Review of PCE, GDP, etc., for end of June, 2023

Another month to review (with some comments at the end)...

The following looks good, except....

The outlook for core is actually higher than the total inflation. Which means food and energy are the main drivers of overall lower inflation. Sounds good, except it really isn't food as much as energy. Energy crested in June of last year and then quickly slid... going into September. 

Just saying, the falling overall inflation numbers may come to an abrupt halt in the fall.

Now for the adjustments...

Personal Income and Outlays...

Now for the GDP...

The updated estimates primarily reflected upward revisions to exports and consumer spending that were partly offset by downward revisions to nonresidential fixed investment and federal government spending. 

I highlighted my area of concern. Note the statement of upward revision in consumer spending, then review the PCE expenditures directly above. January was good and presumably the revision upward in February would match up with the quoted statement.

However, April was revised up a mere +0.2 from original flat and May is also flat. 

So where is the growth coming from in the 2nd quarter?

Natural Gas Inventory Report, June 30, 2023

The Energy Information Administration released their weekly report yesterday.

As always... the Pacific Region...

Prices increased in all West Coast markets this report week. At PG&E Citygate in Northern California, the price rose 96 cents from $3.02/MMBtu last Wednesday to $3.98/MMBtu yesterday. The price at SoCal Citygate in Southern California increased 3 cents from $4.80/MMBtu last Wednesday to $4.83/MMBtu yesterday. The price at Sumas on the Canada-Washington border rose 59 cents from $2.02/MMBtu last Wednesday to $2.61/MMBtu yesterday.

Select inventories of EU and UK... 

Overall, very good, with EU wide numbers at 78.86% full.

A brief look at the 12 month highs for futures... TTF (EU) and UKG (UK).

A slight uptick for the 12 month, but still below the 5-5 picture. 

Current week ending prices...

Current futures (August v 12 month high)

Basically, the current futures are about where they were 2 years ago, when the EU was worried about Russia messing with natural gas deliveries and woefully inadequate natural gas stocks. 

Has the storm been weathered? 

Gasoline consumption per latest EIA data, June 28, 2023

Gasoline prices (per AAA) eased down  from last report to $3.556, or -2.5¢. One year ago the price had ballooned to $4.881, and was on its downward trajectory... into the mid September lull, around  $3.67.

Consumption increase week over week, and stands 4.5% above year ago numbers. (This is a four week moving average).

The import/export surplus of gasoline since last March 1st 2022, stands at +98.7M barrels. It has basically remained flat for the past 3 months.

Where will pump prices be next week? My estimate last week was ±7¢, with a downward bias. Result was down -2.5¢. Sooo... ±5¢, with an ever so slight upward bias.  

Crude and Petroleum Product Inventories - June 28 2023

Data per the EIA weekly report. 

Crude stocks fell by -9.6M barrels, from last week, and remains down -2.4% from the 5 year seasonal average. It should be noted the 5 year average includes the abnormal 2020 and 2021 number. Otherwise, the current inventory is nearly +1.7% above normal.

Distillates inventory edged up 123K barrels; and Gasoline inventories increased +603K barrels. Distillates and Gasoline are both below 5 year and 3 year adjusted average inventories.

The SPR fell another -1.351M barrels.

WTI is $69.45, compared to $69.34, one week ago, and $107.01, one year ago.

Refinery output eased back on a weekly basis, and compared to year ago levels.

For anyone interested, the U.S. has exported 730.9M barrels of crude and petroleum products, more than imported, since March 1, 2022. It jumped nearly 20M barrels this past week.

Overall, crude stocks remain quite healthy, compared to this time last year, with days supply at 27.5, compared to last year's 25.3 days.

Comparison of Inflation in selected countries

 

Stats Canada reported their y/y inflation numbers this morning, so here goes with a graph... since January, 2020.

Some folks might prefer a chart, so here it is... as well.

Included in both is the United States inflation by way of using the EU methodology. The overall picture indicates much improvement in y/y figures, although the United Kingdom seems to be stalled. 

As for the United States, the rate of y/y inflation appears set to fall further, but a considerable part of the drop is due to lower energy costs. With June, 2022 being the peak of gasoline costs, and a rapid fall back to near current levels in September, 2022... the benefit of y/y inflation reduction will quickly recede. 

The focus will become core + food, imho. 

Natural Gas Inventory Report, June 23, 2023

The Energy Information Administration released their weekly report yesterday.

As always... the focus is on the Pacific Region...

Along the West Coast, prices increased this week, in line with the Henry Hub, even as consumption in California declined slightly week over week. The price at PG&E Citygate in Northern California rose 16 cents, up from $2.86/MMBtu last Wednesday to $3.02/MMBtu yesterday, while in Southern California, the price at SoCal Citygate increased more than any other major hub this week, rising $1.67 from $3.13/MMBtu last Wednesday to $4.80/MMBtu yesterday.

Select inventories of EU and UK... 

Virtually all areas continue to increase NG in storage. Despite the hysteria, NG futures continue to ease, both nearby and 12 month... on the EU and UK market, with the Henry Hub, up slightly.

A brief look at the 12 month highs for futures... TTF (EU) and UKG (UK).

Recently, I have noticed some articles stating how the EU/UK natgas prices are surging and giving many reasons. Even one that was AI generated. 

Yet these hysterical articles don't seem to hold up for very long.

Surging... compared to what?

Gasoline consumption per latest EIA data, June 22, 2023

Gasoline prices (per AAA) eased down  from last report at $3.584, or -0.7¢. One year ago the price had ballooned to $4.955, and was on its downward trajectory... into the mid September lull, around  $3.67.

Consumption slipped -1.2% from last week, and stands 2.7% above year ago numbers. (This is a four week moving average).

The import/export surplus of gasoline since last March 1st 2022, stands at +98.7M barrels. The import/export numbers are starting to reflect pre Ukraine invasion pattern. Which was the U.S. importing in the spring- summer and exporting in the fall - winter. It generally was balanced through the year. 

Where will pump prices be next week? My estimate last week was ±5.0¢ and down -0.7¢.

Not sure that will happen this coming week, as several factors have me leaning to pump prices heading a bit lower. Again, the range may be in the ±7¢, with a downward bias. Okay, for a bold number... national average for AAA at $3.511, on next the 28th of June. 

Crude and Petroleum Product Inventories - June 22 2023

Data per the EIA weekly report.

Crude stocks fell by -3.8M barrels, from last week, and remains down -1.5% from the 5 year seasonal average. It should be noted the 5 year average includes the abnormal 2020 and 2021 number. Otherwise, the current inventory is nearly +2.9% above normal.

Distillates inventory edged up 434K barrels; and Gasoline inventories increased +479K barrels. The SPR fell another -1.719M barrels.

WTI is $69.34, compared to $68.76, one week ago, and $101.58, one year ago.

Refinery output continues to edge up on a weekly basis, as well as above year ago levels.

For anyone interested, the U.S. has exported 711M barrels of crude and petroleum products, more than imported, since March 1, 2022. It jumped 13.8M barrels this past week.

Overall, crude stocks remain quite healthy, compared to this time last year, with days supply at 28.1, compared to last year's 25.7 days.

Natural Gas Inventory Report, June 16, 2023

The Energy Information Administration released their weekly report on yesterday.

Once again, let me focus on the Pacific Region...

Along the West Coast, prices decreased this week, but remain relatively high, particularly in California. The price at PG&E Citygate in Northern California fell 86 cents, down from $3.72/MMBtu last Wednesday to $2.86/MMBtu yesterday. The price at SoCal Citygate in Southern California decreased 16 cents from $3.29/MMBtu last Wednesday to $3.13/MMBtu yesterday. Consumption of natural gas in the electric power sector in California decreased by 7% (0.1 Bcf/d) week over week, as temperatures were relatively mild. In the Sacramento Area, temperatures averaged 68°F this week, leading to 12 fewer CDDs than last week, while in the Riverside Area, inland from Los Angeles, temperatures averaged 65°F this week, leading to 1 fewer HDD and 5 fewer CDDs than last week.

Select inventories of EU and UK...

Inventories continue to improve... over historic highs for this time of year.

NatGas Price chart...

The sky is falling...

The past 2 weeks have seen sudden spikes in EU and UK futures. This is being attributed to a host of things that have been known to take place. 

• The Dutch are shutting down the largest gas field in Europe.
• Norway is doing maintenance on their equipment.

Nevermind where the price was just 6 weeks ago. It reminds me of the gold bug syndrome. Time to talk of gloom and doom, to unload those holdings.

Until next week. 

6-15-23, Advance Retail Sales Report for May

Advance Monthly Sales for Retail and Food Services, May 2023.

Advance estimates of U.S. retail and food services sales for May 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $686.6 billion, up 0.3 percent (±0.5 percent)* from the previous month, and up 1.6 percent (±0.7 percent) above May 2022. Total sales for the March 2023 through May 2023 period were up 1.7 percent (±0.4 percent) from the same period a year ago. The March 2023 to April 2023 percent change was unrevised at 0.4 percent (±0.2 percent).

The advance estimate are in current dollars, and are not adjusted for inflation. The CPI for May was 4.0% Y/Y, while the advance sales estimates were up 1.6% (± 0.7%). Effectively paying more for less. 

Retail trade sales were up 0.3 percent (±0.5 percent)* from April 2023, and up 0.7 percent (±0.5 percent) above last year. Nonstore retailers were up 6.5 percent (±1.4 percent) from last year, while food services and drinking places were up 8.0 percent (±2.3 percent) from May 2022.

Time for the revisions...

I do not fault the bean counters, as it is openly acknowledged that estimates are based on incomplete information. The problem is with the media, that jump to conclusions based on incomplete information.

In short, the sales numbers are rather stagnant, when factoring in inflation, and not really growing much when using constant dollars.

So the folks extolling the "sales" increase are  not exactly paying attention to the revised numbers, and those constantly forecasting a collapse aren't paying attention, as well. 

No news is actually good news, in this case, or at least in my humble opinion.

 

 

Gasoline consumption per latest EIA data, June 14, 2023

Gasoline prices (per AAA) edged up from last report at $3.591, or up +3.8¢. One year ago the price had ballooned to $5.015, which was the all time high.

Consumption increased +2.2% from last week, and stands 3.2% above year ago numbers. (This is a four week moving average).

The import/export surplus of gasoline since last March 1st 2022, stands at +99.2M barrels. The import/export numbers are starting to reflect pre Ukraine invasion pattern. Which was the U.S. importing in the spring- summer and exporting in the fall - winter. It generally was balanced through the year. 

Clearly, the upheaval has smoothed out.

Where will pump prices be next week? My estimate last week was ±5.0¢ and ended up +3.8¢.

Not sure that will happen this coming week, as several factors have me leaning to pump prices heading a bit lower. Again, the range may be in the ±5¢, with a slight downward bias. 

For fun, here is my current forecast for the remainder of the year. 

Crude and Petroleum Product Inventories - June 14 2023

Data per the EIA weekly report.

Crude stocks rose dramatically by 7.9M barrels, from last week, and remains down -1.6% from the 5 year seasonal average. It should be noted the 5 year average includes the abnormal 2020 and 2021 number. Otherwise, the current inventory is nearly +2.4% above normal.

Distillates inventory surged +2.1M barresl; and Gasoline inventories climbed +1.2M barrels barrels. The SPR fell another -1.882M barrels.

WTI is $68.76, compared to $72.56, one week ago, and $110.75, one year ago.

Refinery output continues to edge up on a weekly basis, as well as above year ago levels.

For anyone interested, the U.S. has exported 697.2 M barrels of crude and petroleum products, more than imported, since March 1, 2022. It jumped 8.5M barrels this past week.

Overall, crude stocks remain quite healthy, compared to this time last year, with days supply at 28.5, compared to last year's 25.8 days.

Producer Price Index June 2023 release for May Data.

The BLS has released the April Producer Price Index Report.  (historical releases)

The Producer Price Index for final demand declined 0.3 percent in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.2 percent in April and fell 0.4 percent in March. On an unadjusted basis, the index for final demand moved up 1.1 percent for the 12 months ended in May.

In May, the decline in the final demand index can be traced to prices for final demand goods, which fell 1.6 percent. The index for final demand services increased 0.2 percent. 

Prices for final demand less foods, energy, and trade services were unchanged in May after inching up 0.1 percent in April. For the 12 months ended in May, the index for final demand less foods, energy, and trade services increased 2.8 percent. 

Overall, the trend is downward and some relief might be in sight for the consumer.

The decreased costs in unprocessed intermediate, have not completely moved into the processed area. Possibly by next month? 

Unprocessed goods for intermediate demand: The index for unprocessed goods for intermediate demand fell 4.8 percent in May after increasing 1.6 percent in April. Almost 60 percent of the broad- based decrease is attributable to a 7.8-percent drop in prices for unprocessed energy materials. 

Nearly 60 percent of the May decline in the index for unprocessed goods for 

intermediate demand can be traced to prices for crude petroleum, which fell 10.2 percent.

The price drops all across the petroleum sector are evident in the report. Another big drop should be forthcoming in the report for June, as this sector peaked last June. 

After that, the impact of petroleum will decrease and the focus will shift elsewhere. As the saying goes... the low hanging fruit will have been picked by fall. 

When looking at the overall, as in the first graph and seeing it hold relatively steady, then realizing the significant drops in energy... sticky it is.

BLS releases latest Real Earnings... June 13, 2023

The BLS has released the latest Real Earnings Report.

Real average hourly earnings for all employees increased 0.3 percent from April to May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.3 percent in average hourly earnings combined with an increase of 0.1 percent in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings decreased 0.1 percent over the month due to the change in real average hourly earnings combined with a 0.3-percent decrease in the average workweek. 

Generally speaking, real income growth has about matched pre-Covid, per the graphs below.

But first, a few notes...

• These hourly and weekly figures are in 1982~1984 dollars, so that inflationary impact can be easily seen. The $11.03 per hour in the first graph would be $33.34 per hour in today's dollars. 
• Much is made about the decrease in hourly wages, but some easy explanation... We can all remember when covid shut everything down, and people were sent home. Some kept working at their jobsite or from home. 
• Many others went home without a job. A lot of those were lower wage employees, which skewed the hourly and weekly rates upward, until those employees slowly returned to work.
• I have January, 2020 (pre-covid) on each graph, so that comparisons can be made to current. Also, the unemployment rate then and now are very similar. 

 

CPI Latest DATA results, June 13, 2023

The BLS report was released this morning and it was a shade below consensus estimates. (historical releases)

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in May on a seasonally adjusted basis, after increasing 0.4 percent in April, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 4.0 percent before seasonal adjustment.

The index for shelter was the largest contributor to the monthly all items increase, followed by an increase in the index for used cars and trucks. The food index increased 0.2 percent in May after being unchanged in the previous 2 months. The index for food at home rose 0.1 percent over the month while the index for food away from home rose 0.5 percent. The energy index, in contrast, declined 3.6 percent in May as the major energy component indexes fell.

I read some reports how inflation came in well below expectations. Apparently those expectations got inflated prior to this release. The expected inflation Y/Y was 4.13% and this report came in at 4.048%.

It goes without saying that energy costs going down is a major factor in these lower inflation rates.

Yes, today's release is the lowest since March, 2021. However, the period since that date has seen overall prices increase 14.82% in that 26 month period. Which matches the rise of prices from August, 2012 until March, 2021. A period of 103 months.

Here is some food for thought. Food at home, has risen 19.5% in the 26 months, since March, 2021. It rose 19.5% from May, 2008, until March, 2021... a period of 102 months.

Those stats are a bit hard to chew.

So yes, inflation is slowing and should continue to slow. But once again, without the energy component, and the food component... prices increased 5.3%. Food was generally flat for the month, but still up 5.8% Y/Y.

My own personal CPI...

The current report card...

It is down across the board and hopefully... will continue to slide. 

Natural Gas Inventory Report, June 09, 2023

The Energy Information Administration released their weekly report on yesterday.

And now a look at regional, specifically Pacific.

Prices in West Coast markets remain the highest of all major pricing hubs this report week. The price at PG&E Citygate in Northern California rose 65 cents, up from $3.07/MMBtu last Wednesday to $3.72/MMBtu yesterday. The price at SoCal Citygate in Southern California increased $1.11 from $2.18/MMBtu last Wednesday to $3.29/MMBtu yesterday. The price at Sumas on the Canada-Washington border rose 47 cents from $1.70/MMBtu last Wednesday to $2.17/MMBtu yesterday. Natural gas consumption in the Western region increased by 13%, or 0.9 billion cubic feet per day (Bcf/d), which was led by a 38% (1.0 Bcf/d) increase in consumption in the electric power sector, according to data from S&P Global Commodity Insights.

Select inventories of EU and UK...

Prices rose sharply on the EU and UK markets this past week. Nearby by months by 8% with max 12 month at 2.5%.

I have no real explanation, as I never bothered to research reasons. Although it is not so unusual for summer months, for there to be a spike. Afterall... hot weather is here.

Gasoline consumption per latest EIA data, June 08, 2023

Gasoline prices (per AAA) remained relatively flat, from last report at $3.553, or down -2.1¢. One year ago the price had ballooned to $4.919. 

Consumption increased +0.3% from last week, and stands 1.6% above year ago numbers. (This is a four week moving average).

The import/export surplus of gasoline since last March 1st 2022, stands at +99.8M barrels. The import/export numbers have really not changed that much over the past few weeks and this past week showed more exports than imports, by a mere +15K daily. 

Where will pump prices be next week? My estimate last week was -4.7¢ and ended up with a down -2.1¢. The right direction at least. 

Not sure that will happen this coming week, as several factors have me leaning to pump prices heading a bit higher. Again, the range may be in the ±5¢, with a slight upward bias. 

Crude and Petroleum Product Inventories - June 07 2023

Data per the EIA weekly report.

Crude stocks fell- 452K barrels, from last week, and remains down -3.3% from the 5 year seasonal average. It should be noted the 5 year average includes the abnormal 2020 and 2021 number. Otherwise, the current inventory is nearly +1.2% above normal.

Distillates inventory surged +5.1M barresl; and Gasoline inventories climbed +2.7M barrels barrels. The SPR fell another -1.867M barrels.

WTI is $72.56, compared to $70.02, one week ago, and $114.54, one year ago. (It began the big slide from there).

Refinery output continues to edge up on a weekly basis, as well as above year ago levels.

For anyone interested, the U.S. has exported 688.7M barrels of crude and petroleum products, more than imported, since March 1, 2022. There was only a slight bump this week. 

Overall, crude stocks remain quite healthy, despite the major drop and compared to this time last year, with days supply at 28.3, compared to last year's 25.3 days.

 

Natural Gas Inventory Report, June 02, 2023

The Energy Information Administration released their weekly report on Friday.

The national inventory stock remains above 5 year average and is keeping pace with seasonal movements. As usual, the Pacific region is lagging, but showing significant gains each week.

Select regional spot prices: Natural gas spot prices fell at most locations this report week (Wednesday, May 24, to Wednesday, May 31), except for prices in the Northeast. Price changes at major pricing hubs this report week ranged from a decrease of 29 cents/MMBtu at the Waha Hub in western Texas to an increase of $3.30/MMBtu at the Algonquin Citygate in the Northeast.

Select inventories of EU and UK...

Prices continue to fall on the UK and EU markets. The UK spread of 12 month futures is annually at £1,441.34 ~ £2,174.50, with OFGEM setting the cap at £2,074. That cap is consistent with NatGas prices of £94.51 per Therm or $11.76 per MMbtu. November futures rise above the cap.

The lowering of the (annual) energy cap from £2,500 to £2,074 is certainly a great relief, however it was only 2 years ago, it was something like £1,200 annually for the average household. The monthly energy charges have fallen substantially and is reflected in the U.K. CPI. 

gas provided a downward contribution of 0.75 percentage points to the monthly change in CPIH

electricity provided a downward contribution of 0.67 percentage points to the monthly change in CPIH.

 

Energy costs have abated, but elsewhere is very troubling, in my humble opinion.