Gold tops $4,500, Japan stabilizes, U.S. data in focus— what’s moving markets
While strength in the dollar is currently helping to keep down imported inflation, evident in the import and export prices report where import prices fell a very sizable 1.0 percent for the first decline since October, but negative net export prices will continue to weigh on the economy.
On a year-over-year basis import prices are down -0.28% and is the first negative read since October of 2009. Import prices have remained in a negative trend since their peak in July of 2011. That peak was just before the recessionary pull caused by the last Eurozone crisis and debt ceiling debate. Likewise, export prices also printed their first negative annual read at -0.15%. Similarly export prices have remained in a negative trend since their last peak in June of 2011.
While the report shows that inflationary pressures are not currently a problem, it is the deflationary pressures on the economy that are. Negative net export prices (Exports minus Imports) are in a clear downtrend and at levels that are normally associated with recessionary drags on the economy. The economy was able to withstand the drag from before the last recession due to the consumption boom driven by the housing bubble. Since the last recession the economy has limped along on life support from the Fed as the deflationary pressures strangle the average American.
There is little upward pressure currently on reported inflation which we will see in reports on PPI and CPI later this week. This gives Bernanke some wiggle room for another stimulative program later this summer to support an economy that is likely to show further signs of deterioration over the next couple of months.
On a year-over-year basis import prices are down -0.28% and is the first negative read since October of 2009. Import prices have remained in a negative trend since their peak in July of 2011. That peak was just before the recessionary pull caused by the last Eurozone crisis and debt ceiling debate. Likewise, export prices also printed their first negative annual read at -0.15%. Similarly export prices have remained in a negative trend since their last peak in June of 2011.
While the report shows that inflationary pressures are not currently a problem, it is the deflationary pressures on the economy that are. Negative net export prices (Exports minus Imports) are in a clear downtrend and at levels that are normally associated with recessionary drags on the economy. The economy was able to withstand the drag from before the last recession due to the consumption boom driven by the housing bubble. Since the last recession the economy has limped along on life support from the Fed as the deflationary pressures strangle the average American.
There is little upward pressure currently on reported inflation which we will see in reports on PPI and CPI later this week. This gives Bernanke some wiggle room for another stimulative program later this summer to support an economy that is likely to show further signs of deterioration over the next couple of months.