Inflation Barely a Whisper; Homebuilders’ Optimism Status Quo; CBO Predicts Ballooning Public Debt
- Sep 18, 2013
The Bureau of Labor Statistics reported on Tuesday that the Consumer Price Index for All Urban Consumers edged up by 0.1 percent in August compared with July. Over the last 12 months, the index has risen 1.5 percent.
Price increases for shelter and medical care contributed to the monthly increase, however modest, in the all items index. Those two categories also accounted for most of the 0.1 percent monthly increase in the index for all items excluding food and energy. Prices for personal care, tobacco, and apparel rose as well, while prices for airline fares, household furnishings, and used cars and trucks dropped.
Over the last 12 months, the index for everything except food and energy rose 1.8 percent. The 12-month change has remained in the range of 1.6 percent to 2.3 percent since June 2011, pointing to persistent low inflation. Food prices have risen 1.4 percent over the last 12 months, a figure that has held steady since May, while energy prices have yo-yoed around but ended up declining 0.1 percent over the last 12 months in August.
Homebuilders Optimism Same as Last Month
The National Association of Home Builders reported on Tuesday that builder confidence in the market for newly built, single-family homes held unchanged in September with a reading of 58 that month. The halt came after four consecutive months of improvement, according to the organization, but it’s still above the optimism-pessimism threshold of 50.
The component indexes came in mixed. While current sales conditions held unchanged at 62, sales expectations in the next six months declined three points to 65. The component gauging traffic of prospective buyers increased one point, to 47.
“Following a solid run-up in builder confidence over the past year, we are seeing a pause in the momentum,” said NAHB chief economist David Crowe in a statement. He attributed the pause to consumers waiting “to see where interest rates settle and as the headwinds of tight credit, shrinking supplies of lots for development, and increasing labor costs continue.”
CBO Predicts Ballooning Public Debt
The Congressional Budget Office reported on Tuesday that the federal government needs to shave $2 trillion off its spending over the next 10 years to stabilize long-term public debt. If no action is taken, according to the CBO, U.S. public debt will be equal 100 percent of the nation’s GDP by 2038.
Wall Street continued its climb on Tuesday, though less robustly than Monday, with the Dow Jones Industrial Average gaining 34.95 points, or 0.23 percent. The S&P 500 was up 0.42 percent and the Nasdaq advanced 0.75 percent.