Inflation holds firm
Prices rose 0.2 percent on the month and 2.7 percent over the past year, according to the BLS, in line with June levels.
But core inflation — which strips out volatile food and energy prices — came in at 0.3 percent higher over the past month and rose 3.1 percent over the past year.
The July CPI report was largely in line with the expectations of economists, who projected a 0.2 percent monthly increase in prices and an annual inflation rate of 2.7 percent, according to consensus estimates.
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Yahoo
5 hours ago
- Yahoo
PPI Jumps in July, Underscoring Growing Costs for US Manufacturers—And Likely Future Price Hikes for Consumers
Trickle-down economics may indeed be in effect—just not in the way Ronald Reagan envisioned. The Bureau of Labor Statistics (BLS) released its Producer Price Index (PPI) on Thursday, revealing an unexpected 0.9 percent surge in July compared to the previous month. It was the biggest monthly increase since 2022, and well above the projected growth of 0.3 percent. More from Sourcing Journal Port of LA Handles Record Volumes, but Imports 'May Have Just Peaked' Air Cargo Capacity 'Correction' in Play as Tariff Deadlines Come and Go Here's Why Consumers Keep Spending Despite Tariffs July's increase pushed annual index growth to 3.3 percent, the most significant 12-month bump since the 3.4 percent announced in February. What does it all mean? Well, compared to Consumer Price Index (CPI) data released Wednesday, the price index for the American manufacturing sector is up—way up. CPI data showed that inflation accelerated for shoppers from June to July at a rate of 0.2 percent, and an annualized rate of 2.7 percent. While consumers have indeed clocked higher prices at retail, inflation was cooler than analysts and economists expected. The divergence between the CPI and the PPI suggests that until very recently, companies were largely eating the cost of President Donald Trump's tariffs rather than passing them along to their clients. That may not be true for much longer. 'Tariff-exposed goods are rising at a rapid clip, indicating that the willingness and ability of businesses to absorb tariff costs may be waning,' Oxford Economics analysts wrote in a research note on Thursday, referencing the PPI. 'We anticipate broader signs of tariff-driven inflation in the data over time as inventories roll over and firms adjust pricing under margin pressure.' With the president's 'reciprocal' tariffs kicking in last week and producers feeling squeezed by higher import costs, American consumers may be in for much steeper prices in the months to come. 'As of now, we have absorbed the costs of the increased tariffs. We know this is not sustainable. We will be having a price increase soon to offset increase costs for trimmings, cloth, tariffs and labor,' Alexa Roberti, director of sales for Rochester, N.Y. custom suiting and apparel company Adrian Jules, told Sourcing Journal. Adrian Jules brings in much of its fabrics and inputs from countries throughout Europe and Asia—now, all subject to double-digit duty increases. But there aren't many onshore options to turn to. 'In the '70s much of the U.S.A. textile industry was offshored to keep labor costs down,' Roberti said. 'Consequentially, the internal trimmings and exterior cloth was also made outside the U.S.A.,' and importing that arsenal of inputs is essential to business continuity. Adding insult the injury of added tariff costs, some of Adrian Jules' overseas suppliers began notifying the company this spring that the duties would make doing business cost-prohibitive—even suggesting that the factory source from other countries and producers with a lower tariff burden. 'They were looking out for our best interests, but where are we to go?' Roberti said. 'Tariffs have been increased to most of our trading partners; changing suppliers would just mean we would pay tariffs to a different country.' The firm, which sells private-label goods to New York City brick-and-mortars and runs its own custom suiting shops, is clinging to the upsides of the turmoil of the past eight months. 'There is a positive to this. We are seeing an increase in the demand for Made in U.S.A. garments. We just completed a strong Q2, and we are bullish on Q3,' Roberti said. 'I am hopeful that once all the dust has settled, American manufacturing has a resurgence, and the U.S.A. is in a stronger, more prosperous position for citizens and businesses.' Newark, N.J. manufacturer Unionwear, which crafts hats, bags, promotional products and military gear, is also contending with higher costs—and working hard not to shift the sting of bloated prices to its customers. 'We are definitely absorbing tariffs,' owner and president Mitch Cahn said. Part of the struggle stems from the changeability of tariff rates, revised or threatened on a near-weekly basis by the White House. Within the company's business-to-business arm, 'We are selling goods before we order them, but the tariffs are changing after we have received an order but before we are shipping,' Cahn said, illuminating the complexity of setting prices. 'We are hedging a little bit and making sure we have alternative sources, but there really is no other way to do this.' According to Cahn, the firm buys some of its fabric from India, which is slated to be hit with another round of 25 percent tariffs later this month, bringing the total reciprocal duty rate to a staggering 50 percent. 'We are planning to absorb the cost increases if necessary, but most likely we will shift purchasing to Pakistan,' he said. Down the road elsewhere in Newark, Mitch Gambert, CEO and owner of Gambert Shirtmakers, is fretting over the future of his business due to the upheaval caused by the administration's ever-evolving trade policy. 'It's become borderline unmanageable,' he said. 'It's been literally eight months of utter confusion.' The custom and wholesale shirting supplier hasn't been able to raise prices despite crippling increases to overhead costs (due predominantly to tariffs), along with compounding logistical challenges. 'The way that we work with our retail partners is that they set their [prices] for the season at the beginning of every season. So to go in and change pricing on them…it's a real disruption to the flow of business,' he said. Gambert is also ambivalent about raising prices when consumer confidence is in the doldrums. 'I'm afraid that when the prices do go up, that people are going to be so sticker shocked that it's just going to have an even deeper impact on sales,' he said, noting that Gambert Shirtmakers' sales ledger is 'hovering at 30 percent less than where we should be' at this time of year. That doesn't bode well for fall or holiday, traditionally the manufacturer's boom time. Gambert has even had to reduce working hours due to the slowdown—a concession he's making in order to avoid layoffs within his 90-worker facility. 'I have not had any surging American production because of tariffs, none whatsoever,' he said. That's because of a simple truth that thus far, the administration has neglected to acknowledge. 'It would be different if raw material prices weren't going up—then I could be more competitive with Asia,' he said. 'But with raw material prices going up, my prices are just going up in perfect sequence with the Asian prices. There's no competitive advantage for me.' With steep new tariffs on trade partners across the globe compounding existing duties, something's got to give, he said. Even countries subject to the 10 percent universal baseline tariff could still see prohibitively high rates on certain types of products. Gambert Shirtmakers imports much of its woven cotton for shirting from Europe, and the company pays a variegated rate between 18 percent and 19 percent depending on the characteristics of the fabric. Those same products will see added duties of 15 percent under the new tariff regime. 'We're also getting hit with the increases on our button supply,' which comes from China, he said. The manufacturer brought in a 'huge shipment' of product before the tariffs took effect, but charged its customers, like Gambert Shirtmakers, for the added cost of transportation and warehousing in the U.S. 'It forced me to put out a lot of cash up front to beat these tariffs before they hit, which absolutely kills cash flow. I mean, it's like a death kiss,' he added. It's not just new costs that have thrown a wrench into the company's value chain. Longtime mill partners in Europe that once offered low MOQs and flexible terms are seeking out safer bets, opting for bigger sales to prominent players with more robust cash flow. 'I might do, let's say, $400,000 of business with one mill in the course of a year. But now you have the big brands who are doing $2.5 million of business with the same mill. Who's going to take priority?' he said. Gambert is also facing a complex problem that many U.S. makers are contending with: their place in the market. At $280 or $350 a pop, the firm's custom shirts are a carefully considered purchase, not an impulse buy. 'For a lot of people who purchase my products, when they look at a gallon of milk at $11 and a full tank of gas at $90, those things are going to take precedence in their life,' he said. For that reason, raising prices—however necessary—is a highly unpalatable prospect. It's not just East Coast manufacturers feeling the burn. Across the country in Los Angeles, Lalaland owner Alex Zar is taking creative license to his business model in a bid to mitigate costs. The founder of L.A.'s largest leather goods factory said he's seen increased demand for local production in recent months as the Trump trade agenda has taken hold. 'However, it's a double-edged sword—tariffs are impacting all our material imports, which in turn is driving up the cost of finished products,' he said. The full-service manufacturer is pulling all the levers to make up for cost increases. 'We are working closely with our clients to design products so that materials make up the largest portion of the finished product cost, while labor is minimized,' he said. 'This helps absorb some of the increased costs from imported materials by reducing the labor share.' In L.A., minimum wage is $17.87—far higher than most of country. Zar is uniquely positioned, having invested heavily in cutting-edge production technology and dabbling in automated processes that reduce the need for a high factory headcount. The aim is to ensure that final product costs are aligned with overseas production—an objective the designer, merchandiser and factory collaborate to achieve during product development, he said. But it's not easy, especially when domestic capacity for manufacturing of footwear and handbags is so limited. 'Many factories have shut down as production shifted overseas, which limits available resources for local manufacturing,' he said—ergo, the need to rely on foreign partners for the parts and pieces that make up his creations. Another L.A. native and owner of Lefty Production Co., Marta Miller, co-signed the observation that raw material costs have risen 'across the board' since the onset of the trade wars. 'Fabrics, trims, and certain imported components are all more expensive now, and machinery pricing is also increasing,' she said, attributing the increases to new duties and other supply chain constraints. 'China is by far the most impactful when it comes to tariffs,' Miller, who also owns Austin-based manufacturing body Stitch Texas, said. 'Many of the fabrics, trims, and certain categories of apparel we source have traditionally come from China, and the duties there have had a significant impact on landed costs,' she added, noting that sourcing from Vietnam and India has also been challenging. 'I have tried to avoid raising prices dramatically for my clients,' the factory owner said. 'My goal is to manage these cost increases in a way that softens the impact on their businesses, so they can continue to grow. That said, modest adjustments have been necessary in some cases, and I would expect to see some additional increases if tariffs and input costs remain high.' Despite the intricacies of maintaining a balance sheet with ever-shifting line items, Miller maintains that tariffs have, on the whole, given her a leg up. 'Clients who previously defaulted to overseas production are now giving serious consideration to producing here at home, and I am leaning into that opportunity,' she said. Emphasizing speed-to-market, lower shipping costs and better quality control has indeed driven new business to California and Texas over the past eight months, Miller added. 'The increased cost of overseas production for certain categories has encouraged some brands to explore domestic manufacturing for the first time. We've seen new clients coming to Lefty Production Co. and Stitch Texas specifically because the tariff environment has tipped the scale toward U.S. production,' she explained. 'It's an unexpected win that's helping offset some of the challenges.'
Politico
10 hours ago
- Politico
The unsettled future of the BLS monthly job reports
DATA DUMP — Earlier this week, E.J. Antoni, President Donald Trump's new pick to run the Bureau of Labor Statistics, set off alarm bells by hinting that he'd suspend monthly reports on job numbers. The markets, economists and those who rely on BLS data viewed it as another unsettling development that began with the president's firing of the BLS commissioner — a move that came in response to the president's anger over the bureau's downward revision of the May and June jobs numbers. The immediate outcry, from both sides of the political spectrum, was enough for Antoni and the Trump administration to backpedal immediately and offer assurances that the key economic figures would still be released monthly. 'I believe that is the plan, and that's the hope, and that these monthly reports will be data that the American people can trust,' White House Press Secretary Karoline Leavitt said on Tuesday. That semi-concession, however, has been made without any of the core issues resolved. The Trump administration still distrusts the BLS data and methodology because of its revision process, despite the many economists who confirm that it is a necessary and normal practice. Many MAGA supporters continue to view the revision process as proof of 'data manipulation.' In any case, there have been no follow-up announcements about alternative methods or improvements to collecting the job numbers, leaving a big question mark regarding the future of the monthly jobs report. As the administration weighs its options and reconsiders the BLS methodology and data, economists say it's critical that they understand the necessity of fast and frequent reports. The economy can move quickly — as can be seen in the dramatic market changes during the pandemic and the Great Recession — which is why BLS has always released early estimates, even if they're imperfect. 'There's a trade-off between perfect accuracy and getting the numbers quickly when they're relevant,' said Jessica Riedl, a conservative economist at the Manhattan Institute. Without the monthly job numbers, governments and markets will be flying blind on the state of the economy: You can expect a drop off in business investment as companies become weary of investing aggressively in an unsure economy — a phenomenon that may be seen through slowing economic growth figures, Riedl said. Then, there's also an equally concerning alternative, where businesses expand during a time they shouldn't because they're making their decision off on dated data, according to Guy Berger, an economist who leads economic research at the Burning Glass Institute, a non-profit that does labor market research and analysis. 'Both of these can exist at the same time for different people, and that's a risk,' Berger said. 'It's like you're driving and the windshield is clouded.' There's also the issue of the persisting 'vibecession' narrative, where people believe that the economy is worse than it actually is. In the past, the job numbers report has been used as concrete data to refute the negative vibes surrounding the economy. By eliminating those figures, we may inch toward a reality in which people's feelings are the only source of data, said Berger. That could be bad news for the Trump administration, which would have to continue to battle the recession narrative, and could ultimately lead to consumers hunkering down because there isn't enough solid data to disprove their pessimistic attitude toward the economy. If the Trump administration's tinkering with jobs numbers affects the quality of the data — or even renders the report useless — expect businesses and government organizations to scramble for more information from the private sector: ADP publishes a monthly national employment report; LinkedIn posts hiring rates; Indeed uploads job postings; The Conference Board surveys people's confidence in the economy. These figures, however, ultimately cannot replace the scope and rigor of the current BLS data. 'They're a complement, not a substitute,' Berger said. Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@ Or contact tonight's author at ckim@ or on X (formerly known as Twitter) at @ck_525. What'd I Miss? — Trump rolls out red carpet to welcome Putin to Alaska: President Donald Trump welcomed Russian President Vladimir Putin to Alaska with a red carpet on the tarmac military flyover, friendly handshakes and a short ride in his presidential limousine. It was a striking welcome for a leader who has been a global pariah since his 2022 invasion of Ukraine — and one who Trump has been increasingly frustrated with in recent months because of his resistance to Trump's peacemaking efforts. The initial image of a smiling Putin riding off in Trump's limousine could raise fears in Ukraine and Europe, where leaders have urged Trump to hold a firm line with the Russian leader, who many suspect is aiming to buy time by repairing his relationship with Trump but not willing to end the war. The private meeting without aides in the back of the limousine played out shortly after the White House announced that the two leaders would not be sitting down alone, but with a couple of their top aides. — DC sues over Trump administration's attempted takeover of city police: Washington officials are suing the Trump administration over what they call a 'baseless power grab' after the Department of Justice ordered a new 'emergency' head of District police. 'By illegally declaring a takeover of MPD, the Administration is abusing its temporary, limited authority under the law,' DC Attorney General Brian Schwalb wrote in an X post today. 'This is the gravest threat to Home Rule DC has ever faced, and we are fighting to stop it.' The lawsuit, filed in federal court, warns that the attempted takeover could 'wreak operational havoc' on the Metropolitan Police Department because of the confusion about who has operational control. — Texas governor immediately calls second special session for redistricting: Texas Gov. Greg Abbott immediately called another special session to pass a new congressional map after the first attempt failed due to Texas Democrats leaving the state to deny Republicans the ability to carve out additional GOP seats. Abbott's proclamation was largely the same as the first one, which lays out 19 agenda items, including redistricting and disaster relief for Central Texas flood victims. 'Delinquent House Democrats ran away from their responsibility to pass crucial legislation to benefit the lives of Texans,' the Republican governor said in a statement. 'We will not back down from this fight. That's why I am calling them back today to finish the job.' — Federal judge declares Education Department's attempt to bar diversity programs unlawful: A federal judge in Maryland struck down the Trump administration's attempts to have the country's school systems comply with a conservative interpretation of federal anti-discrimination law. Thursday's 76-page ruling from Stephanie Gallagher, a Trump appointee, vacates both a Feb. 14 Education Department letter that asserts that federal law prohibits schools from using race in decisions pertaining to all aspects of education — and an ensuing agency demand for schools to certify they would comply with the administration's views. — Appeals court clears way for deep cuts, restructuring at CFPB: A federal appeals court panel has cleared the way for the Trump administration to largely dismantle the work of the Consumer Financial Protection Bureau, lifting a lower-court judge's injunction that had preserved the agency's structure — and barred mass layoffs — for months. The 2-1 ruling, authored by Judge Gregory Katsas, said a series of legal defects in the lawsuit brought by CFPB employees and the NAACP doomed the case and required the district court judge's blockade to be lifted. AROUND THE WORLD HIGH STAKES — Ukrainian President Volodymyr Zelenskyy said his country 'is counting on America,' hours before U.S. President Donald Trump and Russian President Vladimir Putin are set to meet in Alaska. 'Indeed, high stakes,' said Zelenskyy in a post on X, echoing an earlier post by Trump, who wrote 'HIGH STAKES!!!' on his Truth Social account before departing for the Joint Base Elmendorf-Richardson in Alaska. 'It is time to end the war, and the necessary steps must be taken by Russia. We are counting on America. We are ready, as always, to work as productively as possible,' Zelenskyy wrote. UN, GERMANY WARNS ISRAEL — The U.N. and Germany said a plan by the Israeli government to approve around 3,400 settlement housing units in the West Bank would breach international law. Israel's far-right Finance Minister Bezalel Smotrich presented the plan — which would effectively cut off the West Bank from East Jerusalem — earlier this week, saying it 'definitively buries the idea of a Palestinian state, simply because there is nothing to recognize and no one to recognize.' The United Nations human rights office said today the plan would break the West Bank into isolated enclaves which would be illegal under international law. A spokesperson told Reuters it was 'a war crime for an occupying power to transfer its own civilian population into the territory it occupies.' TURKISH CRACKDOWN — Turkish authorities detained an Istanbul district mayor and about 40 other officials today in what appears to be an escalation of the government's crackdown on the country's opposition. İnan Güney, the mayor of Istanbul's Beyoğlu district, was taken into custody as part of an investigation into alleged corruption, the state-run Anadolu Agency reported. Several of his close aides, including his bodyguard and some of his advisers, were also detained, according to local media reports. Güney is a member of Turkey's main opposition party, the secular Republican People's Party (CHP). His arrest comes five months after the CHP's Ekrem İmamoğlu, the popular opposition mayor of Istanbul, was jailed over corruption allegations. İmamoğlu is the main political rival of Turkish President Recep Tayyip Erdoğan and has been nominated as the CHP's candidate for the country's 2028 presidential election. He denies wrongdoing and says his jailing is politically motivated. His opposition party has steadily risen in popularity, performing well in regional elections last year, winning a fiercely fought mayoral election in Istanbul in part by turning districts traditionally held by Erdoğan's ruling Islamist party. Nightly Number RADAR SWEEP A CURATOR'S ODYSSEY — Behind every item displayed in a museum is the story of how it was acquired. Katherine Jentleson, a curator at the High Museum of Art in Atlanta, has crossed the country and traveled to remote and dodgy corners of the U.S. in search of great art. When she heard that a man in Palm Springs had a collection of quilts and other works made by beloved Atlanta artist Nellie Mae Rowe, she knew she had to acquire them for the museum. But this acquisition involved more than the typical contract negotiation, shipping coordination and museum board approval. She also had to convince the collector to let go. Jentleson writes about her yearslong journey to collect Rowe's works for The Bitter Southerner. Parting Image Jacqueline Munis contributed to this newsletter. Did someone forward this email to you? Sign up here.
Yahoo
11 hours ago
- Yahoo
The 'one' reason this strategist is nervous about the economy
Simplify Asset Management chief strategist Michael Green joins Market Domination Overtime with Josh Lipton to discuss recent economic data and the markets reaction. To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime. What would you say, um, you learned this week, Michael? What were your big lessons, your big takeaways? Well, to me, the most interesting part of the week was the fact that we sold off on the, um, CPI or the, I'm sorry, that we rallied on the CPI beat, and then we sold off on the PPI miss very briefly. The irony between those two is that the CPI outperformance was perceived as relatively positive for rate cuts. And then, of course, the PPI miss was very heavily tied into a particular segment of the, of the economy. It was tied to what's called, um, tradeable services in particular portfolio management services. As a portfolio manager, I can assure you I did not raise my prices this week or this past month. What actually did happen is that that index is basically just a proxy for the S&P 500. So the great irony of this past week was we beat on CPI. That causes the, the S&P to rise. The S&P rising causes PPI to miss, which causes momentary distress. That was a fun learning this week. It felt like, Michael, the markets looked at those prints, CPI and PPI, and said, listen, they looked it over and said, there's nothing in these reports that derail the Fed from giving us that cut we expect in September. Is that what you saw? Well, we certainly saw that with the CPI. We saw that pricing back off a little bit with the PPI miss, in particular, as I mentioned the areas and services, etc. Those are areas that are going to pass through to CPI and PCE in the next month. Um, that actually lowers the prospect that we're going to get that giant rate cut, the 50 basis point cut that I think a lot of people had tried to price in. Um, we've already heard, um, Fed, you know, Fed presidents and governors come out and speak and say, we're a little less favorable. Maybe we're going to be a little bit more cautious after the PPI print. I've had some economists on the show, Michael. Let's get your take on this. Who say, listen, stop being so worried about the inflation boogie man. Inflation is going to come, and then it's going to, it's going to, it's going to come, and then it's going to ease. It's going to be transitory. It's not going to be persistent. Stop worrying. What do you make that argument? So I generally fall in that camp, and I, I guess I'm one of the economists that you have on TV that say that sort of thing. But the, the, the simple reality is that the underlying forces in the global economy are actually quite deflationary, not inflationary. Slowing population growth, slowing labor force growth, this means all else equal that we need to make less investments to maintain the capital labor ratio, which is used for productivity gains. All else equal, this suggests that there's less pressure than people want. A year ago, all we heard about is the shortage in housing. Now we're hearing about rising inventories and supplies. Um, we have a very, very bifurcated economy right now. And the one thing that I would say that caught my attention and makes me a little bit nervous is in the inflation reports what we saw is a rapid acceleration and how much the government is paying for things. One of the views on inflation that I happen to subscribe to is ultimately, if the government decides to pay more for stuff, the rest of us are going to have to pay more for stuff. And so I'm a little cautious that we could see a pickup in inflation that's a little bit more durable, but we're just going to have to see how that plays out. Overall, I think we have to be very, very cognizant that slow growth is not particularly inflationary. Related Videos How markets could have a 'déjà vu' moment with Sept. rate cut Trump–Putin meeting, retail sales, consumer data: What to Watch How some retail investors view crypto now Intel stock jumps on report Trump admin. is considering stake Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
