Today's Scoop:

Optimistic🌤️

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Here’s what you need to know today…

Big Picture

  1. Americans haven’t cut back on overall spending yet.

  2. Businesses are struggling with higher gas prices.

  3. Layoff rates are still very low.

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The Market: ⬆️+0.8%

S&P 500: 4,505.10
1Mo: +2% | 1Yr: +16% | 5Yr: +54%

The market drifted higher today as economic data pointed to an economy doing pretty well without creating too much inflation. Investors also liked seeing a positive reaction to a new big tech company going public.

Americans kept spending in August despite rising costs and shrinking savings. The Commerce Department reported retail sales rose by 0.6%, almost three times more than economists expected. Higher gas prices and spending at the pump raised the overall spending figure, but consumers also increased spending on cars, clothes, electronics, and events.

Businesses are still battling inflation, but rising fuel costs is the biggest issue. The Labor Department reported a 0.7% surge in the producer price index in August, the most significant monthly jump in over a year. [🤓] A 20% surge in gas prices accounted for 60% of the higher expenses, but transportation and machinery costs also ate into businesses’ profits.

Layoff rates are still very low. The Labor Department reported initial unemployment claims inched higher for the first time in over a month last week to 220,000. That’s still in line with pre-pandemic levels. Unemployment is historically low, and there are still more than 1.5 available jobs for every unemployed person.

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 Inside Scoop 🤓

What is the Producer Price Index (PPI)?

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).

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