Headline PPI Drops By 0.1%, Core PPI Rises By 0.3%, Highest Y/Y NSA Jump Since June 2009, BLS To Change PPI Weights

Tyler Durden's picture

Mixed picture in today's PPI which saw headline prices decline by 0.1%, on expectations of a 0.1% increase, driven by a 0.8% drop in both food and energy finished goods. Alternatively, core PPI rose by 0.3%, with the same +0.1% consensus, and is the largest M/M increase since July 2011. Just as curious, the Year over Year change in the NSA PPI of 3.0% is the highest in the series since June 2009. It appears money printing even in the face of multi-trillion debt deleveraging can be inflationary. Finally, and in pulling a page straight out of the BLS playbook, the BLS announced it would change the weighting in its PPI categories. "The new weights, which will be introduced in February 2012 with the release of January 2012 index data, will be based on shipment values from the year 2007. These value weights come from the Census of Manufactures, the Census of Mining, the Census of Services, and the Census of Agriculture. PPI weights have been based on 2002 census shipment values since January 2007. All PPIs will be affected by this weight update, including all the industry net output indexes, as well as indexes for traditional commodity groupings. In addition, weights will be updated from the 2002 to the 2007 census for all stage-of-processing indexes, durability of product indexes, and special commodity-grouping indexes. This weight revision will not change any arithmetic reference bases for indexes, the dates when PPIs were set to 100." This is a lot of words to say that going forward even more inflation will be crammed into smoothed core price indices, so as to completely ignore any swings in the margins. Because after all who cares about energy and food?

Some commentary from Bloomberg

  • Light trucks accounted for 30% of core rise
  • Headline decline fueled by drop in energy prices, with forward-looking intermediate costs indicating “further relief is on the way for producers,” says Bloomberg economist Joseph Brusuelas
  • Easing pricing pressures “will be good for profit margins later in 2012”
  • Light trucks, passenger cars down on Thai-floods-triggered supply-chain disruptions, tobacco up on tax increases
  • "The global economy is slowing and prices of most basic materials are moderating,’’ says Bloomberg economist Rich Yamarone

Core PPI NSA Y/Y change:

From the report on what caused the jump in core PPI:

Trade industries: The Producer Price Index for the net output of total trade industries moved up 0.2 percent in December after no change in November. (Trade indexes measure changes in margins received by wholesalers and retailers.) Leading the December advance were margins received by merchant wholesalers of durable goods, which climbed 1.4 percent. Higher margins received by discount department stores and by automotive parts and accessories stores also were factors in the rise in the total trade industries index. In 2011, the total trade industries index rose 3.4 percent.


Transportation and warehousing industries: The Producer Price Index for the net output of transportation and warehousing industries moved up 0.6 percent in December following a 0.2-percent decline in November. Over seventy percent of this rise can be traced to prices received by the  scheduled passenger air transportation industry, which climbed 2.7 percent. Higher prices received by the industries for long-distance general freight trucking (truckload) and local general freight trucking also contributed to the increase in the transportation and warehousing industries index. In 2011, the transportation and warehousing industries index moved up 6.1 percent. 


Traditional service industries: The Producer Price Index for the net output of total traditional service industries edged down 0.1 percent in December following a 0.1-percent advance in November. The index for the commercial banking industry led the December decrease, falling 0.9 percent. Lower prices received by the industries for non-casino hotels and motels and for passenger car rental also were factors in the decline in the total traditional service industries index. In 2011, the total traditional service industries index increased 1.9 percent.

And so on. Full report here.

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fonzannoon's picture

Somehow those balls stay in the air.

mayhem_korner's picture



Can I change the weightings of my holdings once the returns are in?

EscapeKey's picture

They picked the weights from 2007? Yes, when the bubble was at its highest, when they were the most busy sending crap we don't need around the globe financed on basis of an enormeous and ever growing debt bubble, that's the best case basis for an "average" year indeed.

LongBalls's picture

No respectable savings will be allowed. You WILL throw it at risk in the markets to stimulate activity.



EscapeKey's picture

More than 5 days worth of cash balance, and you'll be branded a traitorous hoarder.

The future underclass will be those who are not massively overdrawn on every credit line they have.

LawsofPhysics's picture

No worries - "Inflation can be fixed in 15 minutes"

Right, the only options left for fixing my margins are to cut staff or enter the black markets and start doing business tax free.  Thanks Ben.  Margins matter mother fucker.

disabledvet's picture

Actually I was thinking more along the lines of one minute myself. "they don't call it a New York Minute for nothing" as they say. And when "junk debt" yields hit...say...200 percent...that should have the desired deflationary impact.

Sean7k's picture

When will they drop the "L" from BLS?

fonzannoon's picture

I am picturing when Bernak and Obama meet up and no one is looking they do a NBA style chest bump.

SheepDog-One's picture

I thought they just blew each other.

LongSoupLine's picture



PPI - Purely Preposterous Information

tarsubil's picture

You're lost in a hall of mirrors.

Flakmeister's picture

What's the matter, did you read any of it? Or are your blinkers so firmly on that you can't see the outright fraud of guys like Patrick Michaels?

Maybe you would like to discuss this recent paper?

Global Temperature Evolution 1979-2010

There is a synopsis aimed more at the layman here


and here



Would you like to try and refute the above paper?

tarsubil's picture

Did I read any of it? Do I read all of Paul Krugman's work? Do I check all his sources? No, because I'm not interested in wasting my time that way.

I think your anger stems from being insecure about how you make a living. The odd thing is that you are here. You do realize that this will all pop along with fiat money, right? If I were you, I'd be learning a trade right now.

Flakmeister's picture

On matters of ideology one can have an opinion that cannot be tested or falsified, much as religious faith.

Not so in matters involving real data...

Now, are you trying to weasel out of a debate? It sure looks like it...

You might be a true denier, you mind is made up no matter what facts may emerge...  Do you listen ideologues to tell you what your world view should be? Or do you ask questions and look for answers?

Now run along.... I would have kicked your ass anyway...


tarsubil's picture

I've worked in an academic lab. I know what "real data" is. There should be a "real data" committee that goes back and tells us what all the real data is. This is real data, really. Oh then we'll need a real data, really committee. You can head all of them!

Oh, I'm serious. Learn a trade. When sound money comes along, no one is going to pay you anything for what you do. I think you know this.

Flakmeister's picture

Alright data-hound.... can you run a linear regression?

Here is the data for the paper and code if you like..


Go ahead, show us why it is wrong...


tarsubil's picture

LOL, you just love telling people what to do.

Flakmeister's picture

For the record, you are the one that piped in with an assinine comment to my claim that the BLS has nothing on Patrick Michaels when it comes to manipulating data.   

I will now proceed to safely ignore you.

tarsubil's picture

Wait! I just measured an object and got real data. 12 inches. Prove me wrong! I double dog dare you!

I schooled you, chicken! Bok bok bok!

Flakmeister's picture

WTF are you babbling about?

Tell me what the object was and how you measured it....

tarsubil's picture

Haha! You have no clue what you're talking about! In your face! I reign supreme!

Flakmeister's picture

I think I hear Jesus calling you...

mayhem_korner's picture



Tarsubil.  You must ignore the Flakmeister.  His oft-repeated, antagonistic blueprint is as follows: bait you into responding to one of his bomb-lobs - usually asking you to refute something that is unproven, then label you, claim superiority over you based on his godlike intellect and academic credentials, then declare victory and go home.  As the line goes in War Games, "the only winning move is not to play."

Flakmeister's picture

Just like I took you to school on peak oil... do you still think kerogen is oil?

Would you like a lesson in Global Warming too?

One at a time though, Tarsubil chickened out and Pods is next....

pods's picture

Now you guys are forced to use 30 year sets of data?

Sorry, finding a correlation in two sets of data does not prove a damn thing.  Especially over 30 years.  

What's next, will you be reduced to videos of glaciers breaking off into the ocean to calculate rates of disappearance?


Flakmeister's picture

Would you like to play??

Do you know why 1979 was chosen? Instead of spewing nonsense, why don't you read the abstract?

Or are you one of those guys that relies on Rush or Patrick Michaels for your scientific insight?

Go ahead, make my day....

pods's picture

Actually I rely on my training as a scientist.

Do you believe in man made global climate change?

Flakmeister's picture

I believe the hypothesis that is most consistent with the data. And for that I rely on my training as a scientist....

If the data changes or a superior hypothesis emerges, my views will likely change.... I tend to fall into this camp called Rationalism...

Would you care to dispute the findings of the paper I linked above? Before dismissing it, I do suggest that you at least read the abstract to see what was done and what the conclusions were....

pods's picture

I have read it.  I used the term "believe" to judge whether we could actually have an argument based upon the data, or whether it was an argument based upon your belief.

The abstract showed a consistent "0.014-0.018 K y-1" change.

Are you going to argue that:

1. This level of precision is actually possible with a temperature measurement.

2.  This time frame can be used to extrapolate to a longer time frame or to make any conclusions.

If either of those are correct, we are done.  As results are only as accurate as their LEAST accurate data.  And there is no way in hell that 14 thousandths of a degree can be stated with any confidence.  Sure an instrument may spit out as many digits as you program, but any average temperature is far outside of this level of precision.

So you basically found a data set that has fit your worldview.  Big fucking deal.


tarsubil's picture

I think you are wasting your time. Flak knows he is full of BS and he knows we know he is full of BS. What's the point?

Flakmeister's picture

So you do want to play?

Whats the matter, can't even entertain any thought that disagrees with your worldview. See, Speak and Hear no-Evil??

Humor me. Read the paper and explain why it is wrong. If not STFU and go back to commenting on the FED and Ron Paul and leave scientific discussions to those that are qualified. 

You do realize that the paper shows GW over the past 32 years as a 8 sigma effect using a very robust mathematical technique? 

It is a slam fuckin' dunk that the globe is warming....

Deal with it...

tarsubil's picture

LOL, you sound like you're 12 years old.

Flakmeister's picture

I was once.... and once upon a time I believed in Santa, but I grew up.

Time for you to grow up and think for yourself...

tarsubil's picture

If you grew up, why do you sound like you are 12 years old right now?

Flakmeister's picture

As a rule, in Fight Club, I always let the otherside define the terms of engagement...

Therefore being able to act like a 12 year old helps when relating to the emotionally and intellectually stunted denizens of ZH, such as yourself...

Ta-ta for now....

Flakmeister's picture

Wow, Pods and you have the audacity to claim scientific training???

By your logic, if something cost $1.50 30 years ago and it costs $1.65 now, that is impossible because the average rate of change is 0.5 cents per year and that coin doesn't exist...

Did you read the paper? Do you understand the analysis? You do understand that all they are doing is testing a hypothesis using 5 independent data sets?

I am really disappointed, I thought you had more to offer based on some of your comments. Thanks for playing, though....


I guess I should not show you this paper


Similar technique going back to 1850 but its a bit more comlipicated and I don't want to overwhelm your limited analytics abilities (i.e. the Dunning-Kruger Effect)

(Note: the actual paper is not free, as the journal requires a subscription otherwise I would link it)


tarsubil's picture

Has anyone attempted to replicate any of your experiments? If so, how did that go? LOL.

pods's picture

The logic of the paper cited is not akin to your analogy.  It would be the same as looking at something that was 1.50 last week, and it 1.65 this week, and extrapolating from there.

So the data set looked at over 30 years showed the minimum of 0.42 degrees K change, maximum of 0.54 degrees.  Which correlated to their rates of change.

Does this time frame in any way extrapolate out?

What type of conclusions can be made?

I get your schtick, you are smarter than me.  Fine.  I am secure enough in my knowledge to where I accept that there are smarter people than me.

As to your second piece, these are the words that tell me that this is the same crap that has been spewed for years, and when any new data is uncovered, it is crammed into the model to keep spitting out the same result as was originally intended:

"We use a massive ensemble of the Bern2.5D climate model of intermediate complexity, driven by bottom-up estimates of historic radiative forcing F, and constrained by a set of observations of the surface warming T since 1850 and heat uptake Q since the 1950s

Huber and Knutti take the estimated global heat content increase since 1850, calculate how much of the increase is due to various estimated radiative forcings

their model

average global surface warming simulated by the model

MIP3 climate models.

 natural variability can very likely

most likely value

Our best estimate is 

because the whole method is probabilistic

could be a bit smaller

could also be 

it is extremely unlikely (<5% probability)

Even if models 

extremely unlikely

This is consistent with reconstructions

can mostly be explained

the authors estimate

chose a reconstruction

they may have overestimated

Even for a reconstruction with high variability in total irradiance, solar forcing contributed only about 0.07°C (0.03-0.13°C) to the warming since 1950.

Since 1950, the authors find that greenhouse gases contributed 166% (120-215%) of the observed surface warming (0.85°C of 0.51°C estimated surface warming).  The percentage is greater than 100% because aerosols offset approximately 44% (0.45°C) of that warming.

ran thousands of model simulations

is projected 

Huber and Knutti's results are also consistent with the body of climate sensitivity research

And they find that if we continue with business-as-usual, we will reach 2°C above pre-industrial levels within the next few decades.  All the more reason to change course."

So basically they have estimated, modeled, reconstructed and then statistically concluded that humans are to blame for global warming.  

Lots of wiggle words in there.  Sounds pretty scientific to me.

So you are telling me that they have used the same "methods", models, adjusted data, et all to statistically come to the same conclusion that all the other global warming people have come up with?




tarsubil's picture

Flak is not smarter than you are. Geez. Flak knows a lot of data that if marked to market would be worth absolute 0. Most people don't know all this stupid crap so he has to lord it over you like he is somebody of consequence. Not so. He's digging ditches with sound money.

One thing Flak is tricking you with is asking you to prove the analysis wrong. The assumption is that the measurements and data are legit. But that is where debates in science are really settled. Can you replicate the data and results? That is impossible in this case. It all comes down to whether you trust how the measurements were made, if they represent what they say they represent, the scientists making the measurements, or not. I don't myself.

pods's picture

Yeah, I do not allow myself to argue within that paradigm.  It is one of belief simply due to so many particulars of it are modelled, estimated, reconstructed, and then compared to the previous modelled, estimated, reconstructed studies.  

I merely like going through those "learned papers" to see how many wiggle words you can find.  At least now they use them on both sides to make themselves look better.  

As for a legitimate argument in the climate change area, you cannot actually have it. I like to see how excited they get though.  Emotion based arguments=belief, no matter what they are trying to say.

I saw that when you would not play his game out came the insults and taunting.  

Trying to win an argument inside the AGW sphere is like trying to beat Calvin at Calvinball.



Flakmeister's picture

Simple Yes No questions:

1) Do you know what a linear regression is?

2) Are the data from the past 32 years correct? or incorrect?


Hey, you are the one that has a problem with me stating the AGW deniers are frauds and that the evidence is GW is real and most of it is AGW. Please show my why I am wrong...


You talk as a condescending anti-intellectual... and your posts support that conclusion.



pods's picture


Have not seen the data.

Do you know the difference between causation and correlation?

I have no problem with anything you say. Opinions are everywhere.

As to the evidence, it is all based on models that limit the variables to a few simple inputs.  And those inputs just so happen to be things that we can crudely measure.

It is not my job to show you that you are wrong, only to keep you from implementing policy based on your erroneous findings.


Flakmeister's picture

First, you clearly did not read the FR paper let alone understand what they did. So your correlation/causation strawman is just that, a strawman.

Second, quit with the fucking strawmen. I have not discussed any government policy wrt to GW.  I am only discuss the science.  Quite frankly, the financial disaster brewing combined with peak oil will define the policy. My only hope is that we dont fry the planet a la Dr. Strangelove over dwindling oil reserves first.


Good that you know what a linear regression is, it will help understand the paper.

So, if you have not seen the data, then how can you have an opinion on global warming anthropogenic or otherwise?? Above, you claimed to have scientific training, can you reconcile that with what you just said?

pods's picture

It can be reconciled easy enough by merely coming to the realization that 30 years is much too short of a time frame to make any valid conclusions about climate.

The noise in the data far outweighs any perceived change.  And by that I mean the data that is gathered via temperature measurement.  

You might get some oohs and ahhhs at cocktail parties by dropping how well your model fit is to the data, but you are all just looking at noise.