Wednesday, August 19, 2015

July consumer prices: all intact trends continue

 - by New Deal democrat

This morning's CPI report for July was a big yawn, coming in at +0.1% just as expected, and YoY CPI also unchanged at +0.2%.  OMG, the Fed simply *must* raise rates as a precaution!!! < / snark >

So let's look at a couple of useful bits of information.

First, inflation continues to be confined almost exclusively to housing.  The below graph comparing CPI for shelter (blue) vs. everything else (red) continues to show housing inflation a little on the "hot" side, while everything else remains in the most severe deflation in the last 50 years outside of the Great Recession:

Next, we can now show real retail sales for July, which continue to show an improving trend, although they did not make a new high:

Finally, over the longer term YoY real retail sales tend to lead YoY employment.  The recent deceleration in growth of real retail sales is another reason to suspect that YoY job growth will fade at least a little bit, with reports under 225,000 or maybe even under 200,000 a month:

Basically, all of the existing trends are still intact.