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Producer Prices Warm Up, Jobless Claims Tick Higher In Disagreeable US Data
If hope still floated for a 50bps rate cut from Jerome Powell next week, Thursday's BLS update on wholesale prices sank it. Sank the hope, I mean.
A day on from a warmer-than-expected read on core consumer price growth for August, the government said producer prices rose 0.2% last month from July, ahead of consensus. Excluding food and energy, PPI rose 0.3%, likewise quicker than economists saw.
Notwithstanding my dramatized opening sentence(s), I wouldn't make too much of this release. July's
Fiscal policy is inflationary and the government can hire more people when the private business payrolls exhibit weakness. The US is now on track for $2T in deficit spending.
The Fed is on track to assist the underlying fiscal policy situation by keeping everything within a narrow band- not too much inflation, keep the economy from going too low and keep employment at “healthy” levels. No need to drop rates too much right now