And The Downtrend Returns: Inflation Disappoints As Empire Manufacturing Posts First Sub-Zero Print Since October 2011

Tyler Durden's picture

The X-12/13-ARIMA seasonal adjustments on today's data were not quite up to snuff as both the CPI, printing at 0.0% (or 1.4% Y/Y) on expectations of 0.2%, the biggest CPI miss since January and the Empire Manufacturing index, at -5.85 on expectations of a +7.00 print, posting the biggest miss in 14 months. Notably, the number of employees declined in August from 18.52 to 16.47, while margins got crushed as Priced Paid soared from 7.41 to 16.47 as Prices Received slide from 3.70 to 2.35. And so baffle with bullshit returns, as following several weeks of better than expected, if largely seasonally adjusted, the speculation that NEW QE may be coming back is here again. In other words, yesterdays scorching retail data was good, but today's horrible NY manufacturing miss is better. At least to the complete idiocy that the market, and its "discounting mechanism" have become. Sure enough both EURUSD and gold spike on the weak news as the ghost of Bernanke's printing press is back in the room. Finally, how CPI could be unchanged when crude alone posted a 20% increase in July, and gas prices are back to doing their vertical thing, will always remain a mystery.


The Consumer Price Index for All Urban Consumers (CPI-U) was  unchanged in July on a seasonally adjusted basis, the U.S. Bureau of  Labor Statistics reported today. Over the last 12 months, the all  items index increased 1.4 percent before seasonal adjustment.


Major indexes posted small movements in July, with a 0.3 percent  decline in the energy index offsetting 0.1 percent increases in the  indexes for food and all items less food and energy. Within energy,  declines in the indexes for electricity, natural gas, and fuel oil  more than offset a small increase in the  gasoline index. Within the  food component, the food at home index was unchanged with major grocery store food group indexes mixed, while the food away from home index increased.


The index for all items less food and energy rose 0.1 percent in July, ending a streak of four consecutive 0.2 percent increases. The shelter index rose 0.1 percent for the second month in a row. The indexes for medical care, tobacco, household furnishings and operations, and apparel also increased, while the indexes for airline fares, used cars and trucks, recreation, and new vehicles all declined.


The 12-month change in the index for all items was 1.4 percent in  July. This compares to 1.7 percent in June and is the smallest 12- month change since November 2010. The index for all items less food and energy rose 2.1 percent for the 12 months ending July, a slight decline from the 2.2 percent figure in June and its smallest increase since October 2011.

From the Empire Fed:

Business Conditions Deteriorate


In August, the general business conditions index fell thirteen points to -5.9, slipping below zero for the first time since October of 2011—a sign that activity declined for New York manufacturers over the month. Twenty-two percent of respondents reported that conditions had improved, while 28 percent reported that conditions had worsened. The new orders index fell three points to -5.5, its second consecutive reading below zero, pointing to a small decline in orders. The shipments index fell six points to 4.1, and the unfilled orders index inched higher but remained negative at -10.6. The delivery time index fell six points to -7.1, indicating that delivery times were shorter, and the inventories index declined eight points to -8.3, suggesting a modest decline in inventory levels.


Optimism Continues to Wane


Indexes for the six-month outlook were generally lower than last month and indicated a continued decline in optimism about future conditions. The future general business activity index fell for a seventh consecutive month, dropping fi ve points to 15.2. The future new orders index fell eleven points to 2.4, and the future shipments index declined seven points to 8.3. The future prices paid index fell to 31.8, its lowest level in more than a year, and the future prices received index inched down to 14.1. The index for expected number of employees fell to 3.5, suggesting that employment levels were expected to be only  slightly higher in the months ahead, and the future average work week index was -8.2. The capital expenditures index fell seven points to 12.9, and the technology spending index fell thirteen points to 5.9.


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dereksatkinson's picture

Goldman punking clients again?

francis_sawyer's picture

Governments don't produce WIDGETS they produce MIDGETS...

knukles's picture

So that's where the midget tranny porn for the SEC originated.
It was homemade so to speak.
Now there's a new Conspiracy Theory that even I can believe.
Gubamint midget tranny porn to keep the animals docile.
Hole-eeeeeeeeeeeeeeeee Shit!


LawsofPhysics's picture

There is no inflation and these are not the droids you were looking for.

Bloody sheep.

We all know what comes next;  "Credits (dollars) will do fine. -  NO they won't."

midtowng's picture

This should be a big gift for those wanting QE3. After all, isn't the CPI the be-all and end-all for determining inflation? (at least as far as Wall Street and the financial media is concerned)

gmrpeabody's picture

No..., CPI is for the sheep. It's there to cover inflation, not expose it.

Mugatu's picture

In this peverse world, bad is good.

Party on Garth!

Kreditanstalt's picture

WEIRD.  Any sane individual would BUY gold and SELL dollars/Euros on WEAK data, not on hopium...

Theta_Burn's picture

Everyone, plug ears, close eyes, and go LA LA LA LA...

dottjt's picture

You're not shouting loud enough. 

JustObserving's picture

All that is left of US markets is speculation on whether the Fed will print or not.  Nothing else matters.  It is the terminal stages of a ponzi market where printing is the only answer.  And attacking gold and silver to keep confidence in fiat currencies.

Shizzmoney's picture


BTW, for those who are looking for that big score (considering you are never going to make any money off of hard word) - Powerball is at $320 million tonight:

mrktwtch2's picture

be nice to win the powerball..i only bought 1 ticket..but maybe i can beat the 76million to one

the not so mighty maximiza's picture

You have better odds being abducted by aliens and being probed by an alien chick with 4 titties.

SmoothCoolSmoke's picture

Yeah, well at least Powerball ain't rigged and manipulated......yet.

ptoemmes's picture

If you win PowerBall you can buy that service...Yeowww

ejmoosa's picture

Still, those odds are better than the powers that be halting their destruction of the US economy.

insanelysane's picture

People realize the government data is BS.

the not so mighty maximiza's picture

So we are right back where we started, complete failure.  All theories on economics and politics are nullified.

SheepDog-One's picture

Right, none of it means anything....all the bow-tied PHD economists may as well be wearing hockey helmets because what it all really comes down to is .001% up or down triggers the 'free money' firehose back into TBTF banks and Corps. 

madcows's picture

By my own measurements I've expended the same for gas this year as I did last year.  But, food is up 11.2%, clothes are up 3.5%, Heating Oil is up 33%.


Overall inflation is at 8.4%.  I throw out the mortgage and car costs. 

My 5-year inflation rate is at 60.6%.  With food up 50%, gas up 70%, and heating oil up 63%

LawsofPhysics's picture

In other words you are calculating the CPI using the same method that was used before Regan and "trickle down" economics.  I have the same, without mortgage, medical, or auto. I see inflation at about 7.5 %.  Add back medical and it goes to about 15%, but I have a bigger than average family.

madcows's picture

I long ago figured out that the government numbers for inflation are a joke, and cannot be used for budgeting or any other purpose.

I've maintained a very detailed budget with Excel since 2007.  First anticipating costs for all items, then inserting actual expeditures as the year progresses.  My numbers represent my personal inflation rate, but should to some degree mirror the inflation rate for most suburbanites.  I commute, have a family and a house.

My health insurance inflation for the last few years has been flat, but I got severely shafted several years ago when we switched from an HMO to a very high deductible HSA.

That's why I look at the 5 year inflation rate.  My cost ofliving has increased 60%.  That's roughly 10% per year.

Shadow Stats doesn't do a 5 year, but their 1-year CPI based on the 1980 calculation looks to be about 9%, so that correlates with my numbers.

Overall, I still think we are in for deflation.  Food and fuel are essential items limited in quantity.  Their prices will continue to rise.  But, housing, vehicles, etc... must fall in price as wages continue to stagnate.  Point in fact, I bought a new 2010 mazda 6 for the same price I paid for used 2004 Altima 5 years ago.

ghengis86's picture

You still eat food? Fucking 1-percenter!!!

madcows's picture

Chicken instead of beef or fish.  Store brand instead of better commercial brand.  Home grown garden veggies instead of store bought. 

I know their Hedonics calculations say I'm living high off the hog, but I'm wondering what meat substitution comes next, Spam or Squirrel.

Spastica Rex's picture

Having eaten both, my personl preference is Spam.

El Viejo's picture

I'm into health food. I like Spam Lite.

dottjt's picture

Food is for the weak. But then we all died out. 

blueridgeviews's picture

Now those are numbers I can believe.

yars's picture

You are calculating the index incorrectly. Remember, it is the change in prices for all items less food, energy, and other goods and services needed. I don't think I need to remind everyone how stable iPad and iPod prices have been over the last year.


Arnold Ziffel's picture

We are in a deleveraging deflationary downward nosedive with plunging prices (houses, retail, for example) except for spots of inflation here and there (such as food) :


So when do 10-year T-bills sink to 0.50% ?

LawsofPhysics's picture

"So when do 10-year T-bills sink to 0.50% ?"


More importantly, if they get there or even go negative, what does that translate into in terms of capital gains for people holding the ten year.

ejmoosa's picture

So what's gonna affect you more?

Deflation in the stuff you are not purchasing?

Inflation in the things that you need to purchase?


I'm gonna have to buy a lot of crap I don't need if I want to get my personal rate of inflation down to the printed numbers.  And that ain't gonna happen.


madcows's picture

Classic stagflation my friend.  Eat it and weep.

lizzy36's picture

Would appear the NY is manufacturing far fewer "states of mind" and "dreams" (which near as i can tell is the only thing NY manufactures).

Headbanger's picture

Last one out, turn off the lights.

djsmps's picture

I'm glad inflation is in check. I'm sorry that it costs me a lot more to drive to the grocery store where cat litter jumped from $3.39 to $4.69 a bag.

ptoemmes's picture

Tylers - you're not going give MS a break are you?





LeisureSmith's picture

FINISH HIM....Sub-Zero Wins.

SmoothCoolSmoke's picture

So, now the markets will be levitated until Jack-ass-son Hole, where obfuscation and weasel words ("ready to act") will attempt to bridge the gap until the election.  Can-kicking has reached an art form.  GD mofos.

monopoly's picture

Don't let the daily tripe get you down. Nothing has changed. A hated, corrupt Congress, a useless President who gives away tax dollars we do not have to garner votes. Real unemployment at 16% and those getting jobs, ha, few with benefits and making what many of us made 30 years ago. No growth there.

And housing, right. This from Mark Hanson, a very smart guy on housing.

1)  “Effective” Negative Equity – 25 million borrowers / houses.  These borrowers are dead to the housing market. Zombie homeowners.

2)  Impaired Credit – 28 million borrowers.  These are borrowers with “c” grade or lower credit that can’t easily qualify for a purchase money loan outside of FHA.

3)  Legacy Second Liens – 18 million borrowers.  Legacy seconds that banks refuse to extinguish also trap millions of homeowners making them useless in the macro housing market equation.

**No analysis I have ever seen makes the case that…until these 20 to 30 million — mostly bubble years buyers/borrowers — are de-levered macro housing can never reach “escape velocity” or achieve a “durable” recovery.  In a healthy housing market this is the primary demand cohort…current owners with mortgages who move every 6 to 8 years.

Think I will keep my physical.

boiltherich's picture

Worse than that, like me it is not just about the housing market but ALL credit. I walked away when I could not stay and could not sell, that was Feb. 2010, the house still sits empty, unsold, and the bank clearly plans to simply let it rot into the earth. I will have a new late payment reported to the credit scoring agencies every month for the rest of my life, resulting in an ever decreasing credit score. Currently at 596 in spite of a decent, stable income, three credit cards and a car loan that have never been late and I never even paid minimum upon but always at least double the min.

How do I know my credit score? I tried to buy a washer/dryer for my new apartment when I moved July 1 and realized the ones in the apartment were the former tenants and were now gone. Not even the lower tier higher priced stores would extend credit, the best I could arrange was a lay away at a local store that was essentially a 30% charge on the price to allow a 6 month payment plan in which they kept the merchandise until paid off. No way, if I have to use a Laundromat for six months I am not paying 30% over sticker for appliances. So, I will do what we all should have been doing the last forty years, save up for them. But, not without resentment over the pure theft of the housing bubble that stung, is still stinging all of us every day even if you don't see the damage as obvious. And over the fact that I am still a good credit risk in that other than one exceptional transaction that was beyond my control I have always paid my bills. ON TIME in full. One of the most insidious affects of the class war has been the reassignment of this nation from a representative democratic republic into a kleptocratic crediditocracy where your human value is reduced to a credit score generated by nameless faceless machines. And they are creating a self fulfilling prophecy of debt default because if this onerous situation continues then chapter 7 would be a relief. My credit score would be better if I filed bankruptcy than it is now and it would prevent the bank from further revenge.

Whatta's picture

There IS inflation in my world.

Geebus Aitch Rice, shit is costing way more in many cases than it did a year ago. I hope inflation never really starts to pick up to where gubermint is forced to acknowledge it....could get ugly.

khakuda's picture

No way the CPI number isn't fake.  Energy prices rose well into double digits and these jokers print that they went down?

Somewhere, the last person on earth who believed the numbers weren't manipulated just threw in the towel.

MrBoompi's picture

The price of gas never affects CPI because the Fed knows you can always walk, and the price of walking never goes up.  And so what if the price of filet mignon is up 15%?  It can be substituted with groud chuck which is only up 8%.  God knows how they're going to hide the inflationary effects of the drought, but I'm sure they have something cooked up.

skipjack's picture

The cost of buying shoes to do that walking, and the health care that allows you to replace hips and knees when they wear out, do most definitely go up in price :)

boiltherich's picture

Ground chuck only up 8%? Where do you live - Omaha? So many food prices here have doubled I really don't even keep track anymore, but the geniuses in BLS who work SO hard to make sure we read reports of zero inflation, you have to feel bad for them because they know the truth about the CPI and yet have to go to bed and try to sleep at night anyway, it must be a lot like the guards at Auschwitz who might not have cared for Jews and Poles very much growing up but did not sign on for what went down after 1942. They have to feel the pain of a person who is telling a bald faced lie even when they know the other party knows it is a lie. But this is not some irrelevant face saving untruth, this is pushing millions into ever more dire poverty, along with that comes shortened or terminated lives and at the very least ever more distance between dignity and survival. Their lies are the difference between decent nutrition and Friskies.

Hamburger has doubled here in the last 18 months. My income is unchanged, this means I either choose to forego other expenses or I buy half as much meat. Unfortunately this has been going on since 2008 so there are no more expendable items in my budget, now it has to be the meat that goes. I lived better on $2,500 per month in 2005 than I live on $3,732 now. I used to have several hundred dollars per month left over after paying my bills, now I cannot remember the last time I made it through a month without resorting to a payday loan. And if food goes any higher, they say it will, rapidly, the car will have to go. That is how bad it has gotten.

What gets me is that the amount of money required to not be in poverty has risen far faster than the amount required to be considered middle class, I estimate for a single head of household in this area you can consider the border between poverty and working poor to be about $20,000 (remember single heads of household get zero assistance of any kind and I assume half of take home income to rents). But you hear very few complaints, I think the masses of people have simply capitulated, after the 99% movement was crushed they understood that protest was not going to be allowed. And in a depression era mentality there is not a lot of bitching about how poor you are because no matter how bad off you are there are millions of others in worse shape, people with no income of any kind. On the street, dependent upon missions for a meal.

Ah, the beauty of capitalism, we must preserve and increase the wealth of the very VERY few at the top so that those betters can lead us back to prosperity one day. So, write your checks to the bankers, (which is what you do when you pay taxes) and for god's sake don't let those commie lefties take away your automatic weapons. The time will come when they line the poor up along the ditches at the side of the road and mow them down like they did in Europe in the 1940's. The final solution of too many jobless excess people.


Yen Cross's picture

 Every piece of U.S. news , except Ind.production & Capacity ult. missed expectations this morning. Industrial Production was only up .10 on consensus, and off .40 on a revised 1.0 number, yet the markets move higher off their lows? WTF?

Snakeeyes's picture

Watch for the Fed to print! Empire State falls, inflation at zero. Bernanke now feels  safe in printing ... again.