The BLS report on import and export prices is another sign of weakening inflation.
Export Price Synopsis
- The price index for U.S. exports declined 0.9 percent in June, after falling 1.9 percent the previous month.
- U.S. export prices fell 12.0 percent from June 2022 to June 2023, the largest over-the-year decline since the 12-month percent change series was first published in September 1984.
- Agricultural Exports: Prices for agricultural exports fell 1.6 percent in June following a 2.4-percent decline the previous month. Lower prices in June for soybeans, fruit, and nuts more than offset higher meat prices.
- The price index for agricultural exports decreased 9.8 percent for the year ended in June, the largest over-the-year decline since a 10.7-percent drop from March 2015 to March 2016.
- All Exports Excluding Agriculture: Nonagricultural prices decreased 0.9 percent in June following a 1.9-percent drop in May. Lower prices for nonagricultural industrial supplies and materials and nonagricultural foods in June more than offset higher prices for capital goods, consumer goods, and automotive vehicles.
- Prices for nonagricultural exports declined 12.4 percent over the past 12 months, the largest over-the-year drop since the 12-month percent change series was first published in March 1986.
Import Prices Month-Over-Month and Year-Over-Year
Import Price Synopsis
- U.S. import prices decreased 0.2 percent in June and have fallen in 5 of the first 6 months of 2023, after rising 3.2 percent in 2022.
- Prices for U.S. imports declined 6.1 percent over the past year, the largest 12- month drop since the year ended May 2020.
- Fuel Imports: Prices for import fuel rose 0.8 percent in June following a 4.3-percent decline the previous month. Higher petroleum prices in June more than offset lower natural gas prices.
- Despite the June advance, import fuel prices fell 36.4 percent over the past year, the largest 12-month drop since a 37.5-percent decrease in June 2020.
- The price index for petroleum rose 1.1 percent in June, after falling 3.8 percent in May. Petroleum prices declined 35.1 percent for the year ended in June.
- Natural gas prices decreased in June, falling 5.6 percent following a 20.9-percent drop the previous month. Prices for import natural gas declined 78.4 percent from January to June, driving the index down 70.8 percent over the past 12 months. The 12-month decrease was the largest over-the-year drop since the 12-month percent change series was first published in September 1982.
Rate Hike Odds Rise Slightly
A quick check of CME Fedwatch data shows rate hike odds for December 2023 actually rose slightly despite this very weak report.
The first rate cut is still the same as yesterday. The market pencils in a cut for March of 2024, with a small up tick in the odds the Fed holds pat rather than cut.
Producer Prices Hold to Narrow, Fed Pleasing Range, for 9 Months
Yesterday, I commented Producer Prices Hold to Narrow, Fed Pleasing Range, for 9 Months
And on July 12, I noted Despite CPI Surprise to the Downside, Higher for Longer Interest Rate Outlook Holds
Import and export price declines, the CPI, and PPI should promote a less hawkish wait-and-see attitude by the Fed despite the CME reading.
[…] Lots of disinflation news this week. Disinflation means a reduction in the rate of inflation. Prices are still going up, but at a slower rate. The data doesn’t paint a perfect picture, and we’ll elaborate in the “Things” below. We also have some new information on the year’s best antitrust case, and DKI enters the debate about the proposed BRICS currency. For those of you who want more disinflation news, check out this post from Mish Shedlock on the drop in both import and export prices. […]
Natural Gas is making a “54” month cycle bottom. This is a nice time to get in with a chance of a double within the next 2 years.
Federal taxes slumped 9.2% from $461 billion to $418 billion YOY in June. How does this sync with our so called good economy and good job market? When taken in conjunction with falling prices, seems we’re heading towards recession if we’re not already in one.
“Federal taxes slumped 9.2% from $461 billion to $418 billion YOY in June. How does this sync with our so called good economy and good job market?”
Middle class income is down, lower taxed stock options are up. The true high cost of stock buybacks which constitute 5% of GDP.
Stock option gains wouldn’t be withheld in June.
July 11 2022 – SPY 385.13
July 14 2023 – SPY 449.72
SPY up 16.77% YoY, that’s a lot of profit for some people. That’s what I call a good economy. Unemployment at 3.6%, how much better do you want it to get? 0% unemployment?
Economies aren’t measured by stock indexes.
Oh really?
link to corpgov.law.harvard.edu
Dodge v. Ford is one corporate law’s iconic decisions, regularly taught in law school and regularly cited as one of corporate law’s core shareholder primacy decisions. Ford Motor slashed its dividend in 1916 and minority stockholders—the Dodge brothers—successfully sued Ford Motor Company for a big dividend payout. Ford had justified skipping the dividend because he sought to do well for employees and America’s car buyers, with corporate profits a secondary motivation. The court largely rejected Ford’s justifications for holding back the dividend.
That doesn’t further your argument in any way. Do you even understand what you posted?
Are you a bot?
MPO, if everyone would simply get 2 or 3 more part-time jobs the BLS would tell us that we have negative unemployment.
There are help wanted signs everywhere. Go to Indeed.com and type any key word and thousands of jobs will pop up. the job market is red hot and the 3.6% unemployment proves it.
There is data reality then there are opinions based on “I hate the Fed” or “I hate Biden” that lead people to make some very poor financial and investment decisions. BLS service inflation is still very high and that’s another sign labor market is tight.
We’ll see what the Fed does and says next week.
“There is data reality then there are opinions based on “I hate the Fed” or “I hate Biden” that lead people to make some very poor financial and investment decisions.”
One of the basic tenets of investing/trading, never bet on political views, and yet, financial bloggers rant all day every day about politics.
“BLS service inflation is still very high and that’s another sign labor market is tight.”
A 9.8 mil JOLTs report after a years’ hikes doesn’t hurt this argument, but groupthink yields a sense of social belonging.
My innate response to most herds on the topic of finance is contrarian, a Buffet thing.
.
You seem to ignore data reality that goes against your beliefs.
I’m pretty sure you used to be realist.
ha ha. i still know, of not one person without a job, that wants one. we have stagflation. with tight labor.
The people that can be taxed are making less, and the rich, that had the foresight themselves nice tax dodges, don’t pay nearly as much tax on that money.
So now they even have more money to buy congresspersons with, to keep more money out of the hands of the filthy poors, who will just spend it on nonsense. The Invisible Hand thus guides us to Utopia!
America has the best Democracy money can buy.
taxes truly are for the little people.
1) Import prices are down y/y because consumers demand is down. USD y/y is flat.
2) DOD Austin flooded ammunition factories with new orders. The defense contractor will hire and expand production to support the war in Ukraine.
3) ISM might popup for years. Inflation is down, real wages will be up. High tech
and blue collars employees will earn higher real wages. Jobs might shift from the
service sectors to defense sectors. These factories will snap new grads out of tech schools and colleges.
4) Workers will work day and night. They might save 25%/35% of their annual net income.
5) The job market might be tight because Gen Z and millennials will be stationed
in Lita, Poland and Germany. That’s on top of the retiring/expiring boomers.
6) DC politicians will salivate. We protected our best friends for 80 years.
Lower prices means Lower profits. The losses on the auto industry that’s already bleeding $$$ and auto manufactures have EVs not selling while dealers are dropping prices to clean inventory .
FIFO accounting can bolster profits in a time of inflation.
But only for a little while.
I’ll be CFO in another company before it catches up with me.
It’s the American Dream.
ha ha ha
IMO. Not necessarily. When you are paying expedite fees, high raw material and shipping costs and overtime, those costs fall when flows get back to normal.
Could it be that shipping stuff halfway around the world on the backs of an exploited labor model is no longer as profitable, and that it takes price cuts too squeeze whatever margin is left out of existing inventory.
Every nation has an internal economy, even during bad times. Nations will hunker down socially and economically into their own tribe like they have since Babel. The natural biosphere has placed every culture in a unique adaptive stance. This is why we have Races, Creeds, Colors and languages. At least some nice local boy will not be outbid by a swashbuckler type.
This is a sign that the One World Order will never work. It is probably a good thing for Emerging Nations, but probably a bad thing for American Ex-patriots trying to do the Asian girlfriend, Slavic girlfriend thing on the cheap.
Might be that the Wallmart shopper has realized he’s drowning in crap he doesn’t really want or need.
i always thought the middlebrows in amerika could just skip the middleman, and pay the assholes at walmart/CCP their wages/debts and have the junk delivered straight to the landfills in flyover country. amerikans could stand to lose a ton of junk and poundage.
“A quick check of CME Fedwatch data shows rate hike odds for December 2023 actually rose slightly despite this very weak report.”
Just a guess but I am fairly certain we will have a short reprieve in inflation and then it will shoot back up again circa late 70s and early 80s. There are just too many people retiring and not enough to back fill and no real way to fix this issue.
On a side note, I received a half dozen pings on Linkedin for job opportunities. Friends I know are quitting because of burn out, taking summer off and will look for work in the fall. At least a dozen people have quit over the past couple of months and moved on to “greener” pastures.
A burst of stagflation will get those layabouts back in harness.
Export Prices Plunge 0.9 Percent, Import Prices Drop 0.2 Percent
This will not be a problem as we can compensate for the losses with increased volume.