We recently noted that the Federal Reserve and the government cannot control the economy. The Fed has an inflation target of 2% per year, but it isn’t happening. From The Wall Street Journal:
Underlying figures hint at firming inflation
By Eric Morath | Updated March 15, 2016 9:44 a.m. ET
WASHINGTON—A gauge of business prices fell in February, a sign inflation pressures remain modest.
The producer-price index for final demand, which measures the prices companies receive for goods and services, decreased 0.2% in February from the prior month, the Labor Department said Tuesday. But underlying figures hint at firming inflation.
Excluding volatile food and energy categories, so-called core prices were flat. Economists surveyed by The Wall Street Journal had expected overall prices to fall 0.2% and core prices to rise 0.1%.
“This data displays no domestic inflation pressure down the chain of production,” said Mizuho Bank economist Steven Ricchiuto. The inflation reading coupled with a separate report showing retail spending slowed to start the year suggests the economy remains stuck in a slow-growth mode, he said.
Still, some underlying figures hint at firming inflation.
From a year earlier, overall producer prices were flat last month. That is the firmest annual reading since January 2015, when the gauge was also flat.
Core prices were up 1.2% from a year earlier.
There’s more at the original, but did you catch the subtitle: underlying figures hint at firming inflation? Well, here’s another article, also from the Journal:
Retail sales are a key barometer for overall consumer spending
By Jeffrey Sparshott and Eric Morath | March 15, 2016 8:34 a.m. ET
WASHINGTON—U.S. retail sales fell in February as Americans pulled back on auto purchases and gasoline prices fell, suggesting a degree of consumer caution amid volatility in financial markets.
Sales at retail stores and restaurants slid 0.1% from the prior month to a seasonally adjusted $447.31 billion in February, the Commerce Department said Tuesday. Compared with a year earlier, sales grew 3.1%.
Economists surveyed by The Wall Street Journal had expected sales to fall 0.1% from the prior month.
Retail sales for January were revised to a 0.4% decrease, compared with the initially reported 0.2% increase. The downward revision stemmed largely from new estimates on auto sales, and recasts what had seemed a more upbeat start to 2016. January’s drop was the steepest in a year.
There’s more at the link, but remember: this February had one extra day, and the weather was better nationwide, with fewer consumer trapped inside snowed-in homes and towns. Fuel prices were significantly lower, leaving consumers with more money available for other purchases.
But other measures of the economy have been mixed. And while sales figures can be choppy from month to month, the overall trend has reflected varying economic crosscurrents and some financial market jitters. Americans have been spending selectively in recent months, while also saving at a higher rate than before the recession.
Translation: American consumers are showing more caution than they did before the recession, a trend which shows wisdom and lessons learned the hard way. Americans are doing the right thing, but it isn’t the right thing as far as Janet Yellen and the Fed are concerned. Once again, their efforts and ability to control the economy simply aren’t working. Personally, I never believed that they could.