A week in which we saw a ninth grader arrested for his mad time tinkering technique, the “Most Trusted Name in News” misidentifying Mrs. Nancy Reagan and the White House in a latte lockdown was as comical as it was economically disappointing.
The U.S. Census Bureau reported on Tuesday that August Retail Sales were up 0.2 percent over July’s upwardly revised 0.7 percent increase. Excluding auto and gas, sales were up 0.3 percent. Restaurant sales, alone, were up 0.7 percent. As we predicted in the August 23rd #Money Conscious Mash Up, gas prices fell 1.8 percent. So we switched feeding our cars for feeding our faces.
Contrary to future components in other indexes, Retail Sales suggest consumer confidence. With 32 million American already Christmas shopping, the only contradiction bigger than consumer sentiment versus consumer action is a vegan who sells leather shoes. A vegan’s gotta eat.
Then on Tuesday, the Federal Reserve’s August Industrial Production Index was down 0.4 percent after July’s 0.9 percent increase. The Census Bureau, also, reported that July Business Inventories, the next stop after production for goods, were up slightly. Hopefully it won’t take 32 years for these two to make up, as our tenuous economic can’t take it.
The Department of Labor’s August Consumer Price Index (CPI), released on Wednesday, must’ve kicked off the two-day FOMC party with a round of keg stands, as it showed consumer prices in general, decreased 0.1 percent after July’s 0.1 percent increase. Ever in search of a reason to not raise rates, the Fed received its coup de gras. “Go Yellen! Go Yellen,” yelled all the banks in the world.
The main drag on CPI was the 4.1 percent drop in gas prices, which is good for consumers. Bad for consumers was the 0.2 percent increase in food prices. In a move that makes the Seattle Lamborghini puncher seem eggspecially prescient, eggs prices increased 7.7 percent. Overall, egg prices are up 35.3 percent year-over-year, due to the effects of avian flu from earlier in the year. No Egg may help you save your dough until eggs go easy.
We continue to stress the need to save and invest, with an overweight towards investing. Because corporations, especially banks, don’t want increased rates, the Fed won’t likely raise rates anytime soon. That being the case, we suggest considering reducing exposure to cash and cash equivalents. However, while credit is cheap, pay off credit. When rates do increase, credit will be expensive and you’ll have missed an opportunity.
That’s this week’s Money Conscious Mash Up, which comes to you live from 32,000 feet in the air on our way to FinCon15. Catch up on all our FinCon15 fun here. If you enjoy this economic review, please like and share it to spread the enjoyment.