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US Producer Prices Drop Most Since 2020. Retail Sales Better Than Feared
US retail sales were firmer than expected in October, data released on Wednesday showed, but a cool read on producer prices helped take the hawkish edge off.
Nominal spending across the world's largest economy dropped just 0.1% last month against expectations for a decline triple that size. The range of estimates, from more than five-dozen economists who ventured a guess, was -0.7% to +0.3%.
The small drop counted as the first decline in seven months. September's already robust showing was rev
Maybe pandemic inflation was transitory-ish after all. By staying where it is for a while, the Fed has a chance, imo, to nudge prices back toward pre-pandemic levels (i.e., deflation) without harming the economy. Wall Street, of course, disagrees and can be expected to ratchet up its cries for (much) lower interest rates.
Broad deflation will hit corporate revenues and earnings enough to drive UE higher, and perhaps tax revenues enough to worsen the deficit, I fear. I think the Fed is much more comfortable with disinflation (low inflation) than deflation.