent, compared with a 0.1 percent rise in September. Economists surveyed by Briefing.com had forecast a 0.6 percent rise. Citigroup's forecast of a 1.0 percent increase was the highest forecast found by a Reuters survey.

The so-called "core-PPI" that excludes food and energy prices gained 0.3 percent, the same as the rise posted in September. Even without a big jump in the closely watched core PPI, it was also well above estimates. Briefing.com had a consensus forecast of 0.1 percent.

Energy prices were up 6.8 percent, but they weren't the only culprit. Food prices were up 1.6 percent. The big jump resulted in a wholesale prices posting a 4.4 percent gain compared with a year earlier. In September that year-over-year increase had been only 3.3 percent.

http://money.cnn.com/2004/11/16/news/economy/ppi/index.htm?cnn=yes

Well, here we have it. What we've known for months is now being acknowledged and reported. Good thing the election is over so we can finally hear the truth.

[TomClash]

1. Imagine that

Higher energy prices, a weakening dollar and huge deficits will do that.

[asjr]

2. Cheney is taking care of energy for us and

we will be forced to eat Arroz con Pollo from the WH.

[lil-petunia]

5. coincidental timing. AFTER the election

Yet people have known this for months.

[mom cat]

45. you noticed.

[papau]

21. 1.7% equates to 22.4% annually - I do not see that number in the media?

Excluding energy and food costs, which can swing widely from month to month, "core" wholesale prices climbed in October by 0.3 percent for the second month in a row. The PPI figures showed larger gains than economists were expecting. They were forecasting overall wholesale prices to go up by 0.6 percent in October and core prices to edge up by 0.1 point. The 1.7 percent increase in the overall PPI was the largest advance since January 1990.


http://ap.tbo.com/ap/breaking/MGBZUWL5M1E.html

Wholesale Prices Jump by 1.7 Percent in October
By Jeannine Aversa
Associated Press Writer


WASHINGTON (AP) - Propelled by sharply higher energy and food costs, wholesale prices soared by 1.7 percent in October, the largest increase since early 1990.
The Producer Price Index measures costs of goods before they reach store shelves. The big over-the-month jump came after wholesale prices edged up just 0.1 percent in September, the Labor Department reported Tuesday. Concerns about inflation have driven the Federal Reserve's credit-tightening policies of recent months.
===========================================================================
http://www.bls.gov/news.release/ppi.nr0.htm

NOVEMBER 16, 2004

Producer Price Indexes -- October 2004

The Bureau of Labor Statistics of the U.S. Department of Labor
reported today that the seasonally adjusted Producer Price Index for
Finished Goods advanced 1.7 percent in October. This gain followed a 0.1-
percent rise in September and a 0.1-percent decrease in August. At the
earlier stages of processing, prices received by the manufacturers of
intermediate goods went up 0.9 percent, after increasing 0.1 percent in the
prior month. The index for crude materials turned up 4.3 percent in
October, compared with a decline of 4.2 percent in September. (See table
A. Monthly and annual percent changes in selected stage-of-processing price
indexes, seasonally adjusted:Finished goods 2004: Jan.. 0.6...Feb... 0.1....Mar. 0.6...Apr...... 0.7......May..... 0.6....June.....r -0.2...July.... 0.1....Aug.... -0.1...Sept.... 0.1...Oct.....1.7)


Before seasonal adjustment, the Producer Price Index for Finished
Goods increased 2.2 percent in October to 151.9 (1982=100). From October
2003 to October 2004, prices for finished goods advanced 4.4 percent. Over
the same period, prices for finished energy goods went up 17.2 percent, the
index for finished goods other than foods and energy climbed 1.8 percent,
and the index for finished consumer foods rose 2.5 percent. Prices for
intermediate goods moved up 9.0 percent during the 12-month period ended
October 2004, and the crude goods index jumped 15.7 percent.


*****
Producer Price Index data for November 2004 are scheduled to be released on
Friday, December 10, 2004, at 8:30 a.m. (EST).

Brief Explanation of Producer Prices Indexes

The Producer Price Index (PPI) of the Bureau of Labor Statistics (BLS)
is a family of indexes that measure the average change over time in
the prices received by domestic producers of goods and services. PPIs
measure price change from the perspective of the seller. This contrasts
with other measures, such as the Consumer Price Index (CPI). CPIs measure
price change from the purchaser's perspective. Sellers' and purchasers'
prices can differ due to government subsidies, sales and excise taxes, and
distribution costs.

More than 8,000 PPIs for individual products and groups of products
are released each month. PPIs are available for the products of virtually
every industry in the mining and manufacturing sectors of the U.S. economy.
New PPIs are gradually being introduced for the products of industries in
the trade, finance, and services sectors of the economy.

More than 100,000 price quotations per month are organized into three
sets of PPIs: (1) Stage-of-processing indexes; (2) commodity indexes; and
(3) indexes for the net output of industries and their products. The stage-
of-processing structure organizes products by class of buyer and degree of
fabrication. The commodity structure organizes products by similarity of
end use or material composition. The entire output of various industries
is sampled to derive price indexes for the net output of industries and
their products.


Data Collection

PPIs are based on selling prices reported by establishments of all
sizes selected by probability sampling, with the probability of selection
proportionate to size. Individual items and transaction terms from these
firms are also chosen by probability proportionate to size. The BLS
strongly encourages cooperating companies to supply actual transaction
prices at the time of shipment to minimize the use of list prices. Prices
submitted by survey respondents are effective on the Tuesday of the week
containing the 13th day of the month. This survey is conducted primarily
through the mail.

Price data are provided on a voluntary and confidential basis; only
sworn BLS employees are allowed access to individual company price reports.
BLS publishes price indexes instead of unit dollar prices. All PPIs are
subject to revision 4 months after original publication to reflect the
availability of late reports and corrections by respondents.

.

Price Index Reference Base

Effective with publication of January 1988 data, many important PPI
series (including stage-of-processing groupings and most commodity groups
and individual items) were placed on a new reference base, 1982=100. From
1971 through 1987, the standard reference base for most PPI series was
1967=100. Except for rounding differences, the shift to the new reference
base did not alter any previously published percent changes for affected
PPI series. (See "Calculating Index Changes," below.) The 1982 reference
base is not used for commodity indexes with a base later than December 1981
or for industry net output indexes and their products.


In 1998, the PPI implemented the X-12-ARIMA Seasonal Adjustment
Method; prior to that year the PPI employed the X-11 method. Each year,
the seasonal status of most commodity indexes is re-evaluated to reflect
more recent price behavior. Industry net output indexes are not seasonally
adjusted. For time series that exhibit seasonal pricing patterns, new
seasonal factors are estimated and applied to the unadjusted data for the
previous 5 years. These updated seasonally adjusted indexes replace the
most recent 5 years of seasonal data.


Since January 1988, the PPI has used Intervention Analysis Seasonal
Adjustment methods to enhance the calculation of seasonal factors. With
this technique, outlier values that may distort the seasonal pattern are
removed from the data prior to applying the standard seasonal factor
estimation procedure. For example, a possible economic cause for large
price movements for petroleum-based products might have been the Persian
Gulf War. In this case, intervention techniques allowed for better
estimates of seasonally adjusted data. On the whole, very few series have
required intervention. Out of nearly 900 seasonally adjusted series, only
16 interventions were performed in 1997.

[Digit]

48. Shhhh...it's supposed to be a....secret.....

if you don't tell....maybe nobody will notice....

[sonicx]

3. largest increase since 1990 - still setting records.

[Poor Richard Lex]

4. Gee, a wholesalers cost increase in October

won't be felt by the public for a month or more. what good timing for shrub! another glitch mayber?

[WannaJumpMyScooter]

7. Hmmmm. Breaking Daddy's records, at that

This boy is doin good, huh?

[phantom power]

6. Bush voters know: setting that thermostat at 50F,and eating dog-food

is a small price to pay for taking a stand on two guys living together.

[calimary]

14. I'm starting to get that "compassionate conservative" feeling toward folks

who voted for bush. Especially those who knew, and saw, and were shown enough to know better. On EVERY score, too. But, hey, gotta go git them queers, 'eh? Our country is going straight to hell but as long as we can smack a few gays around, everything's just peachy. Oh yes, almost forgot - Praise the Lord!

[llmart]

41. Me, too, calimary.....

I know some of them and I can't bring myself to even smile or wave at the ones that live two doors down from me. I'm all out of compassion for the assholes that voted for Bush. Let THEM be the ones who eat dog food and can't go to the doctor when they're sick or their children are sick. Let THEM be the ones to send their loved ones off to Iraq to be blown to bits for Halliburton profits. They'll get no compassion from me.

[durablend]

31. Sheesh...GET WITH THE PROGRAM...

Have you checked the price of dog food lately?

That minimum wage job might buy you a can of it, but not much more.

[phantom power]

34. dry food: It's a great deal, by the 50lb bag.

[WannaJumpMyScooter]

8. Can you say hyperinflation? I knew you could.

Keep your warm coats, kids, it's gonna be a rough one.

[RawMaterials]

49. can we say Germany 1930 style hyperinflation n/m

[seasat]

9. In addition to energy prices don't forget the exchange rate.

With offshoring occuring for manufacturing at least part of the finished goods here in the US, the sinking of the dollar is making foreign goods more expensive. That would also raise the wholesale prices. IMHO, we've come to rely on overseas manufacturing for so much of our production, that we don't have the manufacturing facilities to duplicate it in in the US. With the sinking of the dollar, we're now forced to buy more expensive goods from overseas because they remain our only source for certain items. Shrub Inc does it again.

[skooooo]

10. oh what a freakin shock

Here ya go, middle America. Here's some "values" for you.

[Old and In the Way]

11. Plastic resin going up 15-18%

That will start showing up in ever molded part that is made....this is on top of an increase 2 months ago.

[Roland99]

36. Got a link for that one?

[Old and In the Way]

39. Not yet....waiting to see if I can get a formal notice....just heard this

last night.

[bin.dare]

12. and who do they blame?

"Energy prices were up 6.8 percent, but they weren't the only culprit. Food prices were up 1.6 percent."

those damn food culprits. F**k cnn's financial analysis, shrub cannot do any wrong.

[ProfessorGAC]

26. And Of Course, There's No Energy Used In Food

Not in production, or shipping, or processing, or shipping of finished goods to stores, or the retail centers that sell the food. So, of course, the food thing is "independent" of energy. Dumbasses.
The Professor

[TahitiNut]

37. Interestingly, they don't make note of energy-intensive industries.

Energy-intensive industries show increases while other industries are mixed. There also appears to be greater increases in the more narrowly-controlled industries, where the number of providers is most limited.

[Zorra]

13. All the bad news comes out after the selection. I got a feeling "we ain't

seen nothin' yet."

[calimary]

17. Yeah, the rest of the CIA report is yet to be released. Oh. Wait a minute.

Sorry. I forgot. This is the bush age. They can't stall the economic figures forever, but they can keep all that other nasty stuff hushed up. Nothing stopping them now.

[0007]

15. CNN is a wholesale Whore House for the White House

......ya haven't seen anything yet!! When winter hits folks will be jumping out of birthday suits.

[dkofos]

16. Get used to it.

This will get much worse.

:cry::cry::cry::cry:

[sal]

18. Where are the fops I saw here cheering the weak dollar?

You couldn't melt butter in their mouths - pricks.

Hey, let me break it down for you Pointdexters: my five bucks in 2000 is now worth four.

Let me break it down further: Fuck you.

[happynewyear]

19. energy prices should be blammed!

Totally sucks IMO. The cost of fuel is one of the main reasons for this to occur. Food has skyrocketed! I'm not buying a whole lot of anything right now (who can afford it?).

I've noted things like the local salad bar - up 25%. Their sandwiches, up 25%. Everything seems to be up foodwise about 25%. Seems that about the amount that gasoline has risen in the past several months - about 25%.

So yeah, that $5 bill is buying maybe $4 worth of stuff, MAYBE.

:(

:kick:

[mac56]

20. But..but..but..

Gays still can't get married, right?

I mean, as long as no gays can get married, we're okay, right?

/sarcasm

[Beetwasher]

22. Helloooooooooooooooooo Inflation!!

Where ya been? Oh, that's right, been there all along, you were just being kept out sight...

[jpak]

23. It's the Bush Miracle Economy!

Weeeeeeeeeeeee!!!!!!!!

[cliss]

24. An interesting factoid:

In the 1950's, some really big research was done to try to find out what caused the business cycles to go up and down. Good times = peak. Bad times = trough. Like a wave length, businesses expand, then times go bad and they contract, and we have a recession, or maybe even a depression if the wave goes far enough down.

Kondratieff got his Ph. D. studying what drives the wave to go down. There were lots of factors to look at: unemployment, company profits, consumer confidence etc etc.

He discovered that the ONE single factor that started the wave to go down was the increase in wholesale prices. This started the chain of events which led to the downturn in the economy.

The firm is faced with higher prices. It proceeds to hike its retail prices. The consumer buys less. This in turn causes the retail firm to lay off people. = less purchasing.

The really frightening thing about this jump in the wholesale prices is the very large amount. This has got to be some kind of a record.

Welcome to Bush Land.

[lawladyprof]

33. Impact of income tax structure

This is what I learned many, many years ago re: influence of the progressive income tax on the business cycle (copied and pasted from another use--sent to Kerry campaign--no response <sigh>). Debunk if no longer considered valid.

When the tax structure is properly progressive, it acts AUTOMATICALLY to "smooth" out the downturns in the economic cycle. Works this way. Ec. downturn leads to reduced income in the aggregate (and individually for a number of people). B/c their taxes fall faster than their gross adjusted income the very nature of the tax structure acts (without any intervention, e.g., extension of unemployment benefits) to sustain buying power and thus demand, which in turn mitigates the effect of the downturn on employment. I am not sure (and maybe you could check with US history/ec. profs. whether income tax in the 1920's was progressive or flat, but this was one reason that FDR made the income tax progressive/increased its progressivity. Anywhoo, one theory might well be that we have gone too far (think payroll taxes, fee for service type financing, etc.) in flattening the progressivity of the tax system so it is less effective in "smoothing out" the downs (and, by extension, the ups) of the economic cycle. Hence, the current recession went deeper and lasted longer than it would have.

This is not an argument I have seen/heard since my days as an ec. major so I don't know if it is still considered valid. When put with the to-whom-much-is-given-much-is-required point of view, it substantially strengthens the argument for a progressive income tax. Note that under a flat tax, the potential for an ec. meltdown a la 1929 is increased to a virtual certainty. There is the thought that without progressivity in the tax structure, the lower demand leading to loss of jobs/income leading to less demand spiral can get beyond control (read Great Depression).

[cliss]

40. Interesting. Thanks for the update.

Taxation is a fascinating subject. I was amazed to find out that in the 1800's and early 1900's, we didn't have an income tax! I think they instituted the income tax in 1918. Pundits have speculated that this was the reason for the unbelievable wealth accumulated in the early part of last century. The American industrial machinery was getting started and we were establishing ourselves as a major power. Capitalism was pretty much laissez-faire in those days. Huge amounts of wealth were created.

Once the Great Depression hit, I think policymakers were anxious to try to find out what happened and how they could avoid it in the future.

As far as a progressive tax, progressive is defined as a tax where you pay more taxes as you earn more. The idea is that if you make $200,000 per year, you can afford to pay more in taxes than someone who earns $34,000. A sales tax is considered to be regressive because poor people will end up spending more of their meager wages on necessities.

Now the question is: do progressive taxes smooth out the business cycle? I would agree with you that it does. It would smooth out the wild swings that we endured, especially in the 1800's.

Now consider what Bush is doing right now. He's re-creating a world before 1918. He's allowing the capitalists free rein. They pay hardly any taxes (if any at all). Taxes have gone way down.

If the theory you posted up above is correct, then we're going to go back to those wild swings that we had in the 1900's. I'm also assuming that all those Entitlement programs will be dried up (like Unemployment, myriad forms of assistance, etc).

Welcome back to the Roaring 20's.

(have my BA in Econ, Labor Economics)

[lawladyprof]

44. Well, that argues that this trough is a result

flattening the tax structure. Did you learn this as economics major too?

[tmooses]

25. It's Hard Work Fucking the Economy

[Javaman]

27. And we are surprised by this because????

The value of the dollar is plunging overseas. It's only logical that wholesale prices would surge.
It's bad now, but if the Chinese ever to decide to call in their T-bonds, then we are in really deep shit. It will make the depression of the 30's look like a walk in the park.

[JPace]

28. Praise the lord and pass the potaoes...

Oops! can't afford potatoes anymore.

[BlueStatesForever]

29. On the Yahoo board they're blaming it on Clinton and Kerry

Yes, you heard me, Clinton and Kerry. And you thought WE were living in denial.

[KayLaw]

30. How can that be?

I recently read of someone saying all the layoffs are Clinton's fault because he gave the corporations too much hope, thereby causing them to overhire, but how can they blame Clinton and Kerry for prices?

[kysrsoze]

35. Kerry's work of opposing Bush's re-election had a significant impact

on pricing. Whatever. Excuse me while I go vomit.

[KayLaw]

42. Think I'll join you!

That's pretty darn silly!

[RawMaterials]

50. just like the INTERNET bubble and economy were

all thanks to Regen's trickle down economics. I guess it takes 20 years to trickle down to us regular folk.

[MallRat]

32. But Bush is a god-fearing Christian, so none of this is relevant.

:eyes:

[PlanetBev]

38. Gee, wonder if some people voted against their own interests

YOU THINK??????????

[MatrixEscape]

43. Not so long ago ...

I recall thinkin that Greenspin was totally lieing when he said that the high oil prices would not have the same impact on the economy and prices as it did "crisis" did in the '70's. He was talkiing about energy and how efficient we are now compared to then.

Ha! Energy is not the only think oil and all its petroleum products impact.

While there are several factors involved, oil is everything and it only makes sense that prices on other things would start to catch up about now.

[daleo]

46. War+OilShortage+TaxCutsForRich+Deficit=Inflation

Who could have imagined this?

[Thor_MN]

47. Is this "pent up" inflation i.e. businesses propping up *'s economy '

before the election or is it the start of the "W."

I've called * "DoubleDip" since day one. I was starting to doubt myself, but now I think we are just catching sight of his second recession/depression. The question is "will people FINALLY realize that voting GOP is bad for your financial health?"

FDIC should require warning messages on ballots.