Inflation Picks Back Up

Week in Review: March 11-15

This week was all about inflation data but also included updates on retail spending, population growth by county, consumer sentiment, industrial production, and a whole lot more.

Monday

Four year anniversary of the unofficial start of pandemic

On March 11, 2020, the NBA suspended their season after Rudy Gobert tested positive for COVID-19. This was the unofficial start of the pandemic in the U.S., so even with an election coming up, we can probably retire the question “Are you better off now than you were four years ago?”  

TSA Checkpoint Travel Numbers

The number of passengers screened by TSA was about 5% higher than in 2023 over the past week. Overall, travel activity remains strong heading into spring.

Tuesday

NFIB Small Business Optimism Index

Small business owner optimism fell in February. Nearly one in four owners listed inflation as their most important problem, a change from January when labor quality was their top problem. Overall, small business owners remain pretty gloomy; optimism remained below the half-century average for the 26^th straight month.

Gas Prices

Gas prices increased to $3.49/gallon during the second week of March. Despite trending higher over the past month or so, gas is still about $0.08/gallon cheaper than it was one year ago. Prices will keep moving higher in the coming weeks.

Diesel Prices

Diesel prices fell slightly for the third straight week and are now at the lowest level since the first week of February.

Consumer Price Index (Inflation)

Consumer prices increased 0.4% in February. That’s slightly faster than expected and the largest one-month jump since August 2023. Most of that increase was due to energy prices (+2.3%) and services prices (+0.5%, includes housing). Goods prices increased just 0.1%, while food prices were virtually unchanged for the month.

Core prices (excludes food and energy due to volatility) also increased 0.4% and are up 3.8% year over year. That’s the lowest y-o-y increase since May 2021, but as you can see, core is drifting lower pretty slowly.

To sum up this data: not great. Inflation is still running too hot. That has a lot to do with housing (and the way the Bureau of Labor Statistics measures housing). Importantly, the Fed’s preferred measure of inflation (the PCE Price Index) doesn’t have the same measurement problem. Even so, this CPI release reduces the odds of an imminent rate cut.

Wednesday