It's Been Awhile

Finally some more reports coming out from the government services, with PPI and Retail Sales. Granted it is still a month behind, as October data should be out. 

Inflation did edge up in September on the CPI and PPI. Real Earnings were recently released as well. The latter slipped down a bit, with the exception on weekly earnings for production and non-supervisory.

Retails sales edged up before inflation adjustments, which let it slip a bit.

Looking inside the numbers, it would appear "Brick and Mortar" department stores continue to slide, as well as those companies that sell brick and mortar...building supplies etc. It would also appear the hobbies are taking a hit as well... sporting goods, etc.

Week Ending Report-August 16th, 2025

A few reports of interest (to me), from this past week.

CPI

Real earnings

Petroleum

Producer Price Index

Retail Sales

The inflation report was rather benign and met expectations. The oddity was in the CPI-W, which directly relates to C.O.L.A. It was a mild 2.5% y/y. The previous projection was a 2.6%~2.7% cola, which now moves a bit down to 2.5%~2.7%.

The Real Earnings moved up and is +1.2% above one year ago. As this is inflation adjusted, the earnings are +3.7% above one year ago.

The petroleum report shows an increase in both crude and distillate supplies. Gasoline supply edged a shade lower.

Produce Price Index was rather ugly, with a substantial jump across the board. Just as last month's PPI foreshadowed a benign July CPI... August will be a wake up call, imo. On top of that, the forecast for PPI is even higher... going forward.

I am not exactly happy, as my current CPI is 3.0% and possibly climbing, with COLA far behind.

The current status of the report card...

Advance Retail Sales

Not a bad report on the surface.

OPINION time:

In a previous post I questioned the accuracy of some government reports. The retail sales would be one example. The issue being with revisions. Below is a snapshot of cumulative revisions of advance sales going back about 2 1/2 years. Revisions are not unheard of, but the pattern is suggestive of something being off. 

The pattern HAD been the previous couple of months being revised downward, which inevitably shows a brighter current report. This had been almost a monthly occurrence, of the past couple of years. Now it should be noted that historically, April has been an across the board revision of everything.

Going forward, it will be interesting to observe if the revision pattern continues, although the monthly pattern has broken towards upward revisions for previous month's data, which would suppress the joy of a current report. It does seem suspicious, imho.

While the overall picture seems okay, with the exception of the PPI... a glimmer of hope seems to be in the PPI being a month blip, as following forecasts indicate flat to negative.

Week Ending Report-August 9th, 2025

A few reports of interest (to me), from this past week.

Trade Report

Petroleum Report

The international trade numbers are self explanatory in the linked report.

As for the petroleum report, usage of gasoline continues to drift downward, with pump prices in a narrow range. 

There is the potential for a hurricane in the next couple of weeks, but it is largely forecast to be near the east coast and not the gulf coast, or whatever you want to call it.

OPINION time:

Barely any movement in inflation expectations, although a slight move upward from now into the 4th quarter is in the offing. 

3rd Qtr. GDP projections remain positive, although barely, with 4th quarter in the same range and an uptick by first of year.

I guess if I were a president of a country at war and had suspended elections, knowing I wouldn't be re-elected... I would likely resist any form of peace, even if my citizens continued to die. Especially if the fighting was supported with foreign tax dollars... whether directly or through military munitions.

Week Ending Report-8-02-2025

A few reports of interest (to me), from this past week.

GDP

Personal Income and Outlays

Weekly Crude Oil Report

The GDP exceeded forecasts, but not really by that much. It was just as much about the trade and services deficit, as was the first quarter negative. 

Personal Income and outlays was mostly positive. Here is the July Report card, which includes several variables.

A lot of pink, which is inflation heating up, but oddly... the PPI seems to be slipping. So maybe inflation is cooling. 

Also, of note... the report card was not updated to PCE revisions for prior months.

Here is the latest...

Here was previous month, with revisions highlighted...

There are always some revisions of Government numbers, but the past few years have been quite noticeable, imo. More on my opinion later.

The petroleum report continues to astound me, as U.S. consumption is well below last year.

OPINION time:

The firing of a government official in charge of employment numbers caused great gnashing of teeth. I have a different view than some of the current pundits. 

Those employment numbers have been suspect for some time. The past few years have seen monthly reports heralding better than expected hiring, with hardly any mention of prior months downward revisions. 

The aforementioned was a near monthly occurrence, with even a massive one time downward revision for several months prior... again without media comment. It was very hard to ignore the possibility of political intervention. And if not political intervention... then very lackluster data collection, of which improvement is much needed.

I should probably mention that many reports from the government are in constant revision stage. Contrary to public opinion... I consider the inflation reports to be the most accurate and reliable. The employment numbers being the least reliable. The rest fall in between those two, imo.

Will the Consumer Continue to Carry the U.S. Economy?

Hmmm... The real earnings are almost healed compared to February 2020...

Click to Enlarge

with unemployment rate, now matching that date as well...

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As well as the number of employed near the same number or slightly higher...

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So, everything should be hunky-dory... right? Even when counting in the various stimuli and inflation adjusted retail trade...

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Everything almost matches up, when considering the consumer credit...

Click to Enlarge - https://fred.stlouisfed.org/series/TOTALSL

Except the real earnings are inflation adjusted, the retail trade has been inflation adjusted, but the consumer credit is nominal. Which is ever so slightly slipping behind, when factoring inflation. At least that is my take.

Of course, the graph does not capture all credit numbers.  From the Federal Reserve. 

In August, consumer credit increased at a seasonally adjusted annual rate of 8.3 percent. Revolving credit increased at an annual rate of 18.1 percent, while nonrevolving credit increased at an annual rate of 5.1 percent.

The inflation rate from the CPI was 8.3 percent annually for this period. Revolving credit has jumped 2.5% since June and nonrevolving was 0.9% during that period. We all know that interest rates are moving up, but which would have the higher interest rates? Revolving or nonrevolving?

In normal times, the revolving credit would increase roughly 3.6% annually and nonrevolving credit would edge up about 5% annually. So the 2 month jump in nonrevolving of 0.9%, does stay within the norms. That 2.5%, 2 month revolving credit jump does not translate very well to annual... 15%. It's basically four times higher, against a backdrop of increasing interest rates. 

Those believing the consumer can keep the economy going... are living on borrowed time. It will not be long, before the evidence of a consumer spending decline is clear. 

My guess would be the month following the first cold shock and those higher heating bills arrive. 

Are We, Or Aren't We...

... in a recession?

No one truly knows, although many have an opinion, and depending on political stripe... we either are or we aren't. And it is always because something is a clear sign. Never mind, those government stats containing revisions from previous months, it must be deemed as absolute. 

Then there are the BIG money folks, that have gotten rich off QE and want those glory days to return... meaning the FED to reverse policy. BIG money really needs there to be a recession for that to happen and will lobby long and hard, that we are already in a recession and are betting on the FED to ease off rate hikes, etc. 

GDP gets revised a couple of times and then is revised once a year thereafter. 

Yep... revised from a negative in June 2015, to a positive in one month after third release and by 2021, was downright stellar.

Citing GDP as some guarantee, one way or the other... is based on something likely to be revised. Besides, it might just be possible that the 3rd quarter of this year could be positive. Would that mean the recession is over?

Employment situation... the word revised is used 4 times in the latest report. This month...

The change in total nonfarm payroll employment for May was revised up by 2,000, from

+384,000 to +386,000 https://www.bls.gov/news.release/archives/empsit_08052022.htm

The previous month...

The change in total nonfarm payroll employment for April was revised down by 68,000, from +436,000 to +368,000, and the change for May was revised down by 6,000, from +390,000 to +384,000 https://www.bls.gov/news.release/archives/empsit_07082022.htm

Which is it? 

My goal is not to cast doubt on government reports, but putting my heart and soul into a specific set of data as gospel... is just plain foolish, in my opinion. 

Earlier I mentioned the possibility of a 3rd QTR GDP print being positive. I base that on the blowout of trade balance and how it impacted the 1st two Quarters.

The trade deficit started blowing out in 3rd Qtr. 2020 and then accelerated, with another major drop down in the 1st Qtr, and barely easing the 2nd Qtr. That would be the period when our business leaders went nuts with over ordering. That may ease back a bit going forward. 

In an alternate universe, where the trade imbalance did not drop so dramatically, the 1st Qtr. GDP would have been +2.3% and 2nd Qtr. at +1.6%

Of course on the potential negative side is the extreme jump in credit. I have no idea how much longer that can last, but with the Federal Reserve ready to push up rates further... something's got to give, in my opinion. BUT, that set of data might likely also be revised. 

There is an old adage of "When your neighbor is out of a job... it's a recession. When you're out of a job... it's a depression". Probably the most accurate of all metrics!

Now for MY opinion. We are not in a recession yet. We may soon be, but the severity is unknown, until we are actually in the middle of it. I would say that any looming recession in the U.S. will be exacerbated by the current economic morass of Europe. 

I am trying to get a grasp on why Germany's trade balance is narrowing, when the Euro is cheaper now than 1 year ago. Is it difficulty in obtaining necessary materials to manufacture items? Is it the high cost of Natural Gas that is offsetting any gains from the weak Euro? Is it a combination of both, or several other factors. 

I don't know, but do worry about the impacts on Europe as a whole, which would include the U.K. in this instance. The natural gas issue, will not go away anytime soon, in my opinion. The materials issues are likely not to go away anytime soon, as well. 

This appears to be a very challenging time for Western Civilization. 

We seem to have a situation where many folks are being duped by big money into believing we are already in a recession, which could cause a recession via lack of confidence. Be careful what you wish for. 

Of course, we also have folks in the U.S. eagerly anticipating and repeating statements of a C.O.L.A. being above 10.5% or more, without considering how much additional inflation is required to get us to that level. But then, the point might be to inflate expectations and then cry foul, when it doesn't happen. Be careful what you wish for.