BUREAU OF LABOR STATISTICS, DAILY REPORT, MONDAY, APRIL 15, 2002: One important measure of U.S. inflation rose sharply last month as the surge in world oil prices since mid-January began to work its way through the economy, the Labor Department reported Friday. Producer prices for finished goods rose 1 percent last month, the largest monthly increase since the beginning of last year, principally because of a 5.5 percent jump in energy prices. That included a 21.3 percent increase in the prices refiners charge for gasoline following a 4.5 percent rise in February. However, the rising cost of energy -- evident in recent weeks to motorists at the gas pump -- so far does not appear large enough to derail the U.S. economic recovery. It would take a much larger and more sustained oil price shock to seriously damage the economy, partly because it is significantly less dependent on oil than in the past, analysts say. The University of Michigan said its monthly index of consumer sentiment fell slightly for the first part of this month instead of rising as most financial analysts had expected. University analysts attributed the decline to concerns about inflation (John M. Berry, The Washington Post, April 13, page E1).
Escalating oil and energy prices, particularly for gasoline, pushed wholesale prices up 1 percent in March, compared with increases of 0.2 percent in February and 0.1 percent in January, the Bureau of Labor Statistics reported April 12. The price of finished energy goods rose 5.5 percent in March compared with a 0.4 percent increase in February. The so-called core rate of wholesale inflation -- finished goods minus food and energy -- rose 0.1 percent (Daily Labor Report, page D-1). Sharply higher gasoline costs drove up wholesale prices in March by the largest amount in 14 months, the government reported today. In addition, shoppers hit by higher energy bills, spent modestly on other items. The government reports released today suggested that the economy was hitting some rough patches. Though many economists believe that the surge in energy prices is temporary and note that oil prices have retreated, the increase helped make consumers less willing to spend (Associated Press, The New York Times, April 13, page B4). Businesses worked off excess stocks of unsold goods in February for the 13th month in a row, potentially setting the stage for ramped-up production in the future. The Commerce Department reported today that unsold goods on shelves and back lots fell by a seasonally adjusted 0.1 percent in February. The drop came even as businesses' sales declined by 0.9 percent. One of the biggest sources of the national economy's weakness has been aggressive inventory liquidation by businesses. To cope with lackluster sales, manufacturers sharply cut production and companies ended up heavily discounting merchandise, which began piling up as the economy slowed (Jeannine Aversa, Associated Press, http://www.nandotimes.com/business/story/361432p-2932024c.html). More than 7 months after September 11, some of the heightened workplace precautions predicted in the days following the attacks haven't materialized. For example: Just 15 percent of employers reported that background checks on employees are more comprehensive now than before September 11, according to an online poll by the Society for Human Resource Management. Just 18 percent of human resource professionals reported their companies had been restricting business travel, according to a November survey by workplace law firm Jackson Lewis. About half of Americans say its very or somewhat likely there will be another attack, a recent USA Today/CNN/Gallup poll showed. That's down from more than 80 percent in October. But demand for security guards remains high in areas such as Boston, New York, Washington and Pennsylvania, experts say. "If there's a decline, it's more like a denial that something will happen," said Guardsmark CEO Ira Lipman, adding that tapering demand has been seen in some small towns and the South. And some mail precautions have also persisted. The Jackson Lewis survey found about half of companies had changed mail handling procedures since September 11 (USA Today, page 1B). Faculty salaries at the nation's colleges and universities rose 3.3 percent in the current academic year to an average of $62,895, the largest increase in 11 years, the American Association of University Professors reports. The association's report predicts that the increase in faculty salary will be smaller in 2002-03 because of the economic downturn that peaked after the events of September 11. The sagging economy did not dent the current raises because they were set at the end of the last school year. The report showed sharp differences in pay among the nation's academic institutions, with research universities and the most selective colleges paying professors far more than colleges that focus on drawing students from their regions (The New York Times, April 13, page A12). Last year wasn't just bad for big business. It was bad for big businessmen: Many chief executives at large publicly traded companies saw their annual pay shrink for the first time in more than a decade. Top company officers of major corporations still raked in millions. But the salaries that spiraled ever higher from the early 1990s through 2000 edged up only slightly in 2001 as recession took hold, compensation experts say. And there were sharp reductions in the huge year-end bonuses that business leaders customarily receive, causing a drop in overall cash compensation (http://www.latimes.com/business/la-000026829apr15.story?coll=la%2Dheadlines %2Dbusiness). DUE OUT TOMORROW: Consumer Price Index -- March 2002; and Real Earnings: March 2002
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