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CPI Misses Expectations As Housing Starts Plunge By 11.7%
The October Consumer Price Index came at 0.2%, on expectations of a 0.3% rise, compared to a previous read of 0.1%. The CPI ex-Food and Energy was unchanged, also below expectations of a 0.1% rise. And somehow, despite what is obviously a massive campaign for "value deflation", the BLS once again saw a barely notable increase in food prices (and an outright decline in some): "The food index rose 0.1 percent in October after a 0.3 percent increase in September. The index for food away from home rose 0.1 percent while the food at home index was unchanged.... The fruits and vegetables group posted the largest decline, falling
0.7 percent, while the index for nonalcoholic beverages fell 0.5
percent. " Elsewhere housing starts and building permits both missed expectations by a wide margin, coming in at 519 (vs exp of 598K), and 550K (vs exp of 568). Starts plunged from a revised 588K the month prior. One wonders how this contraction for the builders will be spun.
Some fairy tales from the CPI Report:
Food
The food index rose 0.1 percent in October after a 0.3 percent increase in September. The index for food away from home rose 0.1 percent while the food at home index was unchanged. Among the six major grocery store food groups that comprise the food at home index, the index for dairy and related products posted the largest increase, rising 1.1 percent. This was its fifth increase in the last six months and its largest since January. The index for meats, poultry, fish, and eggs also rose, increasing 0.6 percent as increases in the indexes for beef, poultry, and pork offset a decline in the eggs index. These increases offset declines in the remaining food at home groups. The fruits and vegetables group posted the largest decline, falling 0.7 percent, while the index for nonalcoholic beverages fell 0.5 percent. The indexes for cereals and bakery products and for other food at home both fell 0.2 percent. Over the past year, the indexes for cereals and bakery products and for nonalcoholic beverages have declined, while the index for other food at home was unchanged and the indexes for the remaining three groups have risen.
Energy
The energy index rose 2.6 percent in October, its fourth consecutive monthly increase. The gasoline index rose 4.6 percent in October after rising 1.6 percent in September. (Before seasonal adjustment, gasoline prices rose 3.3 percent in October.) The household energy index, which declined in September, rose in October, increasing 0.4 percent. The natural gas index fell 0.4 percent, but this decline was more than offset by a 0.4 percent increase in the electricity index and a 4.7 percent rise in the index for fuel oil. The indexes of all the major energy components have risen over the last 12 months.
On Housing Starts and Permits:
BUILDING PERMITS
Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 550,000. This is 0.5 percent (±3.0%)* above the revised September rate of 547,000, but is 4.5 percent (±3.1%) below the October 2009 estimate of 576,000. Single-family authorizations in October were at a rate of 406,000; this is 1.0 percent (±1.3%)* above the revised September figure of 402,000. Authorizations of units in buildings with five units or more were at a rate of 121,000 in October.
HOUSING STARTS
Privately-owned housing starts in October were at a seasonally adjusted annual rate of 519,000. This is 11.7 percent (±8.6%) below the revised September estimate of 588,000 and is 1.9 percent (±9.6%)* below the October 2009 rate of 529,000. Single-family housing starts in October were at a rate of 436,000; this is 1.1 percent (±8.6%)* below the revised September figure of 441,000. The October rate for units in buildings with five units or more was 74,000.
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Food inflation rests around 60% in China, agricultural commodities are up across the board on a 12-month basis, but SOMEHOW food inflation is static.
Riiight.
There is no way in hell food prices and energy are up only .2%. Everything I buy here is up 20, 30 or even 50% in the past couple of months. Things like meat, chicken, eggs, OJ, butter, fruits up substantialy granted some of those due to seasonality but up nonetheless....not to mention gas went up 50c in less than a month.
Prices fluctuate and are volatile, so you will always find prices that 'rise', if you look hard enough. (It's similar with stock prices: even during the worst crashes there were stocks that went up in price.)
That is why there are weighted measures like CPI (or, for stocks, basketed measures like the DJIA) which are used to find some long term trend in the (often wildly) fluctuating set of prices.
If you don't agree with the CPI for some reason then you can pick any other metric (please share with us which one you are using) - what you cannot do is to always select those prices that went up. The result will fool you into thinking that there's inflation while in reality the US economy is head first racing into outright deflation.
Wrt, gas: in 2008 you paid two to three times as much for a gallon of gas than in 2003. Does it mean that there was 200% inflation? Not at all. Today you are paying much less for gas than you were paying in 2008. Does it mean that there was 50% deflation? Not at all. Individual prices mean only so much - and the more individual they are, the more volatile they tend to be.
Here you go, DollarDive's below link to UN's Food and Ag Org report - the index has risen from 157 to 197. A 25% increase.
http://www.fao.org/worldfoodsituation/FoodPricesIndex/en/
Let me pile on as well. Here is the metric I prefer:
http://www.shadowstats.com/alternate_data/inflation-charts
I can't decide if MCTW is obtuse or just enjoys getting bitch-slapped.
Heh, you need to come up with something better than "SGS Alternate CPI" which I dont see defined even on that website and which is basically only used by the website run by the person who defined it ... ;-)
That guy appears to treat his metric as some sort of trade secret. Brilliant! Someone needs to tell him about the scientific method, peer review and things like that.
Next one please? Something well cited and researched please - or at least an open definition I can check.
Meanwhile core CPI prints its lowest reading in US history, ever, and ZH only reports that it "missed expectations". You bet! ...
Sadly, deflation, here we come.
Next one please? Something well cited and researched please - or at least an open definition I can check.
Paul: I guess your fingers where too tired to click on the various sources on the website. "More critical thinking wanted" requires a little effort. From the Shadow Stats website:
The CPI chart on the home page reflects our estimate of inflation for today as if it were calculated the same way it was in 1990. The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980. In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.
http://www.shadowstats.com/article/cpi-glossary
http://www.shadowstats.com/article/aa871
The data series is available to paid subscribers. Since your so worried about deflation, I'm sure you would be happy to pony up the money.
Also, your comment about core CPI is not surprisngly misleading:
"Meanwhile core CPI prints its lowest reading in US history, ever..."
In reality, the annual increase in core CPI was +0.6%, the lowest since records started in 1957. (1) +0.6% is NOT deflation; (2) keep ignoring price changes in those pesky non-essential items like food and energy; (3) CPI statistics have been artificially depressed by changing the calculation methodology (see Shadow Stats); and (4) correct me if I'm wrong, but I think U.S. history started before 1957.
Here is metric for ya..take your household expenses including everything you consume and use on a daily basis and let me know if year over year your budget goes up only 2%. Yes the .gov likes to use metrics and indesis to quantify the data but the reality is there is inflation in the things you NEED and deflation in the things you don't really need and could ove without ( i.e flatpanel TVs).
Read on pages 38 - 43 of the book "Greenspan's Bubbles" all about how the CPI is an intentionally fudged joke through the actions of the Boskin Commission to lower fedgov entitlement COLA payments. George Mankiw, Chairman of G.W. Bush's council of Economic Advisors said, "The debate about the CPI was really a political debate about how and by how much to cut real entitlements." The Fed is then delusional enough to actually use this intentionally fudged figure in its calculations to determine where to set interest rates. Garbage in - garbage out.
http://www.shadowstats.com/alternate_data/inflation-charts
"In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living."
If you look inside nthe numbers you see Medical expenses went up 3.6% annualized. I just got my Health insurance premium notice for 2011 and it jumped 72% over 2010. Eveybody I talk to has his up by 20-50%. Of course gov employees' propably went down by this much.
Well, you see, that's where the brilliant hedonics and substitutions used in the CPI calculation may come into effect. Just as they say there is no inflation in your food costs because if beef becomes too expensive, you'll just buy chicken, and if chicken becomes too expensive, you'll just buy dog food, they may figure that you have the option of reducing your insurance benefit level. That way, if you can't afford a human kidney installed in a US hospital, you'll settle for a chimp kidney installed in a Mexican hut.
I have a $5000 deductible and $8000 out of pocket limit. If I choose the $1500 deductible option my bi-weeky premium goes up by 300%. The company changed the way they charge for premium for 2011 and if you have a family, as oppose to just married you pay through the nose.
The magic of hedonics and substitution.
Where do you shop?!? Sounds to me like you need to find a new grocery store. If everything I bought was up 20-50% I'd look like those kids from Africa on TV.
I live in Suburban Chicago and I shop Walmart, Aldi's and local neigborhood stores. I mostly buy basic nutritional stuff (i.e no processed food). Here are some examples compared the summer: Chicken Breast from (1.49-1.99lb) to (2.99-3.79), Milk from ($1.78-1.98) to ($2.48-$2.98), Top Sirloin Steak from $2.99 to ($4.39-4.99), Minute Maid products 64fl from $1.0 to $1.59, pre-packed lunchmeat from $2.88 to $4.00, eggs .89 to $1.79, Apple Juice from 1.50 to 1.97, Grapes from (.99-129/lb) to (2.49-2.99/lb), Peaches from (.59-.79lb) to (1.29-2.49lb) Cat litter -generic- from $2.54 to $3.79, cat food (freskie)actually went down from .44 to .40 but used to be .23 a couple o years ago. Gas unleaded from ~2.69+/- to ~3.09+/- .......
These numbers are so bad they are not worth posting. I do find it funny that inflation coming in low gets called a "miss". When MSFT profits come in high, do you call that a miss too?
If they're high, but not as high as expected, yes.
No real surprises here.... A dead housing market and phony government inflation numbers... Here's the true deal on food inflation. It shows massive inflation.
http://www.fao.org/worldfoodsituation/FoodPricesIndex/en/
It's too bad we can't report our household income with an accuracy of +/- 9.6%.
I hear tent starts are way up nation wide though.
They must not be shopping at the same places everyone else is.
yeah, I would REALLY like to shop wherever they do...
I can personally point to where a bag of chips used to be full of air and around $3, then they put a real load of chips in and jacked it to $3.87 most of this year, then $3.99 lately
http://www.youtube.com/watch?v=Yjr7NtntWeQ
TIPS anyone?
the homeless shelter business is booming. prison economy is rallying. all we need is a new war to bring the weapon sales through the roof! come on usa!
prison economy is rallying.
GS should pitch the Justice Dept to spin off the prison system into an IPO so that the 2,000,000 incarcerated we have can compete with China's labor rate. Local counties could be given shares to mitigate the damages these people cause upon society and since we are only as strong as our weakest link, if we strengthen it (make it profitable) we all win.
Inmates can work for decades virtually for free in a low overhead environment and the cost of sharpening their skills is very low.
Ooooooo ... and Goldman can run the "prison credit exchange"... I'm liking it. People can spend their entire life in jail and sell their credits to rich people who don't want to do jail time! A new class of slave, the "inmate class".
All through an electronic exchange where market making computeres control the price of the credits.
Who needs houses, we can all sleep in a new GM vehicle.
Fuck that, I sleep in my Corolla
There has been some hedonic schenerigans with this CPI: http://www.economicpolicyjournal.com/2010/11/finished-goods-prices-up-43...
Wow, this is a Shocker :-)
The touch...
The feel...
Of cotton in our lives...
The touch the feel of cotton, the fabric of our lives..
Bitchez.
"One wonders how this contraction for the builders will be spun."
Four Legs Goooood, Two Legs Beeeettteerrr...
The only measure of inflation is the dollar equivalent of an ounce of gold, and I believe it has registerd 25 percent YTD.
Well, clearly this will help out with the excess inventories in the RRE market. ;)
Yes excess inventories, along with the 'pent up demand' that the media tells us is out there clamoring to bust out and snatch up all that inventory at any price! :D
No doubt due to all the "money on the sidelines" chasing "low P/E ratio S&P companies".
The amount of lies blasting from the ministry of truth...
What I find hilarious is that the PPI index (unadjusted) has been increasing at between 3% and 6% for the past 3 years, yet CPI only increases at <2%. Riiiiiiight!
These are your margins. These are your margins on QE. Any questions?
Cereal is expensive, they've raised the prices and put "sales" on them, which I know is still higher than the old prices. For bread there's always some brand on sale for $2.50/loaf, and those are the only ones that get picked over. The non-sale, $4.99 stuff is barely touched.
Not sure about eggs and milk, I get those delivered from a local dairy so they're a little pricier anyway.
It definitely doesn't seem like the costs are being passed on yet, but they held off in 2008 too until they eventually had to.
Eggs seem cheap in the Denver area but milk fluctuates a lot. The price for both has gone up but a buck fifty for a dozen eggs is still cheap. Milk comes in around 2.50-3 dollars a gallon.
starts and permits are the meat n potatoes....its committed capital ,
Inflation, The new and improved box size of Frosted Flakes costs the same as it did last month.
Chickens and cows, bitchez.
We don't need government statistics. Just look around with your own two eyes. When you go to the grocery store are packaging sizes growing or shrinking? Is cost per unit rising or falling? It's obvious which way food prices are trending. Don't let the illusionists in government fool you.
This is just sad. Hopefully, when it comes to an end, I'll own an apple orchard in New Hampshire where I'll be making apple jack, growing weed, and filming pornos, Bitchez. Anybody know a good real estate agent, there?
Check out the N.S.A. charts and worse, the historic lows for units under construction. It's worse than the media will discuss hence there's little chance of it receiving prominent attention....
HOUSING DATA INDICATES THE REAL ESTATE DEPRESSION CONTINUES
I am starting to feel like Matt Sumtner, the package delivery guy!!
and market rallies immediately after print.
So the SAR of single family new home permits is running about 271,000 units now.
Back in 2006, it was about 1.7 million.
That's only an approximate 85% drop.
Don't be so dramatic!
http://www.nahb.org/assets/images/figure1_201011193441.jpg
Just received some industry trade group data that implies that globally, electronic manufacturing is up about 16% Q3 2010 over Q3 2009 and Q3 2008 (which were similar).
No clue if this means that consumption is growing or simply inventories are growing. While 16% is large, the fall-off from Q1 2008 to Q1 2009 (the bottom) was 32%... electronic manufacturing is somewhat cyclical during the year with Q3 generally being the strongest quarter and has historically experienced regular periods of overbuilding and inventory consolidation.
Used to watch Toll brothers..... wondering why this McMansion Monster keeps right on rising.
Have they finally met their maker? They and their ilk should! Back to local builders, local material, local styles.
ORI
http://aadivaahan.wordpress.com
Clearly you cannot extrapolate from specific to general, but.....
We keep a detailed budget for the family and track everything, and I mean everything.
We budgeted for a 2% increase in food costs this year. Thus far we are about 2% over budget. This amounts to just about 0.4% monthly food cost increase or a 4.8% annualized increase.
Oh, we didn't gain any weight we eat about the same things. The prices per item may be close to the same but we're seeing a lot of games being played with package size.
A new meaning to "downsizing":
Formerly 3-pound coffee (i.e., 48 oz.) became 39 oz. became 33.9 oz, just recently has morphed into something like 27.x oz, while the price per package has risen.
Formerly 1-quart (32 oz.) jar of spaghetti sauce became 30 oz., which then became 28 oz., then 26 oz., and lately 24 oz.
Formerly 1-pound (16 oz.) box of pasta lately is 13.75 oz.
Various crackers (e.g., Ritz, Cheeze-Its, etc.) now in smaller boxes while the price goes higher.
Orange juice went from half-gallon (64 oz.) to "new, improved" package, but only 59 oz.
Tomatoes we buy at Sam's Club just went up 20% from $4.98 to $5.98 per 2-pound tray.
Boneless, skinless chicken breast has stayed about the same nominal price, but now it is "enhanced" with 10-15% chicken broth.
I could cite dozens more examples, but does anyone really believe the fairy tales and bullshit we are fed by the Bureau of Lies and Statistics??? Oh, and by the way, I used to commute from Baltimore to D.C. from 2002-04, and gas was roughly $1.75 a gallon. Now it is at least a dollar higher. No way my income has gone up proportionately. And I could point to many other examples--clothes, sales tax (went from 5% to 6% here in 2007), virtually anything related to repair or upkeep of a car. . .
+1 Shadowstats CPI Fantasy/government versus....
http://www.shadowstats.com/alternate_data/inflation-charts
Here we go...again.
Fact: M3 money supply continues to be weak
Fact: Inflation remains well below the Fed's minimum target of 2% (to pacify the conspiracy nuts, I'm using an independent metric here, a *good* one)
Fact: Japan did not get high inflation when it implemented QE
Fact: QE is not money printing
Conclusion: ZH is hyperventilating and is wrong when it claims that Bernanke's "money printing" will result in dollar death and hyper-inflationary doom. Junk away groupthinkers, like you always do.
fact: Throughout history, every single fiat currency has collapsed, or were exterminated after a nation was conquered, or merged with other fiat currencies (euro).
fact: Since historically all fiat currencies crash and burn, nobody who considers this likely now is "hyperventilating".
fact: QE is money printing wrapped in lies and soundbites.
fact: For at least 5000 years gold has been money, and has never once vanished or collapsed. Fools have, however, been temporarily suckered by paper frauds like "gold receipts", "gold certificates" and such.
fact: Real inflation is current near 10%, all things considered (including prices that objectively are falling somewhat, like home prices). Just check individual commodity prices or the CRB index for a first-order hint.
fact: A great many naive fools and suckers believe the claptrap spewed by the predators-that-be, including the mainstream media. This is the only way to explain how anyone could justify the federal reserve vaporizing 98.6% of the value of the dollar in the past 40 years... while having a mandate to hold the value of the dollar stable.
fact: Some folks who say insane things are part of the predator class, or paid by them to spew their overt lies and propaganda.