- Today's Scoop:
Hey friend - here’s what you need to know today…
Shoppers cut back in October.
Businesses got a break from inflation last month.
US-China relations improved today.
The Market: ⬆️ +0.2%
S&P 500: 4,502.88
1Mo: +31% | 1Yr: +14% | 5Yr: +65%
The market maintained positivity today following more optimistic inflation news. Prices for business supplies surprisingly fell in October, in line with yesterday's news of slowing consumer price inflation.
Americans have cut back their spending since the summer. According to the Commerce Department, US retail sales fell 0.1% in October after a 0.9% increase in September. Shoppers purchased fewer cars and made fewer trips to retail stores. This was the first time Americans spent less than the month before since March. Less consumer spending, slower hiring, and falling inflation are critical symptoms of a weakening economy.
Costs for businesses are starting to come down. The Labor Department reported a surprising 0.5% drop in the producer price index in October, the most significant month-to-month decline in over three years. [🤓] A 15% dip in gas prices accounted for 80% of the lower expenses. Falling business costs could mean lower price tags ahead for consumers.
US-China relations are looking up. President Biden and Chinese leader Xi Jinping met today near San Francisco, the first diplomatic relations between the two nations since the US shot down a Chinese surveillance balloon in February. Economic issues are a crucial subject, with the Chinese side eager to start talks spanning various sectors, such as artificial intelligence, the continued purchase of American aircraft, and cancer research. American officials are interested in ensuring Pacific trade routes remain open and not stifled by Chinese military presence.
How are you feeling about the economy?
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What is the Producer Price Index (PPI), and why should I care?
The Producer Price Index (PPI) is another important indicator for economists tracking inflation. Inflation is the rate at which things get more expensive.
Unlike the Consumer Price Index (CPI), which looks at a set basket of stuff your average consumer spends money on and tracks how much it costs each month, the PPI tracks the prices of wholesale goods - like how much Ford pays for the tires it installs in its cars before selling them to you. The rate of change in those prices is inflation.
Prices rarely decline. Inflation, aka rising prices, is only a problem when it's really fast (3%+ per year).