The PPI rose 0.2 percent, in line with expectations. The BLS revised the July PPI lower to 0.1 percent. 
The BLS report the Producer Price Index Rose 0.2 percent in August.
PPI Final Demand Key Detail Month-Over-Month
- PPI: +0.2 Percent
- Services: +0.4 percent
- Goods: +0.0 Percent
- Excluding Food and Energy: +0.1 Percent
- Food: +0.1 percent
Given the Fed’s focus on core PPI and CPI (excluding food and energy), this was a rate cut friendly PPI.
Yet, here is an amusing headline on Investing.Com: US stocks choppy following hotter-than-expected PPI reading
There is nothing hotter than expected about the report. The Bloomberg Econoday consensus was 0.2 percent month-over-month and 1.8 percent year-over-year.
The report delivered 0.2 percent M/M and a weaker than expected 1.7 percent Y/Y.
BLS Revisions
- The July PPI went from from 0.2 percent to 0.1 percent.
- The July PPI excluding food and energy went from 0.0 percent to -0.2 percent.
- Services went from -0.2 percent to -0.3 percent.
The report was not hotter than expected. Factoring in revisions, it was weaker than expected.
PPI Year-Over-Year
PPI Final Demand Year-Over-Year Details
- PPI: +1.7 Percent
- Goods: +0.0 Percent
- Services: +2.6 Percent
- Energy: -8.4 Percent
- Food: 2.3 Percent
- Excluding Food and Energy: 2.4 Percent
The Cost of Rent Up 0.4 Percent Again
Yesterday I commented The Cost of Rent Up 0.4 Percent Again, CPI Rises 0.2 Percent in August
I expected rent and OER to moderate. They didn’t. The CPI rose 0.2 percent month-over-month but fell to 2.5 percent year-over-year.
Final Thoughts
I think the Fed is generally pleased with those numbers. However, many of us would prefer 0.0 percent or lower.
There is no overall economic benefit to rising inflation. It’s counterproductive to most but benefits those with first access to money (the banks, government, and the wealthy).
Falling prices mean more goods and services for less money. That raises standards of living.
The Fed makes matters worse by constantly chasing its tale trying to reach 2.0 percent.
The non-asset holders have been royally screwed by the last three years of inflation and are very unlikely to recover what they lost. This will play into the election because it’s why people are mad.
Recession When?
Now is my answer. In case you missed it, please see The McKelvey Recession Indicator Triggered, But What Are the Odds?
Many eyes are on the McKelvey recession indicator. Too many? That would probably be the case if everyone believed it. Click above for details.
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The cheerleading to get the Fed to cut to light a fire under inflation, the labor market and the stock market is insane. Do we really think inflation is done and dusted? Come on there is no way that’s true. U3 is close to all time tights. The FI curve is massively easy out to twos and an awful lot through where it was a year ago. The ugly truth is someone wants Kamala to have the best chance to defeat Trump and that requires a sudden boost and inflation concerns are not important considering that goal. If the Fed cuts given the market is close to all time highs we might just see the market interpret that as an implicit acceptance of a 3 percent inflation target. That might just result in a run on longer dated treasuries.
I think and have stated many times that it’s not this rise in inflation that is transitory, rather, it’s the recent improvement that is transitory.
Inflation TARGETING is the biggest PILE OF SHIT that the FED FOISTS UPON ALL OF US!
‘Falling prices mean more goods and services for less money’
The economy would collapse in a deflationary environment. Nobody would produce anything if the price they were able to fetch was less than their costs.
See C.H. Douglas and hopefully you’ll understand why we have a continually inflationary economy drowning in trillions of debt.
The financial indexes are total jokes as compared with reality. Why is the average American a non-believer in these manufactured indicators?
I’ll take a stab at it(Mish is is cringing and ready to to pounce)
That is global money. Wall St has nothing and I mean nothing to do with any Main St USA near you or me.
Yes the big bonuses from Wall St create state NYstate/city tax revenues, but that is not even enough to pay for all the illegals from the 100 countries they are coming from. That bill coming due the next fed bailout after the election, assuming the liberals steal another one.(this one will be tough though)
We even finance our own economic demise. Our 401ks get invested into companies that have exported jobs out of the USA and pay no corporate taxes and then try to control what you hear and even trying to control what you think(Google)
Bring back the jobs and I’m ok with no corporate taxes but you cant have it both ways
Mid 2025 they will be raising rates to try an combat the 3rd wave of inflation, which is likely to be worse than the previous two. Crude is not going to stay where it is today, and the still very real prospect of hotter conflicts in the ME, Ukraine, South China Sea…and the resulting supply chain disruptions almost guarantee inflation will be rising again in the near future.
No cuts are needed.
Wall Street and Washington don’t admit to recession until at least 6 months AFTER it is already occurring. In the meantime blowing smoke up our you know whatses.
The one thing that ran hot that concerns me some given how sticky it’s been is the services component. That part ran a bit hot. I’ll confess I’m not totally sure how to think about that since some of that was short term rental which should moderate and bounces a lot. Short answer would be that I lean toward acknowledging that it wasn’t a great component number but that I’m not excessively concerned.
Services at +0.4 percent (4.8% annualized) is not good. Likely indicates continued pressure on wages, labor or both.
If the Fed cuts are services going to go down or up in costs? I suspect lowering borrowing costs will cause people to borrow, hire, and expand.
Lot of deferred demand as people have cut back to either bare essentials or modest essentials depending upon economic class they find themselves in.
Lowering rates would encourage that demand to be expressed.
This why housing keeps steady rather then outright crashing. Only real estate getting unloaded is by people who were way over their heads in payments.
ECB cut today 3.65 from 4.25 prior. With China so weak Europe exports are getting hit.
Fed is only CB higher then every other Major CB. Am still of mind they will follow markets down so 25 basis is where I believe they will go. The Data just is not there and higher relative US rates will dampen inflation as rest of world goes in dumpster.
They dug up Draghi to shore up confidence so Europe must be a whole lot weaker then being admitted. That report Mish reported on was a symptom in my book of Play calling.
Draghi seems to reappear from retirement whenever financial problems are imminent in Europe.
My trade is USD will remain supported by safe haven flow along with JPY as money flows back to Japan. Just have to get thru next Fed meeting.