from www.reuters.com
Consumer sentiment at lowest level since 1980
By Burton Frierson
NEW YORK (Reuters) - Consumer confidence fell more than expected in June, hitting another 28-year low as surging prices and mounting job losses contributed to a bleak outlook, according to a survey released on Friday.
The Reuters/University of Michigan Surveys of Consumers said five-year inflation expectations remained steady at the peak of 3.4 percent reached in May, which was the highest in 13 years.
Federal Reserve officials have focused on long-term inflation expectations and the persistence of such pressures heightens their dilemma -- whether to fight price growth or support a weak economy in the grips of the worst housing slump since the Depression of the 1930s.
The Surveys of Consumers said the final June reading for its index of confidence fell to 56.4 from May's 59.8. The report said the pace of consumer spending is likely to sink at least through the start of 2009.
"Moreover, gas prices have risen to an all-time peak, food prices posted the largest increases in decades, home prices have fallen faster than any time since the Great Depression, and there has been widespread distress associated with foreclosures," the report added.
Also weighing on consumers, data earlier this month showed U.S. employers shed jobs for a fifth straight month in May and the unemployment rate jumped to 5.5 percent, its highest in more than 3-1/2 years.
Economists had expected a reading of 57.0, according to a Reuters poll. Their forecasts ranged from 55.9 to 60.0. The final June result is slightly below the preliminary figure of 56.7 released on June 13.
"Overall, no new information, only confirmation of prevailing weak sentiment," analysts at RBS Greenwich Capital said in a note to clients about the report.
Financial markets showed little immediate reaction to the report. Stocks were flat and the dollar was down against the yen. Government bonds were higher on the day.
The June reading is the lowest since 51.7 in May 1980, which was also the lowest reading ever. The index dates back to 1952, though the survey has been conducted since 1946.
One-year inflation expectations declined to a still-elevated 5.1 percent from May's 5.2 percent. May's one-year inflation expectations reading was the highest since 5.2 percent in February 1982.
The index of consumer expectations fell to 49.2 in June -- its lowest since May 1980. This was down from May's 51.1. Meanwhile, the index of current personal finances fell to 69 in June -- the lowest on record -- from 80 in May.
(Editing by Jonathan Oatis)
As expected, it is getting uglier - FAST. This is a consumer led recession. Expect consumer spending to drop dramatically once the short term bounce from government refund checks runs out. All consumer discretionary items are going to get hit at the median to upper consumer levels. Restaurants, Retail, Autos, Electronics, Housing (but we knew that!), Vacations, Road Trips - all of it! Once full fledged layoffs start - I expect targeted education industries to do well. I expect collection and repo agencies, bankruptcy lawyers and consultancies (on both consumer and business levels) to do booming business.
Showing posts with label Consumer Prices. Show all posts
Showing posts with label Consumer Prices. Show all posts
Friday, June 27, 2008
Friday, June 13, 2008
Prices Higher - Food and Energy
from www.nytimes.com
June 14, 2008
Oil and Food Push Consumer Prices Higher in May
By MICHAEL M. GRYNBAUM
Inflation hit hard in May as prices for a wide swath of consumer goods rose at their fastest pace in six months, underscoring warnings from central bankers and adding to a growing consensus that the Federal Reserve might raise interest rates by the end of the year.
The Consumer Price Index, which measures prices of a batch of common household products, rose 0.6 percent last month, as Americans were forced to cope with a sharp increase in fuel costs. The report, released Friday by the Labor Department, is considered a benchmark measure of inflation.
On Wall Street, the major stock indexes rose after the report, with the Standard & Poor’s 500-stock index up 0.76 percent in afternoon trading. The Dow Jones industrials, which had gained more than 140 points, in morning trading was up about 80 points.
The index, which rose more than economists had forecast, comes on the heels of repeated warnings about inflation from the world’s central banks. Ben S. Bernanke, the chairman of the Fed, joined other top officials this week in focusing on higher prices, citing the economic damage wrought by the record run-up in food and oil prices around the world.
The speeches have fueled a growing sense on Wall Street that the Fed has shifted its focus from supporting growth to fighting inflation. The May C.P.I. will probably heighten expectations that higher interest rates, which tend to hold down prices, may be in the offing.
In May, gasoline prices rose 5.2 percent, and were up 21 percent compared with a year ago, according to the report. They may rise again in June: the nationwide average for gasoline topped $4 a gallon last weekend as the price of oil leaped to a new high.
The cost of eating rose, as well, as Americans paid 5 percent more for foods and beverages in May than a year ago.
On an annual basis, inflation worsened for the first time in three months, reversing a downward trend. Inflation ran at 4.2 percent in May compared with a year ago.
High oil prices also pushed up costs for other products, as businesses, squeezed by higher shipping and production costs, sought to raise the prices paid by their customers. Prices for transportation, commodities, tobacco and utility fuels all increased for the month. Excluding the cost of food and gasoline, inflation ran at 0.2 percent for the month.
“Both consumers and financial market participants are becoming sensitized to large headline price rises, and were especially ready this month amid heightened inflation anxiety,” Peter Kretzmer, an economist at Bank of America, wrote in a note.
Consumers, however, do not appear content with rising prices. A measure of Americans’ confidence in the economy fell to its lowest level since 1980, another period of high inflation and slow growth. The University of Michigan’s consumer confidence survey dropped to 56.7 in June, the fifth consecutive month of decline.
June 14, 2008
Oil and Food Push Consumer Prices Higher in May
By MICHAEL M. GRYNBAUM
Inflation hit hard in May as prices for a wide swath of consumer goods rose at their fastest pace in six months, underscoring warnings from central bankers and adding to a growing consensus that the Federal Reserve might raise interest rates by the end of the year.
The Consumer Price Index, which measures prices of a batch of common household products, rose 0.6 percent last month, as Americans were forced to cope with a sharp increase in fuel costs. The report, released Friday by the Labor Department, is considered a benchmark measure of inflation.
On Wall Street, the major stock indexes rose after the report, with the Standard & Poor’s 500-stock index up 0.76 percent in afternoon trading. The Dow Jones industrials, which had gained more than 140 points, in morning trading was up about 80 points.
The index, which rose more than economists had forecast, comes on the heels of repeated warnings about inflation from the world’s central banks. Ben S. Bernanke, the chairman of the Fed, joined other top officials this week in focusing on higher prices, citing the economic damage wrought by the record run-up in food and oil prices around the world.
The speeches have fueled a growing sense on Wall Street that the Fed has shifted its focus from supporting growth to fighting inflation. The May C.P.I. will probably heighten expectations that higher interest rates, which tend to hold down prices, may be in the offing.
In May, gasoline prices rose 5.2 percent, and were up 21 percent compared with a year ago, according to the report. They may rise again in June: the nationwide average for gasoline topped $4 a gallon last weekend as the price of oil leaped to a new high.
The cost of eating rose, as well, as Americans paid 5 percent more for foods and beverages in May than a year ago.
On an annual basis, inflation worsened for the first time in three months, reversing a downward trend. Inflation ran at 4.2 percent in May compared with a year ago.
High oil prices also pushed up costs for other products, as businesses, squeezed by higher shipping and production costs, sought to raise the prices paid by their customers. Prices for transportation, commodities, tobacco and utility fuels all increased for the month. Excluding the cost of food and gasoline, inflation ran at 0.2 percent for the month.
“Both consumers and financial market participants are becoming sensitized to large headline price rises, and were especially ready this month amid heightened inflation anxiety,” Peter Kretzmer, an economist at Bank of America, wrote in a note.
Consumers, however, do not appear content with rising prices. A measure of Americans’ confidence in the economy fell to its lowest level since 1980, another period of high inflation and slow growth. The University of Michigan’s consumer confidence survey dropped to 56.7 in June, the fifth consecutive month of decline.
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