PPI final demand falls 3/10 percent, which is quite
a drop for an index that was up 2/10 the
month before. I'm sure waiting for the details to
drop, but I'm sure that's probably energy related for
the most part. The energy, the core rate
, energy food and trade comes in flat at 0.0%
. That's down from 2/10 gain. And both of
those numbers are below what analysts had expected the year
over year. Final demand falls to 1.1%. Let
me get you in a second historical on that and
the core falls to 2.8% for the year. So
we are seeing a big drop in prices at the
wholesale level. Of course, Tom, as you
mentioned, they don't translate directly into consumer prices because
the middle man gets in there and and has some
say about what things cost, but it is a
sign that the lower level price from the bottom up
prices are starting to fall backward. And it would
just reinforce the Fed's idea that maybe they pause today
, Mike. It used to be easy. There
was like the beginning of the factory, the middle
of the factory in final demand. What came out
the door? You've lectured me. It's more complex
today. Which part of P P I has your
attention. Well, Tom, we generally like to
look at P P for final demand, trade services
and energy and food because that's essentially a core rate
. The trade services is not trade in the international
sense. It's basically the margins received by wholesalers and
retailers. So you get a picture there of what's
going on at a lot of companies. Now the
decline in the overall final demand number was, as
I said, due to energy prices, gasoline prices
down 13 0.8%. Energy prices in general down 6.8%
. Food was down 1.3%. Remember when food was
a big part of the C P I. So
we may be seeing some benefits there. Uh Services
moved up 2/10 percent, but that's down from a
3/10 the prior month. So maybe service prices are
starting to come off a little bit and I'll leave
you with one interesting number here. Uh an index
for iron and steel scrap fell during the month.
Remember when Alan Greenspan was chairman of the Federal Reserve
, he used to look at steel scrap as an
indicator of how the economy was doing. It's where
you sell your old refrigerator or your stove, they
melt the steel down and make it into something else
. And if prices are going down there's less demand
for steel and that means the economy might be slowing
. It's an interesting uh concept to follow. I'm
not sure if it's so accurate these days. We
haven't looked at that in a long time, but
it did pop back into my head. This remnant
from the Greenspan Days.