Stagflation menace all but vanishes in US in July CPI-Housing #'s

[papau]

For First Time in Eight Months,Gasoline prices actually fell by 4.2 percent in July, apparel dropped 0.8% for no known reason, and Car price dropped due to their horrible inventory problem,, so Consumer Prices in U.S. Drop in July, and the world is happy as it ignores year to date annual inflation rate of 4.1%, with year to date core inflation annual rate of 2.4%! (God forbid we discuss July's 0.3 percent rise in medical costs and a 0.2 percent increase in housing costs, or the 0.7 percent drop in inflation-adjusted earnings over the last 12 months).


:-)


http://story.news.yahoo.com/news?tmpl=story&ncid=1504&e=6&u=/afp/20040817/bs_afp/us_economy_040817164340

Stagflation menace all but vanishes in US (CPI down 0.1, Core up 0.1, YTD=4.1%, Housing Rebounds)

WASHINGTON (AFP) - The nightmare menace of stagflation all but disappeared in July as data showed that US consumer prices dipped, industry ramped up output and home building boomed. <snip>

-- US consumer prices unexpectedly dipped 0.1 percent in July as sky-high gasoline prices at the pump slumped 4.7 percent. Stripping out volatile energy and food costs, prices were up only 0.1 percent.


-- Factories, mines and utilities raised combined production by a seasonally adjusted 0.4 percent, nearly recovering from a 0.5 percent drop in June (productive capacity in use at U.S. factories, mines and utilities was only up to 77.1 percent - below what had been forecast, but Factories alone operated at 76.3 percent of capacity - the highest since 2001). Manufacturers boosted output 0.6 percent, miners extracted an extra 1.2 percent and utilities cut output by 2.0 percent as cool summer weather curbed demand for air conditioning.


-- Home building in the United States soared by an unexpectedly steep 8.3 percent in July, recovering from a slump the previous month as weather improved. <snip>


http://story.news.yahoo.com/news?tmpl=story&ncid=716&e=6&u=/ap/20040817/ap_on_bi_go_ec_fi/economy

Consumer Prices Fall, Housing Rebounds

By MARTIN CRUTSINGER, AP Economics Writer

WASHINGTON - Consumer prices fell by 0.1 percent in July as gasoline prices dropped while output at factories and housing construction posted healthy rebounds, offering hope the economy has escaped this summer's "soft patch."

The Labor Department said Tuesday that the decline in its closely watched Consumer Price Index was the first decrease since a 0.2 percent drop last November. The CPI had been up 0.3 percent in June and an even sharper 0.6 percent in May, reflecting big jumps in energy costs.

Meanwhile, the Federal Reserve reported that output at the nation's factories, mines and utilities rose by 0.4 percent in July, nearly erasing a 0.5 percent plunge in June. The increase was led by a sharp 1.2 percent jump in mining activity, a category that includes oil production, and a 0.6 percent rise in manufacturing activity, the biggest increase in this category three months.

In other good economic news, the Commerce Department reported that construction of new homes and apartments rose by 8.3 percent in July. The bigger-than-expected gain pushed housing construction to an annual rate of 1.978 million units last month, making up lost ground from a 7.7 percent decline in housing starts in June. <snip>

Through the first seven months of this year, consumer prices have been rising at an annual rate of 4.1 percent, sharply higher than the 1.9 percent increase for all of 2003. <snip>

The core rate of inflation, which excludes volatile energy and food prices, has been rising at a more moderate annual rate of 2.4 percent, up from a tiny 1.1 percent increase in 2003. <snip>

http://story.news.yahoo.com/news?tmpl=story&ncid=578&e=8&u=/nm/20040817/bs_nm/economy_dc

Consumer Prices Down, Industry Output Up

Tue Aug 17,11:26 AM ET

By Tim Ahmann

WASHINGTON (Reuters) - U.S. consumer prices dropped in July for the first time in eight months as a sharp run up in energy costs reversed, the government said in a report that suggested a slow rate of interest rate hikes is likely.<snip>

The Commerce Department said housing starts rose a healthy 8.3 percent to an annual rate of 1.978 million units in July, the biggest gain since September 2002. Analysts had looked for a slower clip of 1.9 million units. <snip>

Easing inflation in July had the effect of pushing up inflation-adjusted earnings. Real average weekly earnings, which posted a big 0.8 percent drop in June, rose 0.7 percent last month, according to a separate Labor Department report. Still, over the last 12 months, they are down 0.7 percent.

http://quote.bloomberg.com/apps/news?pid=10000103&sid=axQO1WUSMIh4&refer=news_index


U.S. Economy: Consumer Prices Fall, Production Rises (Update2)
Aug. 17 (Bloomberg) -- U.S. consumer prices unexpectedly declined in July, supporting the Federal Reserve's view that accelerating inflation earlier this year may prove temporary. Industrial production and home construction rose. <snip>

The core index was also forecast to increase 0.2 percent (but only rose 0.1), according to the survey median.

The unexpected decline was largely because of a drop in energy prices, which account for about a 14th of the index, and a 0.8 percent drop in apparel costs. <snip>

So far this year, consumer prices are rising at a 4.1 percent annual rate, compared with a 2.1 percent increase at the same time a year ago. Core prices are rising at a 2.4 percent rate, up from 1.3 percent in the first seven months of 2003. <snip>

Companies' investments added more to growth in the second quarter than spending by consumers, the first time that balance has shifted since the first quarter of 1995. That business demand continued into July, helping the economy overcome slower consumer spending and a weakening growth pace that Fed Chairman Alan Greenspan has suggested will soon pick up, economists said. <snip>

Thirty-year mortgage rates that increased to 6.28 percent in May and June, about a percentage point above last year's record low, prompted people to buy in anticipation borrowing costs would keep rising. Since then, they've fallen.

Last week, the rate dropped to 5.85 percent, according to Freddie Mac, the No. 2 buyer of mortgages.