PCE Deflator, (Personal Consumption Expenditure ... - Morningbull

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Inflation is generally bad news for the economy, causing instability, uncertainty and hardship. To address inflation, the Fed may raise interest rates. However, the Fed relies on the PCE Deflator as its primary gauge of inflation because the CPI does not account for the ability of consumer to substitute out of CPI's set. Price changes tend to cause consumers to switch from buying one good to a less expensive-other, a tendency that the fixed-basket CPI figure does not yet account for. Given that the PCE Deflator is a more comprehensive calculation, based on changes in consumption; it is the figure the Fed prefers. The figure is released monthly, as either a month over month annualized percentage change, or percentage change for the full year. The figure is seasonally adjusted to account seasonal consumption patterns. On A Technical Note: The CPI includes over 200 categories of goods and services included, divided into 8 main groups, each with a different weight: Housing, Transportation, Food, Medical Care, Education and Communication, Recreation, Apparel, and Other Goods and Services. CPI Excluding Food and Energy - United States The CPI is also reported excluding food and energy; two of its most volatile components. These components are particularly sensitive to temporary economic factors like oil prices, natural disasters and seasonal affects. Consequently, CPI excluding Food and Energy provides a more stable figure, but at the cost of overlooking two significant sectors in the economy (together food and energy comprise nearly a quarter of the goods included in the CPI). The figure is the monthly percent change in the index. Relevance: Tends to move markets on release Release schedule : 8:30 AM (EST); monthly Revisions schedule : Annual revisions made in February Source of report : Bureau of Labor Statistics, Department of Labor (U.S.) Web Address : http://www.bls.gov Address of release : http://www.bls.gov/cpi/ Producer Price Index (PPI) - United States Measures changes in the selling prices producers charge for goods and services, and well as tracks how prices feed through the production process. Because producers tend to pass on higher costs to consumers as higher retail prices, the PPI is valuable as an early indicator of
inflation. Simply put, inflation reflects a decline in the purchasing power of the Dollar, where each dollar buys fewer goods and services. The report also gives insight into how higher prices from raw materials flow toward the final product. A rise in PPI signals an increase in inflationary pressures. Given the economic instability associated with rising price levels, the Fed often will raise interest rates to check inflation. A low or falling PPI is indicative of declining prices, and may suggest an economic slowdown. The headline figure is expressed in percentage change of producer price. Notes: The PPI records prices at various stages of production: raw goods, intermediate goods and finished goods. Though intermediate and crude goods price do provide insight for future inflationary pressure, it is the price of finished goods that generates most interest for market participants. The finished goods data is able to gauge price pressure before the goods reach the retail market. Core PPI, Excluding Food and Energy The PPI is also reported without the volatile food and energy components. In addition to being seasonally volatile, the two comprise a significant portion of US goods. As a result, any sudden disruption in oil or food supplies will significantly distort the Producer Price Index inflation assessment. By excluding such entities, Core PPI is able to provide a truer, more consistent picture of US inflation trends. Relevance: Moderate market impact Release schedule : 12:30 (GMT); monthly, 2 weeks after the reporting month Revision schedule: one monthly revision after four months, annual revisions every February Source of report : Bureau of Labor statistics, Department of Labor Web Address : www.bls.gov Address of release : http://www.bls.gov/ppi/ Employment - (Non Farm Payrolls and Unemployment Rate) United States One of the most widely anticipated reports on the US economic calendar, the Employment Situation is a timely report that gives a picture of job creation, loss, wages and working hours in the United States. Data in the report relies on the Household Survey and the Establishment (or Payroll) Survey. While the Household Survey is based on the interviews to US households, the Establishment Survey
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Page 5 and 6: Measures job creation or loss in ma
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Page 9 and 10: Advance Retail Sales - United State
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Page 19 and 20: or consumer confidence is low. Conv
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PCE Deflator, (Personal Consumption Expenditure ... - Morningbull

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