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A reader said today "I have an idea, let's get back to the global economic talk. Like EU and bonds, loans. This is just another COVID news feed now."

PPI for February

The PPI is one of the more timely reports. And it shows what we all know (or should know anyway) as crude prices have plunged.

The interesting thing is the economists totally blew it expecting no change but instead we see a 0.6% decline according to Bloomberg, but the BLS says -0.9%.

If we dive into the actual PPI Report from the BLS we find these unsurprising items.

Final Demand Goods

The index for final demand goods fell 0.9 percent in February, the largest decline since moving down 1.1 percent in September 2015. Over 60 percent of the broad-based February decrease can be traced to prices for final demand energy, which dropped 3.6 percent. The indexes for final demand foods and for final demand goods less foods and energy declined 1.6 percent and 0.1 percent, respectively.

Product detail: Nearly one-third of the February decrease in the index for final demand goods is attributable to gasoline prices, which dropped 6.5 percent. The indexes for fresh and dry vegetables, diesel fuel, jet fuel, meats, and light motor trucks also moved lower. In contrast, prices for chicken eggs rose 27.8 percent. The indexes for pharmaceutical preparations and electric power also increased.

Final Demand Services

The index for final demand services fell 0.3 percent in February, the largest decline since moving down 0.3 percent in September 2019. In February, over 70 percent of the broad-based decrease can be traced to margins for final demand trade services, which dropped 0.7 percent. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services declined 0.1 percent and 0.6 percent, respectively.

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Product detail: Leading the February decrease in prices for final demand services, margins for apparel, jewelry, footwear, and accessories retailing dropped 11.7 percent. The indexes for guestroom rental; loan services (partial); food and alcohol wholesaling; health, beauty, and optical goods retailing; and airline passenger services also moved lower. Conversely, margins for machinery, equipment, parts, and supplies wholesaling increased 1.3 percent. The indexes for outpatient care (partial) and wireless telecommunication services also advanced.

Mostly Meaningless

The PPI is one of the better reports. It's only a half-month old on the surface but it also reflects an average for the month so in effect it's a month old.

The construction spending report is two months old as are GDP reports.

Throw all old reports out the window.


The Atlanta Fed GDPNow model says first quarter GDP will rise 3.1%. Wow.

Perhaps it does, but I highly doubt it. But then what?

None of these reports are at all forward looking anyway.

The sudden shock of the coronavirus makes all of these reports more than a bit suspect. In fact, label them useless.

Mike "Mish" Shedlock