PPI -Where is it?
John Succo
The U.S. Bureau of Labor failed to release the PPI in February and there are rumors that they will not release it in March either. They claim problems in calculations, specifically in classifying certain items.
The government has been putting out these numbers for how many years? All of a sudden, are we to believe that there is some strange difficulty in reporting this very important number?
Given the seriousness of this situation and without any credible reason given for the missed release, we are forced into logical deduction. One explanation is that the number might show a problem in the inflation of commodity prices, a problem that we all “feel” is real, despite the mangled CPI numbers reported (we have commented many times that when these numbers are looked at closely, they don’t reflect reality).
We do know that the PPI data is more straightforward and observable and, therefore, may be harder to manipulate than the CPI. Maybe that is why the government will not and cannot release it, at least in its current form. Perhaps a problem in calculation means that an “adjustment” would require changing the entire time series going back years to make it plausible.
A high PPI number, in conjunction with the passive CPI numbers that have been released, would be very bad indeed for the government’s bullish economic case. It would indicate a very rare instance where companies are having difficulty passing through higher costs of production to customers. This is called stagflation.
Where are all the bond vigilantes, the financial media, and just plain old people like you and me that should be up in arms, demanding the release of a number?
Let us just see the numbers and let us make our own decisions. That is what our government is supposed to do. |
