BLS DAILY REPORT, MONDAY, MARCH 20, 2000
__A spike in energy prices drove up the CPI-U 0.5 percent in February, BLS
reports. Mounting energy costs powered the CPI-U to a 3.2 percent gain
since February 1999. Early information from the Energy Department indicated
even sharper oil price hikes in March than in February. Excepting tobacco
prices, core inflation -- minus volatile energy and food prices -- remained
calm, rising 0.2 percent. ... The producer price index for February also
showed that accelerating inflation is largely limited to energy and tobacco.
... BLS economist Patrick Jackman said that beef and pork prices are "true
increases" but the seasonal factors BLS uses to adjust the data for fresh
fruits and vegetables had an impact on the sharp rise in produce in
February. "Because the seasonals anticipated adverse weather, they expected
prices to increase higher than they did in January," Jackman said. "Since
prices didn't go up, the seasonally adjusted data showed a decline. In
February, the seasonals expected prices to go down. But they didn't, so the
adjusted data showed an increase." ... (Daniel J. Roy in Daily Labor
Report, page D-1).
__Federal consumer prices rose 0.5 percent, registering their biggest
increase in nearly a year as the impact of rising oil prices began to ooze
into the economy. Despite the sharp rise in energy costs, the "core"
inflation rate -- the cost of goods and services excluding volatile food and
energy prices -- rose a modest 0.2 percent. The increase in the core rate
was the same as it has been every month since October. ... The February
increase was the largest monthly increase since April, when it rose 0.7
percent. ... (Frank Swoboda in Washington Post, March 18, page E1).
__Surging petroleum prices pushed the inflation rate to its highest level in
3 years. But beyond fuel and energy, the nation remained remarkably free of
the rising inflation that the booming economy was expected to produce by
now. The CPI, the best-known inflation gauge, has risen 3.2 percent over
the last 12 months, the first time the yearlong rate had gone above 3
percent since February 1997. But with energy excluded, the annual rate was
only 2.1 percent, unchanged for many months, although some economists had
expected a much greater impact from labor shortages and rising wages. ...
Beyond energy, there were scattered price increases, in cigarettes, for
example, and hospital rates. Meat and pork prices rose 1.7 percent, which
is more than usual, and such increases may repeat themselves because of a
supply shortage, said Patrick Jackman, a senior economist in the consumer
price division at BLS. Fruit and vegetable prices also rose last month, but
the 0.7 percent increase mainly reflected an aberration in the way prices
are adjusted for seasonal factors, Jackman said. ... (Louis Uchitelle in
New York Times, March 18, page B3).
__Consumer prices surged 0.5 percent in February, their biggest jump in 10
months, spurred by higher prices for heating oil and gasoline. But while
the increase in the CPI topped expectations of about 0.4 percent, the core
CPI was up just 0.2 percent. ... (Jake Bleed in Wall Street Journal, page
A2).
The average inflation-adjusted weekly earnings of most U.S. private-sector
workers fell 0.5 percent in February because of a large increase in the CPI
and a decline in hours worked, BLS says. ... (Daily Labor Report, page
D-14).
"Spiking oil prices don't necessarily cause inflation -- and given red-hot
growth in the U.S., they could even be slightly positive," says Steve
Liesman in "The Outlook" column of The Wall Street Journal (page A1). A
recent working paper by macroeconomist Mark Hooker, who focuses on energy
issues for the Fed, sees a dramatic change in the way oil prices affect
inflation today compared with the 1970s. The paper concludes that since the
1980s, changes in oil prices affect inflation only in proportion to oil's
share of the inflation indexes, with "little or no pass through into core
measures." Before 1980, however, "Oil shocks contributed substantially to
core inflation." Friday's CPI seems to suggest that trend is continuing.
...
Negotiations over drafting legislation that would shield employee stock
option profits from overtime calculations under Fair Labor Standards Act
requirements may be complicated by differences over how to define the types
of programs that would be covered by a new statutory exemption. ... The
task of finding out what is and what is not known about stock options
offered to employees covered by the FLSA fell in large part to William
Rodgers, the Labor Department's new chief economist. ... The Labor
Department "quickly found" there "is not a lot of information" in this area,
Rodgers said. The National Center for Employee Ownership, however, recently
estimated that between 7 million and 10 million nonmanagement workers
receive some form of stock options, Rodgers said. ... The estimate is based
in part on information from BLS, the American Electronics Association, the
Center for Effective Organizations at the University of Southern California,
and a number of surveys by compensation consultants. ... BLS recently
completed a field survey aimed at including in its employment cost index
information about the use of stock options and is moving in the direction of
getting a nationally based sample, Rodgers said. On the benefits side of
the ECI, BLS includes only nonproduction bonuses, such as lump-sum payments
provided in lieu of wage increases. Stock options, which are currently
excluded, are under consideration as an addition to the ECI as BLS works to
determine their prevalence. ... (Deborah Billings in Daily Labor Report,
page C-1).
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