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  • Consumer Price Index On The Rise

    The Consumer Price Index for All Urban Consumers rose 0.2% in March, according to the Bureau of Labor Statistics . 0.2 doesn't look so big, but the news comes after two straight months of 0.1% growth.The CPI-U has grown in ten of the last eleven months. The all items index has grown 1.5% over the last 12 months. From the Bureau of Labor Statistics release: Increases in the shelter and food indexes accounted for most of the seasonally adjusted all items increase. The food index increased 0.4 percent in March, with several major grocery store food groups increasing notably. The energy index, in contrast, declined slightly in March as decreases in the gasoline and fuel oil indexes more than offset increases in the indexes for electricity and natural gas. The index for all items less food and energy also rose 0.2 percent in March. Besides the 0.3 percent increase in the shelter index, the indexes for medical care, for apparel, for used cars and trucks, and for airline fares also increased. The indexes for household furnishings and operations and for recreation both declined in March. The all items index increased 1.5 percent over the last 12 months; this compares to a 1.1 percent increase for the 12 months ending February. The index for all items less food and energy has increased 1.7 percent over the last 12 months, as has the food index. The energy index has risen slightly over the span, advancing 0.4 percent. Here's a look at the CPI for All Urban Consumers over the last year: Read the full release here .
  • Case-Shiller Home Price Indices Flatten Out

    The latest Case-Shiller Home Price Indices release is out, and if you look at the data through a narrow lens, things don't look so great. Average home prices dropped 0.1% for the Case-Shiller 20-city composite in January. Twelve cities saw declines in prices, with Chicago leading the way at -1.2%. But if you zoom out a little, the picture looks a lot different. Prices were up 13.5% for the 10-city composite and 13.2% for the 20-city composite. Here's a look at the long term trend: Overall, it was a strong year. From the release: “The housing recovery may have taken a breather due to the cold weather,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Twelve cities reported declining prices in January vs. December; eight of those were worse than the month before. From the bottom in 2012, prices are up 23% and the housing market is showing signs of moving forward with more normal price increases. “The Sun Belt showed the five highest monthly returns. Las Vegas was the leader with an increase of 1.1% followed by Miami at +0.7%. San Diego showed its best January performance of 0.6% since 2004. San Francisco and Tampa trailed closely at +0.5% and +0.4%. Elsewhere, New York and Washington D.C. stood out as they continued to improve and posted their highest year-over-year returns since 2006. Dallas and Denver are the only cities to have reached new record peaks while Detroit remains the only city with home prices below those of 14 years ago. “Expectations and recent data point to continued home price gains for 2014. Although most analysts do not expect the same rapid increases we saw last year, the consensus is for moderating gains. Existing home sales declined slightly in February and are at their lowest level since July 2012.” Read the full release here .
  • Economics Lessons from Babysitting and Prison Camps

    Tim Harford says that we have a problem explaining how the economy works. It is too big. So we try to explain sections of it. But then the frame is too small and we misunderstand the way it all works. So Harford looks for smaller economies that behave enough like the economy at large that we can use them to make sense of recessions, inflation, and the like. In this Big Think interview, he discusses two such examples: a babysitting cooperative, and a prison camp:
  • The Dangers of Ultra Low Inflation

    Annual headline inflation is very low in Europe. Not so low that we have to shift to talking about deflation. At least not yet. But very low inflation can present problems as well. And you can be sure central bankers and policy makers in developed economies around the globe are watching Europe and the European Central Bank closely. the IMF 's Reza Moghadam outlines the challenges of "ultra low inflation" here:
  • The Rise and Fall of Orange Juice

    At Quartz , Roberto Ferdman has a nice abbreviated history of orange juice. It is not so much a food history or even a fruit history, but is, rather, an interesting economic short story with lessons in commodities trading, scarcity, and consumer behavior. Ferdman was prompted to rite about orange juice by some startling data. Orange juice consumption (per capita) has dropped 40% in the last decade. It is a "big deal," says Ferdman. After World War II, a group of scientists changed the American orange juice landscape forever. Determined to find a more palatable intersection between preservation and flavor, these scientists developed a new process roughly based on the one they saw used to dehydrate food during the war effort. Instead of boiling the juice, they heated it lightly until water evaporated. Then, they’d add a touch of fresh orange, which gave the concoction a “fresh” taste. Orange juice “from concentrate” was born. As was the industry’s marketing push. The product was a hit. Per capita orange juice consumption jumped from under eight pounds per person in 1950, to over 20 pounds per person in 1960. Florida’s production of concentrated juice leapt from 226,000 gallons in 1946 to more than 116 million in 1962, according to a report by agricultural economist Robert A. Morris. By 1970, 90% of Florida’s oranges were being used to make orange juice and the vast majority of that was from concentrate. The increased popularity of flash-pasteurized, ready-to-drink juice advertised as “not-from-concentrate” helped drive consumption still higher in the 1980s and 1990s. But as you can see, things started to roll over in the late 1990s. Since 1998, US orange production and orange juice sales have fallen virtually every year. That decline comes despite strong population growth in the US, which means the average American consumes far fewer oranges today than she did in 2000. Why? Read How America fell out of love with orange juice here .
  • Case Shiller: Home Prices Lose Momentum in December But 2013 Best Year Since 2005

    After a steady rise through the fall, home prices were flat in December, according to the latest Case-Shiller Home Price Indices release. For the month, average home prices dropped 0.1% for the Case-Shiller 20-city composite and were unchanged for the 10-city composite. The year-over-year data is much more promising, as prices were up 13.6% for the 10-city composite and 13.4% for the 20-city composite. Here's a look at the long term trend: Overall, it was a strong year. From the release: “The S&P/Case-Shiller Home Price Index ended its best year since 2005,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “However, gains are slowing from month-to-month and the strongest part of the recovery in home values may be over. Year-over-year values for the two monthly Composites weakened and the quarterly National Index barely improved. The seasonally adjusted data also exhibit some softness and loss of momentum. After 26 months of consecutive gains, Phoenix posted -0.3% for the month of December, its largest decline since March 2011. Phoenix once led the recovery from the bottom in 2012, but Las Vegas, Los Angeles and San Francisco were the top three performing cities of 2013 with gains of over 20%. The Sun Belt, with the exception of Dallas, Miami and Tampa, saw lower annual rates in December when compared to their November numbers. The six cities with the highest year-over-year figures saw their rates decline (Las Vegas, San Francisco, Los Angeles, Atlanta, San Diego and Detroit) and most cities ranked at the bottom improved (Denver, Washington and New York) – Charlotte and Cleveland were the two exceptions. “Recent economic reports suggest a bleaker picture for housing. Existing home sales fell 5.1% in January from December to the slowest pace in over a year. Permits for new residential construction and housing starts were both down and below expectations. Some of the weakness reflects the cold weather in much of the country. However, higher home prices and mortgage rates are taking a toll on affordability. Mortgage default rates, as shown by the S&P/Experian Consumer Credit Default Index, are back to their pre-crisis levels but bank lending standards remain strict.” Read the full release here .
  • Bank of America Chief Economist on Deflation Concerns

    With annual rates of inflation hovering near just 1% in the U.S., Europe, and Japan, the concern about deflation and its effect on the global market is up. Bank of America Chief Economist Mickey Levy sees the three cases as somewhat different, and warns us not to treat them as part of a clear global trend. More importantly, he argues that we should be careful to distinguish between "bad deflation" and "healthy price declines." Here is an excerpt from his op-ed at Vox : Deflation stemming from insufficient demand and growth-constraining economic policies can drain confidence and become negatively reinforcing, as Japan has shown. In such situations, aggressive macroeconomic policy stimulus designed to jar expectations and boost demand is appropriate. Europe’s downward price and wage pressures are necessary adjustments to its earlier excesses, and relying excessively on aggressive monetary policy to stimulate demand is not a lasting economic remedy. Europe is not destined to fall into a Japanese-style prolonged malaise, but it must continue to pursue reforms that lift productive capacity and confidence. The US situation is very different. The economic expansion is gaining momentum (temporarily sidetracked by unseasonal winter storms), unemployment is falling steadily, personal income is growing faster than inflation, and household net worth is at an all-time high. Expectations of deflation are not apparent in either household or business behaviour. Concerns about lingering labour-market underperformance are warranted; angst about deflation is not. Prices of some goods and services in the US have been falling, benefitting from technological innovation, improved product design, or heightened competition and distribution efficiencies through the internet. Examples abound: flat-screen TVs, computers, automobiles, reduced fees on financial transactions, online consumer and business purchases, etc. These lower prices and quality improvements explain the vast majority of the recent deceleration in inflation – the PCE deflator for goods continues to decline and is flat for nondurables, while it has been rising at a fairly steady pace of 2% for services. These innovation-based price reductions improve standards of living and free up disposable income to spend on other goods and services. They boost aggregate demand and enhance economic performance. And they contribute positively to longer-run potential growth. It is unclear why US policymakers and commentators fear disinflation that stems from innovation-based price reductions amid accelerating aggregate demand. European policymakers face tougher choices. Read Clarifying the debate about deflation concerns here .
  • CPI Continues Steady Rise

    The Consumer Price Index for All Urban Consumers rose 0.1% in January, according to the Bureau of Labor Statistics . The CPI-U has grown in eight of the last nine months (in October it came in at 0.0). The all items index has grown 1.6% over the last 12 months. From the Bureau of Labor Statistics release: Increases in the indexes for household energy accounted for most of the all items increase. The electricity index posted its largest increase since March 2010, and the indexes for natural gas and fuel oil also rose sharply. These increases more than offset a decline in the gasoline index, resulting in a 0.6 percent increase in the energy index. The index for all items less food and energy also rose 0.1 percent in January. A 0.3 percent increase in the shelter index was the major contributor to the rise, but the indexes for medical care, recreation, personal care, and tobacco also increased. In contrast, the indexes for airline fares, used cars and trucks, new vehicles, and apparel all declined in January. The food index rose slightly in January. The index for food at home rose 0.1 percent, with major grocery store food groups mixed. The all items index increased 1.6 percent over the last 12 months; this compares to a 1.5 percent increase for the 12 months ending December. The index for all items less food and energy has also risen 1.6 percent over the last 12 months. The energy index has risen 2.1 percent over the span, and the food index has increased 1.1 percent. Here's a look at the CPI for All Urban Consumers over the last year: Read the full release here .
  • The Curious Economics of the Coffee Bean

    When commodity prices shift, consumers should see a change in prices in products that use those commodities. Like the coffee bean. When coffee bean values go up or down, the coffee we drink should shift, right? Well, not so fast. Marketplace 's Stacey Vanek Smith was wondering why her $4 latte is still $4 when coffee beans prices have dropped to "near record lows." Listen in to the answers she finds:
  • Case-Shiller: House Prices Drop Slightly in November, But Year-Over-Year Gains Remain Strong

    Home prices dropped slightly in November, dropping 0.1% from October according to the latest Case-Shiller Home Price Indices release. But they were up significantly from November 2013. Year-over-year, the Case Shiller 10-city composite rose 13.7%, while the 20-city composite rose 13.8%. Here's a look at the long term trend: From the release: “November was a good month for home prices,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Despite the slight decline, the 10-City and 20- City Composites showed their best November performance since 2005. Prices typically weaken as we move closer to the winter. Las Vegas, Los Angeles and Phoenix stand out as they have posted 20 or more consecutive monthly gains.” “Beginning June 2012, we saw a steady rise in year-over-year increases. November continued that trend with another strong month although the rate of increase slowed. Looking at the year-over-year returns, the Sun Belt continues to push ahead with Atlanta, Las Vegas, Los Angeles, Miami, Phoenix, San Diego, San Francisco and Tampa taking eight of the top nine spots. Detroit continues to recover but remains the only city with prices below its 2000 level.” “Home prices continue to rise despite last May’s jump in mortgage interest rates. Mortgage applications for purchase were up in recent weeks confirming home builders’ optimism shown by the NAHB survey. Combined with low inflation -- 1.5% in 2013-- home owners are enjoying real appreciation and rising equity values. While housing will make further contributions to the economy in 2014, the pace of price gains is likely to slow during the year.” Read the full release here .
  • Case-Shiller: Home Prices Gain For 17th Straight Month

    Home prices posted a year-over-year gain of 13.6% in October, according to the latest Case-Shiller Home Price Indices release. That's the highest year-over-year gain since February 2006. The monthly gain was not as impressive. For the month of October, average home prices rose 0.2% for the Case-Shiller 10-city composite and the 20 city composite, compared with 0.7% in September. Only Phoenix posted a stronger gain in October than in September. Here's a look at the long term trend: From the release: “Home prices increased again in October,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Both Composites’ annual returns have been in double-digit territory since March 2013 and increasing; now up 13.6% in the year ending in October. However, monthly numbers show we are living on borrowed time and the boom is fading. “The year-over-year figures increased slightly from last month. Thirteen cities and both Composites posted double-digit annual returns. Cities at the top of the range (Las Vegas, San Diego and San Francisco) saw smaller annual increases. On the other hand, cities that have been relatively underperforming (Cleveland, New York and Washington) saw their annual gains grow. Miami showed the most improvement. Chicago recorded its highest annual rate (+10.9%) since December 1988. Charlotte and Dallas posted annual increases of 8.8% and 9.7%, their highest since the inception of their indices in 1987 and 2000. “The key economic question facing housing is the Fed’s future course to scale back quantitative easing and how this will affect mortgage rates. Other housing data paint a mixed picture suggesting that we may be close to the peak gains in prices. However, other economic data point to somewhat faster growth in the new year. Most forecasts for home prices point to single digit growth in 2014.” Read the full release here .
  • Case-Shiller: National Home Price Index Sees Double Digit Rise Over Four Quarters

    Home prices have risen 11.2% over the last four quarters, with a 3.2% increase in the third quarter alone, according to the latest Case-Shiller Home Price Indices release. For the month of September, average home prices rose 0.7% for the Case-Shiller 10-city composite and the 20 city composite. On an annual basis, prices rose 13.3% for both composites. The monthly growth rate slowed in September, as 19 of the 20 cities in the index saw a lower growth rate, and Minneapolis's rate remained at 0.8%. Here's a look at the long term trend: From the release: “The second and third quarters of 2013 were very good for home prices,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “The National Index is up 11.2% year- over-year, the strongest figure since the boom peaked in 2006. The 10-City and 20-City Composites year-over-year growth at 13.3% was their highest annual numbers since February 2006. “Twelve cities posted double-digit annual returns. Regionally, the West continues to lead with Las Vegas gaining 29.1% year-over-year followed by San Francisco at 25.7%, Los Angeles at 21.8% and San Diego at 20.9%. San Francisco and Los Angeles showed their highest annual returns since March 2001 and December 2005. Although Chicago has not reached double-digit growth, the city recorded its highest year-over-year gain since November 2005. “The strong price gains in the West are sparking questions and concerns about the possibility of another bubble. However the talk is focused on fear of a bubble, not a rush to join the party and buy. Moreover, other data suggest a market beginning to shift to slower growth rather than one about to accelerate. Existing home sales weakened in the most recent report, home construction remains far below the boom levels of six or seven years ago and interest rates are expected to be higher a year from now. “Housing continues to emerge from the financial crisis: the proportion of homes in foreclosure is declining and consumers’ balance sheets are strengthening. The longer run question is whether household formation continues to recover and if home ownership will return to the peak levels seen in 2004.” Read the full release here .
  • CPI Keeps Slowly Increasing

    The Consumer Price Index for All Urban Consumers rose 0.2% in September, according to the Bureau of Labor Statistics . It was the fifth month in a row with an increase in CPI, though the year-over-year growth was the smallest increase since April. From the Bureau of Labor Statistics release: The energy index rose 0.8 percent in September and accounted for about half of the seasonally adjusted all items increase. All the major energy component indexes rose in September. The food index was unchanged, with declines in the indexes for fruits and vegetables and for nonalcoholic beverages offsetting increases in other indexes. The index for all items less food and energy rose 0.1 percent in September, the same increase as in August. The shelter and medical care indexes also advanced and accounted for most of this increase. The indexes for new vehicles and for airline fares rose as well, while the apparel and recreation indexes declined. The all items index increased 1.2 percent over the last 12 months; this was the smallest 12-month increase since April. The index for all items less food and energy has risen 1.7 percent over the last year with the shelter and medical care indexes both up 2.4 percent. The food index has risen 1.4 percent, while the energy index has declined 3.1 percent. Here's a look at the CPI for All Urban Consumers over the last year: Read the full release here .
  • Case Shiller: Home Prices Continue Steady Rise

    Home prices kept rising in July, but at a slower rate than previous months, according to the latest Case-Shiller Home Price Indices release. Average home prices rose 1.9% for the Case-Shiller 10-city composite and 1.8% for the 20 city composites. On an annual basis, prices rose 12.3% for the 10-city composite index and 12.4% for the 20-city composite. Prices rose in all 20 top metro areas, with Chicago, Atlanta, and Detroit all posting monthly growth above 3%. Here's a look at the long term trend: From the release: “Home prices gains are holding their 12% annual rate of gain established by the two Composite indices in April,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “The Southwest continues to lead the housing recovery. Las Vegas home prices are up 27.5% year-over-year; in California, San Francisco, Los Angeles and San Diego are up 24.8%, 20.8% and 20.4% respectively. However, all remain far below their peak levels. “Since April 2013, all 20 cities are up month to month; however, the monthly rates of price gains have declined. More cities are experiencing slow gains each month than the previous month, suggesting that the rate of increase may have peaked. “Following the increase in mortgage rates beginning last May, applications for mortgages have dropped, suggesting that rising interest rates are affecting housing. The Fed’s announcement last week that QE3 bond buying will continue for the time being may have only a limited, though favorable, impact on housing.” Read the full release here .
  • Case Shiller: 'Housing prices rising but the pace may be slowing"

    Home prices continued to rise in June, though at a slightly slower pace than previous months, according to the latest Case-Shiller Home Price Indices release. Average home prices rose 2.2% for the Case-Shiller 10-city and 20 city composites. On an annual basis, prices rose 11.9% for the 10-city composite index and 12.1% for the 20-city composite. Prices rose in all 20 top metro areas, with Atlanta, Las Vegas, San Diego, and San Francisco all posting monthly growth at or above 2.7%. Here's a look at the long term trend: From the release: “National home prices rose more than 10% annually in each of the last two quarters,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “However, the monthly city by city data show the pace of price increases is moderating. “The Southwest and California have consistently led the recovery with Las Vegas, Los Angeles, Phoenix and San Francisco posting at least 15 months of gains. Looking at the cities, New York recorded its highest monthly return since 2002. Atlanta was up the most at +3.4% and Washington DC had the lowest return at +1.0%. In terms of annual rates of change, San Francisco lost its leadership position with Las Vegas showing the highest post-recession gain of 24.9%. “Overall, the report shows that housing prices are rising but the pace may be slowing. Thirteen out of twenty cities saw their returns weaken from May to June. As we are in the middle of a seasonal buying period, we should expect to see the most gains. With interest rates rising to almost 4.6%, home buyers may be discouraged and sharp increases may be dampened. “Other housing news is positive, but not as robust as last spring. Starts and sales of new homes continue to lag the stronger pace set by existing homes. Despite recent increases in mortgage interest rates, affordability is still good as credit qualifications have eased somewhat.” Read the full release here .
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