U.S. producer prices surge in February
RBC | Mar 16
February producer prices rose a much stronger than expected 1.6% in the month following a 0.8% rise in January. Expectations had been for a sizeable increase although by a more moderate 0.7%. The strong monthly increase resulted in the year-over-year rate jumping to 5.6% from 3.6% in January. On a core basis, prices rose an expected 0.2% although this was sufficient enough to move the annual rate up to 1.8% from 1.6% in January and a recent quarterly low of 0.9% at the end of 2009.
Wholesale prices up 1.6% on steep rise in food
LA Times | Mar 16
David Resler, an economist at Nomura Securities, said the jump in prices is likely temporary, echoing remarks made by the Federal Reserve on Tuesday. Much of the increase in food prices was due to winter freezes in Florida, Texas and other agricultural areas, Resler said. Turmoil in the Middle East is a major reason that motorists are facing higher gas prices. “Both food and gasoline prices are going to stop rising so rapidly,” Resler said. But John Ryding, an economist at RDQ Economics, disagreed, noting that consumers will feel the impact for some time. “We do not buy the Fed’s reassurance that these pressures will be temporary and we believe the public, seeing these strong increases in food and energy
will not be marking back down their inflation expectations,” Ryding said.
New Housing Starts Drop Sharply As Building Permits Fall To Record Low
Housing starts fell sharply in February, dropping the most in a single month since 1984, the U.S. Census Bureau reports. The 23% retreat left starts at an annualized rate of 479,000 in February, or just above the previous low for this cycle—477,000 in April 2009. It’s unclear if starts are headed for new lows, but the possibility surely went up a notch or two in light of today’s numbers.
Housing’s Muted Role In The Economic Recovery
The February update on housing starts arrives later today, but a repeat performance of January’s near-15% rise isn’t in the cards. The consensus forecast calls for a 3.5% decline for last month, according to Briefing.com. The housing market, in other words, is still treading water after a severe correction. Housing starts may be stabilizing after falling more than 50% from the glory days before the Great Recession, but a rebound of any magnitude is widely discounted as improbable for the foreseeable future. The question is how that pinches the economic recovery?
Is Fiduciary Oversight In Retirement Plans MIA?
Grant Thornton has published Retirement Plan Survey 2011, and it holds a number of intriguing factoids. Here’s one:
How often is fiduciary training provided to the administrative/investment committee for your plan (other than by your record keeper)?
Never… 23%
Very infrequently and with no set pattern… 41%
Annually… 24%
When new members are added… 12%
In turn, the study advises: “In light of the many new developments annually impacting internal plan fiduciaries, we recommend more frequent (and regular) fiduciary training. The best practice is to provide fiduciary training every year, as well as legal updates as new developments occur.”
Charting The Trend | Real Estate and Commercial & Industrial Loans
Last week’s Federal Reserve update on loans at commercial banks in the U.S. reports the fourth straight monthly rise in C&I loans in February. The relative size of the increases continues to slip, however, increasing by $2.3 billion, well down from January’s $5.3 billion advance. Meantime, real estate loans continue to retreat in absolute terms. Last month’s decline accelerated, posting the biggest monthly drop in a year in seasonally adjusted dollar terms.
Strategic Briefing | 3.15.2011 | Japan’s nuclear crisis
Japan Nuclear Crisis Deepens
Voice of America | Mar 15
The crisis at Japan’s damaged nuclear power complex in the northeastern part of the country is worsening. Top government officials acknowledge further, significantly higher radiation leaks and explosions at a total of three reactors. Tuesday morning, Japanese Prime Minister Naoto Kan delivered a nationally broadcast message to citizens, after a third reactor building explosion was confirmed in Fukushima. Urging the public to heed his words calmly, Kan acknowledged one of the damaged reactors is facing a much higher risk of releasing radiation into the atmosphere. The prime minister asked those living between 20 and 30 kilometers from the plant to stay indoors. Those living closer, about 200,000 people in all, had previously evacuated.
Charitable Donations For Japan
There’s been no shortage of tragedies in the short history of the 21st century to date, although the disaster in Japan surely rivals the worst of the worst. In this century, or any other. It’s also a catastrophe that’s still unfolding, and it may very well deteriorate further beyond the already horrific news. If ever an event needed the better angels of our nature, the calamity in Japan is it. With that in mind, here are some reference links for topics bound up with helping a country in distress.
Japan’s Pain & Suffering Will Have Global Consequences
The week ahead will bring fresh news on a number of key economic fronts for the U.S., including housing starts and consumer price inflation. But the numbers may be irrelevant before they’re published as the tragedy in Japan alters perceptions and economic activity. The global economy was already under a shadow in the wake of the Middle East turmoil due to the resulting jump in oil prices. That threat appears to have eased a bit, although it’s premature to dismiss this factor in the weeks and months ahead. Meantime, there’s Japan to consider, starting with the huge scale of human suffering. In economic terms, the first hurdle is dealing with lots of new uncertainty that’s arrived in the wake of the tragedy. Dated economic news in the period ahead is likely to be of limited value for assessing the trend.
Strategic Briefing | 3.14.2011 | Economic Blowback From Japan
Analysis: Japan quake risks severe near-term economic damage
Reuters | Mar 14
A triple blow of earthquake, tsunami and one of Japan’s worst nuclear accidents is set to damage the world’s third largest economy, possibly more deeply and for longer than initially expected. Power outages and possible tax rises are likely to hurt companies and households and could outweigh the mild economic aftershock from the 1995 Kobe earthquake, given that oil prices and the yen are stronger and Japan’s debt pile is much bigger.
Book Bits For Saturday: 3.12.2011
Oil is topical again–for all the wrong reasons. The change for the worse inspires reviewing some of the classics in the library of energy books. The genre is extensive and so the following list hardly scratches the surface. But these titles deserve to be on everyone’s short list. There are more recent books on the topic, of course, but here are five standards in the niche that will stand the test of time.
● The Prize: The Epic Quest for Oil, Money & Power
By Daniel Yergin
An ambitious review of how the oil industry became so powerful. From the politics to the economics to the personalities, this comprehensive volume is now the standard work on the subject. If you could only read one book about the history of this business, this is it. Well written, comprehensive, and engaging. Quite simply, a magnificent tome.
