Wholesale prices drop 0.6% in May; retail sales fall (worst in 2 years)

[sabra]

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http://www.usatoday.com/money/economy/inflation/2005-06-14-inflation-retail_x.htm?csp=15

Wholesale prices drop 0.6% in May; retail sales fall
WASHINGTON (AP) — Wholesale prices plunged 0.6% in May, the biggest decline in more than two years, as the cost of both energy and food retreated.
Even outside those two volatile areas prices were unexpectedly well-contained, a government report showed Tuesday. Stripping out volatile food and energy prices, the Labor Department's "core" producer price index advanced a mild 0.1%.

The report was likely to further beat back inflation concerns in financial markets. Wall Street economists had expected overall producer prices to slip just 0.2%, with core prices moving up by 0.2%.

Retail sales also fell in May, a second report said.

The drop of 0.5% was the biggest decline in nearly a year, as Americans bought fewer cars and cut back on clothing purchases.

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[NWHarkness]

1. I'm no economist, but...

When prices are falling, and people still aren't buying, you've got a problem.

Isn't that how deflationary ctcles begin?

[napi21]

2. Are those fool on WS recognizing that gas prices eat disposable cash?

My guess would be that because people are paying so much more to fill up their tanks, they've had to cut back on the "unnessary things they would have other wise bought!

As to car sales, many people bought cars when all the deals like zero interest, special discounts, etc. were so popular. They financed the darn cars for 5 or 6 years, and they just aren't going to be in the market for a while! A long while!

Inflation concerns be damned, until the middle class sees some INCREASE in income, retail sales are going to remain low, or even decline!

[marmar]

3. The U.S. economy...

seems structurally damaged right now - it can't ever seem to pick up serious steam - and dumbass's ridiculous tax schemes and suicidal policies are contributing. Republicans are sooo devoted to this supply-side trickle down B.S. - it's like some kind of religion for them, but it has never really worked.

[tanyev]

4. Au contraire.

Don'tcha know the reason recruiting numbers are so low is because this economy is sooooo strong?

:eyes:

[marmar]

6. Of Course! I forgot...

Why join up for the military when White Castle is hiring??

:bounce:

[expatriot]

5. I'm done trying to be an armchair economist.... who the hell knows

one month we're worried about inflation and analogies to Germany 1921 are made with Alan Greenspan's magic money printing machine... the next month we are worried about deflation and analogies to the American Depression are made with Bush's Hooveresque economic policy. I will just sit on the sidelines on this one, I've never made an economic "analysis" that has ever turned out to be correct.

[AX10]

7. Isn't a .6 drop in one month a large drop.

...not just a sign of inflation "falling" but the economy is softening?!?

[ckramer]

8. Wholesale prices dropped in May

Retail sales slide more than economists' forecasts
MSNBC News Services
Updated: 11:27 a.m. ET June 14, 2005

WASHINGTON - U.S. wholesale prices plunged 0.6 percent in May, the biggest decline in more than two years, although the apparent lack of inflation pressure failed to encourage American consumers, as retail sales fell for the first time in nine months.

The Labor Department reported Tuesday that the decline in its Producer Price Index followed gains of 0.6 percent in April and 0.7 percent in March, hefty increases which had raised worries that inflation was threatening to break out of the moderate pattern of the past several years.

Three-fourths of the May decline reflected a big 3.5 percent drop in energy prices after three months of sizable gains in this area. But prices were contained in other areas as well with so-called “core” inflation, excluding energy and food. That number rose by just 0.1 percent in May, down from a 0.3 percent jump in April.

In other economic news, the Commerce Department reported that retail sales fell by 0.5 percent in May. The drop, which followed a huge 1.5 percent increase in April, reflected a decrease in auto sales and lower prices for gasoline.

link

I know why. People have no money left. The mortgage, the gas, the rent, the health insurance, the car insurance, the minimum wage...Where can they find money to buy food?

[Selatius]

9. When demand drops, prices drop soon thereafter