The Bloomberg economists expected the PPI to rise 0.3 percent. It rose double that, with two-thirds of the rise attributed to goods. Gasoline prices rose 6.8 percent.
Here are details from the BLS Producer Price Index report for February.
Month-Over-Month PPI vs Bloomberg Consensus
- PPI 0.6 Percent vs Expected 0.3
- PPI Goods 1.2 Percent
- PPI Services 0.3 Percent
- PPI Excluding Food and Energy 0.3 Percent vs Expected 0.2 Percent
PPI Key Details
- The Producer Price Index for final demand rose 0.6 percent in February, seasonally adjusted. Nearly two-thirds of the rise in final demand prices can be traced to the index for final demand goods, which advanced 1.2 percent. This was the largest increase since moving up 1.7 percent in August 2023.
- Nearly 70 percent of the broad-based rise in February can be attributed to the index for final demand energy, which jumped 4.4 percent. One-third of the February advance in the index for final demand goods can be traced to a 6.8-percent increase in prices for gasoline.
- Final demand for food rose 1.0 percent. The indexes for diesel fuel, chicken eggs, jet fuel, beef and veal, and tobacco products also rose. Conversely, prices for hay, hayseeds, and oilseeds decreased 8.3 percent. The indexes for iron and steel scrap and for asphalt also fell.
- Prices for final demand goods less foods and energy rose 0.3 percent.
- Prices for final demand services moved up 0.3 percent in February after rising 0.5 percent in January. A quarter of the February increase in the index for final demand services can be attributed to a 3.8-percent rise in prices for traveler accommodation services.
- The indexes for outpatient care (partial); airline passenger services; loan services (partial); securities brokerage, dealing, and investment advice; and alcohol retailing also moved up. Conversely, margins for chemicals and allied products wholesaling fell 6.4 percent. The indexes for automobiles and parts retailing and for services related to securities brokerage and dealing (partial) also decreased.
PPI Final Demand Year-Over-Year
PPI Final Demand Year-Over-Year Details
- Final Demand: +1.6 Percent
- Final Demand Services: +2.3 Percent
- Final Demand Goods: +0.3 Percent
- Final Demand Excluding Food and Energy: +2.0 Percent
It appears that year-over-year PPI prices have bottomed.
Especially ominous is the month-over-month rise in food of 1.0 percent. This will pass through to CPI food prices which I have expected.
CPI Hot Again
For discussion of the CPI inflation data for February, please see CPI Hot Again, Rent Up at Least 0.4 Percent for 30 Straight Months
For over two years, analysts said rent was declining or soon would be. But for the 30th consecutive month, rent was up at least 0.4 percent. Gasoline rose 3.8 percent adding to the misery.
Sticky-Price CPI
Meanwhile, the Atlanta Fed reports Sticky-Price CPI Is Up 4.4 Percent From a Year AgoAnd Biden’s regulations, big union wage increases, and student debt cancellation are all inflationary.So is the end of just-in-time manufacturing and global wage arbitrage.The rise in Inflation is not transitory. It’s the recent decline in reported year-over-year inflation that’s transitory.
Food and energy producer prices will no longer help stabilize the CPI, something I also called for.
This was a nasty PPI report.
This too comes as no surprise given the increasing prices we’ve seen in oil and RBOB gasoline.
As I had suggested in previous comments regarding the rate of inflation, we were going to see the rate of inflation begin to tick higher on a YoY basis.
We saw that this week at both the consumer level and the producer level.
We had already been seeing the rate of inflation tick higher on MoM basis and on a 3 and 6 month annualized basis for the last 2-3 months.
Unfortunately, RBOB prices went up dramatically when the front month futures contract rolled over from March to April on 2/29.
They’re currently trading $0.4042 higher than they were at the close of February which is are 17.5% higher since.
We now have 19 states and DC seeing higher YoY prices for all grades of gasoline and another 9 states seeing at least one grade of gasoline higher YoY.
We can expect that list to grow to all states with the exception of Colorado which had crazeh high prices last year due to refinery issues affecting supply back then.
The only silver lining at the moment is that diesel fuel prices are still down 6.9% YoY.
Although nothing is a sure bet, I trust it is only a matter of time until diesel prices begin to play catch up with the rising prices we’ve seen in WTI, Brent and RBOB prices.
Once diesel prices rise higher YoY, we can expect the rate of inflation to pick up steam.
The economy runs on oil, gasoline and diesel fuel and not unicorns, leprechauns, wind mills, solar panels and the green energy pipe dream.
Powell is on the edge of becoming he biggest fool of the 21st Century. He must raise rates now. His credibility is 100% on the line. Even the hint of another round of inflation will be Big Trouble.
Biden is a big mistake for the country. And, I would never vote for him. Putting that aside, I have made a lot of money with inflation running hot, and I would not mind if it ran hot longer.
New day. Same old comments. The same comments that I’ve been hearing all my life from those who have nothing better to do.
A whole lot of blaming, whining and complaining. We’re headed for a catastrophe: inflationary depression; Powell doesn’t know what he’s doing and should be fired; inflation is out of control; it’s all a Ponzi scheme that’s going to crash; yada yada yada.
Where are the comments about what you should do about it? Where are the comments about how to improve your life? Where are the savings and investing ideas?
What else is UP today? How about oil and oil stocks. Anyone else here looking for opportunities to grow their wealth?
We are rapidly approaching a point where it’s going to be ‘back to basics’ for most.
People on fixed income have few choices on where to spend their money.
1. Healthcare – what are the most popular drugs and procedures for seniors? Who makes those?
2. Utilities – You have a house you want to keep it cool in the summer and warm in winter.
3. Energy – You want to do anything you need energy (fuels, electricity, etc)
4. Insurance – You own anything and want to protect it, you need insurance.
Everyone else is struggling to keep up so this is where your homework starts.
Thanks for your reply. All good points. You are one of the few people here who emphasizes positive actions to improve one’s situation.
Because Papa Dave that despite you doing well or even me doing well, with investments ALWAYS providing opportunities in any market or economic condition for those that are savvy, lucky and have access to funds, there are massive segments of the population that are NEVER going to be where your are with inflation running at this pace. Step back and imagine where you were 25 years ago, investing in the dot com bubble if you were fortunate to make a living with excess savings. You are going to automatically be wealthy beyond recognition today even suffering through the massive drawdown of the GFC in 2009. Stocks are up 700% since then. HOWEVER, what investment ideas will work for those just starting out faced with the EVERYTHING IS TOO EXPENSIVE bubble, including the stock market? What does my nephew do? You see, I don’t need to be financially constrained to imagine what it must be like now vs then, I have a memory. One might say that those complaining are also showing empathy by solidarity, knowing this cannot continue if we want a nation that we once enjoyed.
People tire of your wise comments (yes, you have good comments) that always smack of “I got mine, go get yours, you can do it”. I agree to an extent but the world has massively shifted in this inflationary space toward one where there is very little chance 35-40% of people can ever save enough to get a down payment on a house or invest in an already all-time-high stock market where future earnings cannot approach the what, 20%, returns of the last 4 years or 700% in 15 years. You’d be asking them to put money into a market already inflated while overpaying for goods and services just to live let alone a down payment for a too-expensive house. Most have to choose only one of those now.
You are missing the widening disconnect because you are on the right side of the equation. Can you not imagine what it must be like to chase and never reach because the baby boom generation, the Fed and bad Congressional spenders have created this red-hot price environment? Enjoyed the last of defined-benefit pension plans + IRA + 401k + Roth IRA + social security + the era of 1-2% inflation for decades?
It’s not whining for whining’s sake. It’s not lamentation. It’s not blaming. It’s an in-touch realization that we’ve created a hostile price environment in stocks, bonds, housing, health care, insurance, automobiles, taxation and fees that is unrelenting. Just because you and I can afford it doesn’t make it okay. The need to vent is real and if you’ve ever tried to get your elected representative to vote to change direction you know the struggle is real. Frustration and hopelessness abound now more than ever. Draw it on a chart, it coincides with inflation and the massive rise in debt in all places that come home to roost in inflation and need for repayment or ever more debt.
I know…Got oil? Remember, that play didn’t always work either. You could say, got dotcom? Got big tech? Got gold? Sure there are lots of ideas but you would get a whole lot more up votes if you didn’t remind us of your superior investing as I’m sure many on here pointing out the problems and the strong desire for the situation to change have also profited. We will redress some of our progeny’s concerns by dying and leaving them wealth but that is on paper, can be erased quickly, can be confiscated via taxation or, as we are seeing, through massive undercounted inflation.
As you say “new day, same comments”, why not look in the mirror.
(That said, I read yours every time. Honey vs vinegar metaphor might help spread your message better.)
MPO45v2’s reply is a shorter version of mine.
Bravo Bill
Thanks for your reply Bill.
People interpret my message in many ways. Your reply represents a good summary of some of those interpretations.
I realize my message is not always interpreted the way I intended.
My intention is not what most think. It is merely to get this point across; complaining gets you nothing; talking politics gets you nothing; spewing hatred gets you nothing. If you want to make your life better, then stop complaining on the internet, get off your ass, and start working to make that better life. If you want to use the internet to improve your life, then look for the positive suggestions on how to to do that (like savings or investment ideas) rather than getting sucked into the bottomless pit of complaining.
I found some great investment ideas in the comment section here when I first discovered this blog. Now I try to pay it back with my own investment suggestions. And some advice to improve one’s life. I could also go on about health and exercise as well, but that doesn’t fit with the economic theme here.
And I always read your comments. Thanks for seeing my reply for what it was. I found it interesting that Mish wrote a piece today that sorta represented what I was saying. The mailaise or weltschmerz of Gen Z specifically but of the various cohorts in general.
There is absolutely no doubt that learning, doing, working, refining (pun not intended lol), improving is the way forward but within that improvement is elucidating the pain points limiting successing. Often that occurs through venting.
Mish’s blog has covered a LOT of macro topics for decades and there is even opportunity to be found by gleaning the mood of the room. Namely that macro trends are found within the culture or energy of what folks are or are not complaining about, what is interesting them, what doesn’t trip their trigger. It often is a good sign of inflection points.
And to the matter closest to your heart (and wallet hee hee), life is about energy so it’s good to be invested there.
Papa, I will give you Oil, and I followed that lead and am happy with it. I actually believe “if” Trump were to get into office, then “Drill baby Drill” will return immediately.
The thing with Oil is, you can never, ever have too much. There is, and will always be, a Buyer for it. There are probably 100+ Countries that don’t have oil available, or can’t drill if they did. I don’t see a non-demand for oil in my lifetime, or most alive todays lifetimes more than likely.
Good luck with your investments, I am older and like the guaranteed investments for my situation. I am doing quite well with my Cd ladder portfolio, and as I need it in a couple years, money will flow every year to me. A 4-year ladder will be perfect for the next 12-16 years for me. I do still dabble with fun money, and as it makes money I re-invest. I am ok to loose that money, as it is not part of my life portfolio.
Thanks again for the info that you share!!
Remember when gas was over $6 in parts of the country and AOC, in all her wisdom, told people to stop whining and just buy and electric car?
Yea thats you. You are AOC
Inflation will not stop — because we have burned up a great deal of the cheap energy… expensive energy >>> inflation
Conventional Oil Sources peaked in 2008 and the Shale binge has now spoiled US reserves, top investor warns Financial Times.
Preface. Conventional crude oil production may have already peaked in 2008 at 69.5million barrels per day (mb/d) according to Europe’s International Energy Agency (IEA 2018 p45). The U.S. Energy Information Agency shows global peak crude oil production at a later date in 2018 at 82.9mb/d (EIA 2020) because they included tight oil, oil sands, and deep-sea oil. Though it will take several years of lower oil production to be sure the peak occurred. Regardless, world production has been on a plateau since 2005.
What’s saved the world from oil decline was unconventional tight “fracked” oil, which accounted for 63% of total U.S. crude oil production in 2019 and 83% of global oil growth from 2009 to 2019. So it’s a big deal if we’ve reached the peak of fracked oil, because that is also the peak of both conventional and unconventional oil and the decline of all oil in the future.
Some key points from this Financial Times article: link to energyskeptic.com
All good points Fast Eddy, though I am not as pessimistic as that report on peak oil supply. Any shortage in the next few decades will be mostly because of underinvestment. Not because we are running out of oil.
Being under-invested IS the point and thus we run out of oil due to complacency, right? So, no matter the CAUSES, we are facing a moment where finally the EV FANCIFUL forecasts runs smack into a wall of a need for more oil and energy – – JUST IN TIME.
I have made a fortune on beaten down majors. I am on pause for a pullback. We shall see. I use only options.
The Permian Basin in the USA (what is holding up the entire world) looks like it has peaked.
And it has 50% annualised decline rates ( hence it is called “unconventional” oil).
We are in for a punch for a punch to the gut.
“The steep drop in output from US shale wells is turning out to be worse than expected”
link to bloomberg.com
Shale was our last gasp… and now that’s on the downslope.
And everyone is wondering why higher interest rates are not stopping inflation
According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. link to iea.org
Essentially low interest and trillions of dollars of stimulus have prevented collapse of civilization
That game is over now — the stimulus is poisoning the well.
Collapse of civilization = mass murder, rape, disease, starvation. Then cannibalism.
The men who run the world know the deal … that’s why they are about to exterminate us link to headsupster.com
Yes it sucks… but it’s better than the alternative.
It ain’t about the oil. It’s about the money. I wish Mish would do an article about the US balance of Payments. We are bleeding US cash by the Billions because our manufactured goods are too expensive to compete with offshore manufacturing. So, what can we export? Oil! Wouldn’t it be nice of the rest on the world relied on us for something they must have. And if we do reach peak oil world-wide, so what. We cut them off and we have all we need. Econ 101. How do you create wealth? You get an A if your answer is: Farming, fishing, mining and manufacturing. We used to at or near the top producer in all these fields. Now our biggest industry is Printing Money. What could go wrong.
It is not just about oil – it is about energy — money is nothing more than a proxy for energy.
Don’t believe me – take a sack filled with a million dollars to a deserted island and see how far that gets you.
The thing is … energy is a finite substance… and we burn the easiest (cheapest) stuff first. Eventually you run out of most of the really easy (cheap) stuff and while there is a lot left — it’s much more expensive to produce. e.g. deep sea drilling … fracking… steaming oil out of sand.
Obviously when energy costs more to produce that slams growth.
Just after the turn of the century this became a problem … and the response? Interest rates were reduced and massive stimulus was thrown at headwinds caused by expensive energy.
Here you go:
The Beginning of the End
JUNE 13, 2003 – There is increasing evidence that massive economic stimulus — monetary, courtesy of the Federal Reserve, and fiscal, thanks to the president and supply-side minded lawmakers — is taking hold. The magnitude of the policy turnaround, which caps a constructive, multi-year reflation process, should overwhelm the economic negatives — including the drag from expensive oil and poor finances at the state- and local-government levels.
Expensive oil and its impact on other energy costs remains a concern.
The current level of U.S. monetary stimulus is massive. Real interest rates have fallen 5.2 percent from December 2000 to March 2003, reaching -1.2 percent. A swing of this magnitude may be historical.
Read more at: link to nationalreview.com
To reiterate… we have poisoned the well…. collapse is imminent.
If you really want to understand the nuts and bolts of this …
THE PERFECT STORM (see p. 59)
The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel link to ftalphaville-cdn.ft.com
I read this soon after it came out .. and had an ah-ha moment … and I essentially retired at 42… and embarked on a massive bucket list
I have a suggestion for you.
Since everyone knows that the CPI, PPI and BLS prints are suspect at best, the one thing you can count on with each one is a revision from previous month or months( which seem to be closer to reality).
My suggestion is to go back past 12-18 months and compare the printed numbers vs. the revised numbers to see how they look.
It may show that we are heading towards a recession more than a soft landing.
Just a thought.
The Hooties are testing hypersonic missiles (Iranian 7/8 mach). They will use them soon.
The question is, can they maneuver as advertised? We’ve had missiles that can go that fast for decades. I doubt Iran developed a scramjet based missile
Go figure, with all that out of the blue created money enriching all MIC conmen beyond their wildest dreams together with the, don t give a fck about victims, rif raf ! Tbills should be at 12% by now !
You are correct Sir
But there are NO BOND VIGILANTES remaining. Its all just members of a fraudulent cartel of scumbags that manipulate all of it; INCLUDING the bond market
The inflationary depression is gaining speed. No amount of verbal deception can disguise the glaring fact.
The FED should drain reserves while driving the banks out of the savings business. The 1966 Interest Rate Adjustment Act is the paradigm.
And the deficits must be cut.
Old enough to remember discussions about monetizing the debt. Well, here we are with fiscal running hot from here to eternity, debt, debt and mo’ debt. Behold asset bubbles / manias. Old enough to remember discussions about the problems of deflation and disinflation with attempts by the Fed to bring CPI back up to 2%. Yet now everyone acts surprised at the mess. What happens with all the debt? Monetize, increase, inflate away into the ether. Its magic! Hey, artificially low cost of capital worked wonders for the CCP Military Industrial Complex, errr, Chinese economy (cf. Pettis).
Don t you worry Pat (my name too), WW3 will sort out everything !!
Powell should be fired. PPI up 6% mo-to-mo
Contrary to the FED’s technical staff, retail MMMFs are nonbanks. Purchases and sales between the Reserve banks and non-bank investors directly affect both bank reserves (outside money) and the money stock (inside money).
Inflation is back not as bad, but its sticky cost is already are $11,500 a year in higher costs will keep going up to14k to15k to buy goods by the end of the year! Very bad.
this is not courting the Biden tax increases and interest rate increases on credit cards will push many into bankruptcy. The filings are climbing fast and will hit record filings by the year end! You cannot get blood out of a turnip! When the taxes on corps goes to 28% OR SO THE CORPS PASS 70% OF IT ON IMMEDIATLEY FORCING MORE ECONOMIC PAIN ON THE MASSES. ALSO THE CORPORATION WLLL MOVE OUT OF THE COUNTRY CREATING MORE JOB LOSSES!
Well guess what else when up today! The social security snapshot was released today and it’s a whopper.
Jan 2024 – 71,725,000 recipients, cost – $118,966,000,000
Feb 2024 – 71,885,000 recipients, cost – $119,395,000,000
A whopping 160,000 newly minted socialists at an added cost of $429,000,000/month.
With $120 billion/month of free money floating around for doing nothing is it any wonder PPI and CPI are up? But wait there’s more, we are down 160k workers in the labor force too! What can possibly go wrong keeping this trend over the next 10 years?
link to ssa.gov
Good. Crash ponzi bubbled fraud “markets”
Damn, and I haven’t even signed up yet.
But this is the peak. If you were born in 1958 FRA is 66 and 8 months. So a December 1958 person would reach FRA in July of 2025.
if born in Jan of ’59 the FRA moves out two months, so that’s Oct of 25. From there the rate of new signups will drop off.
Very few wait past FRA.
GenX right behind the boomers and many of them will retire long before SS kicks in. The oldest millennials are now 40+. In ten years they will be 50+ and start hitting the retirement window too.
I focus on the boomers because that’s the immediate problem but it doesn’t stop there.
The Boomers are not the problem. The problem is that the Government (Dems and Majority Media) have already spent the $3.5 trillion that us boomers paid into the SS and Medicare Trust Funds. in addition for the last fifty years SS & MC taxes should have been going up yearly to account increased life expectancy. But doing that would cause people to ask qustions and might find our that the Trust Funds were turned into Politishon s Slush Funds. If benefits went up $429,000,000/month, then all of it has to be barrowed. SS and MC benefits have needed barowed cash for 20 years. When the crash comes, it will all come at once.
So if inflation is headed back up doesn’t that indicate interest rates are still too low? How could anyone be talking about cutting? Seems to me the fed would do well to lower it’s balance sheet and absorb the extra liquidity to get inflation under control.
Why? Greed, the election, create the perception we are not drifting into a Weimar Republic scenario. The elite do not care, they are insulated from inflation. Banks/Investment banks are hedged to the max. Stock market is seeing P/E rations not seen since 1929. They don’t care, they get bailouts. $1T added to national debt every 100 days…meh. As Buffett (Jimmy/Warren whoever said the US will never default because we can always print more money. Why? They don’t care about the commoner, the 3rd estate; your populism makes them ill. We’re nothing more than a virus to the elite (Matrix ref).
I would call printing money to buy treasuries a stealth default.
You can obscure a stealth default, but you cannot hide from the consequences of stealth default. They are social, under the radar.
Buffett is right, at the age of 90, he won’t witness a default.
THEY HAVE BEEN TOO LOW
In fact the criminals at the FED never raised the FFR above the inflation rate because they hate you and they SUCK
THE ILLEGAL balance sheet should be 50% lower than the top or around $4.5T with a run rate of having it at $0 by the end of 2025….. but THEY HATE YOU
50% Discount/Rebate policy at retail sale is the ultimate solution. Every commercial agent gets their full price and yet the consumer gets a 50% discount on everything which doubles demand while implementing beneficial macro-economic deflation. Too illogical for the terminally orthodox, too world changing not to be a paradigm change.
If only you were king of the world. Then you could actually implement your brilliant idea. Instead, you will spend the rest of your life promoting it and wondering why others don’t see what you see.
Perhaps you should focus your attention on things that you can actually accomplish. Because this idea isn’t going to happen.
And anyone with eyes can see that it’s nowhere near as low as they report. We get to watch the “data dependent” Fed manufacture some serious BS if/when they cut rates in June.
Stagflation.
But…”Rate cuts”…
Congratulations to SpaceX’s launch of Starship. Fantastic accomplishment!
Until Musk introduces teleportation, I cannot say: Beam me up Scotty, this planet is f.up beyond repair.”
I don’t think you see the significance of the event.
What a real shocker…………..
Yeah, I need an economist to tell me this. 😂