Producer Price Deflationary Trends Cast Doubt On the Recovery

Producers prices unexpectedly declined in June following a bounce in May.

Deflationary Trends Resume

The BLS Producer Price Report shows deflationary trends resume in June.

Final Demand 

• Services: The index for final demand services moved down 0.3 percent in June, the largest decrease since falling 0.3 percent in February. The June decline can be attributed to margins for final demand trade services, which dropped 1.8 percent.
• Goods: The index for final demand goods rose 0.2 percent in June after increasing 1.6 percent in May. Leading the June advance, prices for final demand energy jumped 7.7 percent. 
• Food:Final demand foods dropped 5.2 percent
• Less Food and Energy: The index for final demand goods less foods and energy inched up 0.1 percent. 

Economists Miss the Mark

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Real Economy vs the Stock Market

Not only did economists miss the mark badly, results were outside the range of any estimate on three of four categories.

Prices did not rebound as expected.

Demand destruction tops prices except of course for the stock market. That's where the inflation is found. 

Understanding Demand Destruction

1. There is No Recovery in the Aerospace Industry
2. Fewer People Pay Their Rent on Time in July
3. United Warns It May Cut 36,000 Employees
4. New York City Commercial Property Sales Plunge to 2009 Lows

There will be no recovery without a recovery in jobs. The recent data is grim.

Total Unemployment Claims on the Rise

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For details, please see State Claims Decline But All Unemployment Claims Are on the Rise