> BUREAU OF LABOR STATISTICS, MONDAY, JULY 16, 2001:
>
> A sharp drop in energy prices caused the producer price index for June to
> fall 0.4 percent -- its fastest rate of decline in 2 years. Energy prices,
> led by a 5.8 percent decline in natural gas prices, fell 2.5 percent in
> June. The core PPI, which excludes the drop in energy prices and a slight
> increase in food prices, rose a mild 0.1 percent, the Bureau of Labor
> Statistics said. "In the near term, things look good. The pipeline
> things that might boost inflation are pretty light now, and core inflation
> might still fall a bit over the next couple of months," the chief
> economist at Bank of America says (Daily Labor Report, page D-4).
>
> As they try to gauge underlying inflation trends, private analysts and
> policymakers would be best served by tracking changes in consumer prices
> excluding energy, an economist at the Kansas City Federal Reserve Bank
> concluded. Measuring "core inflation" by excluding only energy rather
> than both energy and food prices from the consumer price index provides a
> better gauge of the underlying trend, said Todd Clark, an assistant vice
> president and economist at the Kansas City Fed. Other measures of core
> inflation are not as straightforward and reliable, he said, in a study
> recently released on the bank's Web site. Policymakers, including those
> at the Federal Reserve, and private economists most often measure core
> inflation by looking at the all-items CPI minus energy and food prices.
> The thinking has been that energy and food are historically so volatile
> that a clearer picture of the underlying trend emerges by excluding these
> two components. The latest CPI figures, compiled by the Bureau of Labor
> Statistics, show that the core inflation rate is running substantially
> lower than the overall rate. Analysts take this as a favorable sign that
> eventually the overall inflation rate will moderate to a level close to
> the core rate. For its part, BLS "does not take a position on what is core
> inflation," Kenneth Dalton, associate commissioner for prices and living
> conditions, told the Bureau of National Affairs. Rather, the agency
> publishes a series of "special indexes" each month as part of the CPI
> report -- including an all-items index excluding energy. By offering
> several options for tracking prior changes, "the bureau supports our data
> users who might want to use the figures in different ways," Dalton said.
> Clark highlights two criteria commonly used in analyzing core inflation:
> "how well each core indicator tracks an estimate of trend inflation, and
> how well each one predicts future overall inflation" (Daily Labor Report,
> page A-9).
>
> The Wall Street Journal feature "Tracking the Economy (page A11) indicates
> that the Consumer Price Index for June, due out from BLS Wednesday, will
> move 0.1 percent higher, according to the Consensus Global Forecast, in
> contrast to a change of 0.4 percent in May. The CPI excluding food and
> energy for June is likely to move up 0.2 percent, although it moved but
> 0.1 percent in May. Initial jobless claims for the week to 7/14, to be
> announced Thursday, is predicted to be 415,000, although it was 445,000
> the previous week.
>
> Retail sales rose 0.2 percent in June, buoyed by strong auto sales, the
> Commerce Department reports. June sales rose to a seasonally adjusted
> $292.9 billion, from an upwardly revised $292.2 billion in May. May sales
> rose 0.4 percent, rather than the 0.1 percent previously estimated. The
> Census Bureau data showed motor vehicles dealers' sales jumped 1.5 percent
> in June after a 0.2 percent rise in May. Excluding the auto sector from
> the total, June retail sales fell 0.2 percent (Daily Labor Report, page
> D-13).
>
> American consumers last month continued to increase their spending,
> particularly for new cars and light trucks, rounding out a quarter in
> which they again apparently kept the U.S. economy from slipping into a
> recession. The Commerce Department reported that retail and food service
> sales rose only 0.2 percent last month, half the May increase. But a
> roaring gain of 1.4 percent in April meant that sales increased at a 6.1
> percent annual rate in the April-June period, the best reading in a year.
> The University of Michigan said in its preliminary consumer sentiment
> index for this month rose to 93.7 from last month's final reading of 92.6.
> The index reached a low of 88.4 in April. One factor making consumers
> more optimistic likely is the recent slide in some energy prices, a
> development that should also lessen the squeeze on business profits. The
> Labor Department said its producer price index for finished goods fell 0.4
> percent last month because the cost of energy items, including gasoline
> and electricity, dropped 2.5 percent while prices for other goods
> increased only slightly (John M. Berry, The Washington Post, July 14, page
> E1).
>
> Fresh evidence of a weak economy appeared yesterday in the latest reports
> on retail sales, inflation and consumer confidence, suggesting that a much
> anticipated upturn will not materialize until the fall, if then. Consumer
> spending, in particular, gave ground, with retail sales growing more
> slowly than most forecasters had expected, the Commerce Department
> reported. Consumer confidence, on the other hand, rose slightly, in the
> first 2 weeks of July, but among low-income households who told pollsters
> that they expected inflation to lose strength in coming months, giving
> their incomes more purchasing power. One crucial measure of inflation
> fell in June, for the first time in over 2 years. "These numbers suggest
> that we won't get to noticeable economic growth until the fourth quarter,"
> said the chief domestic economist at Morgan Stanley Dean Witter.
> Inflation did lose strength in June. The Producer Price Index, measuring
> the cost of goods as they move through the production process, from raw
> materials to finished goods, fell in June. The Consumer Price Index for
> June, a much broader measure covering price changes for services as well
> as goods, will be released on Wednesday (Louis Uchitelle, in The New York
> Times, July 14, page B1).
>
> Consumers are turning a bit more confident, despite the continuing
> economic slowdown. The University of Michigan's mid-month report on
> consumer sentiment for July incrased to 93.7 from 92.6 in June. With
> narrow profit margins squeezing businesses and their capital spending,
> happy consumers are crucial if the slow-growing economy is to stay out of
> recession. Consumers continued to spend at a relatively healthy clip last
> month, a separate report showed. Retail sales rose 0.2 percent for June,
> the Commerce Department said Friday. Meanwhile, U.S. wholesale prices
> registered the biggest drop in nearly 2 1/2 years in June amid a slump in
> energy prices. Overall prices decline a surprising 0.4 percent, the Labor
> Department said. The producer price report fills out the picture of an
> economy with little or no price pressure, a good sign for Federal Reserve
> policymakers who want to stimulate the weak economy with further
> interest-rate cuts (The Wall Street Journal, page A2).
>
> Often hired for low-end jobs like construction labor and meatpacking,
> Hispanic immigrants in the United States die from workplace injuries at a
> far higher rate than other workers. In recent years the rate of
> on-the-job deaths for all Hispanics has been 20 percent higher than for
> whites or blacks, the Bureau of Labor Statistics has found. The death rate
> for Hispanics in construction, an industry that has hired many immigrants
> in recent years, is even higher, occupational experts say. Job safety
> officials say that Hispanic immigrants, often unskilled and often here
> illegally, are hired disproportionately into many of the most dangerous
> jobs, like roofing, fruit picking and taxi driving. Authorities on
> occupational safety point to another factor behind the higher injury
> rates. Hispanic immigrants, partly because many do not speak English,
> often receive less job and safety training than American-born workers do.
> In its most recent Census of Fatal Occupational Injuries, the Bureau of
> Labor Statistics found that in 1999, Hispanic workers had a fatality rate
> of 5.2 per 100,000, compared with 4.4 for white workers and 4.1 for black
> workers. The rates were nearly identical for those groups in 1998. The
> bureau found that 725 of the 6,023 occupational deaths reported in 1999
> involved Hispanic workers. Another reason for the high fatality rate,
> safety experts said, is that Hispanic immigrants are usually newer in
> their jobs than Americans. One Bureau of Labor Statistics study found
> that 12 percent of serious injuries occurred during a worker's first day
> at a job site (The New York Times, page A11).
>
> With back-to-back declines from its peak of last year, the Wage Trend
> Indicator signals an easing of wage pressures for private industry
> employers by the end of this year, according to the latest WTI report
> issued by the Bureau of National Affairs. The WTI's final reading for the
> second quarter is 100.50, down from the 100.71 shown in the first quarter
> and 100.85 in the fourth quarter of last year (second quarter 1976=100).
> The final reading is unchanged from the figure released a month ago (Daily
> Labor Report, page D-1).
>
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