Wholesale index down, consumer spending down

It would seem that fears about rising energy costs are not affecting the Wholesale Price Index.

Wholesale prices fell by the largest amount in more than two years in May, helping to ease concerns that a big spike in energy costs earlier in the year might spell inflation troubles.
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The Labor Department reported Tuesday that wholesale prices fell by 0.6 percent last month with three-fourths of the drop attributed to falling energy prices. Foods costs also fell during the month, thanks to a big drop in vegetable prices.

Outside food and energy, so-called core inflation was contained as well, edging up just 0.1 percent, compared to a 0.3 percent increase in April.

However there was a drop in consumer spending.

Meanwhile, May retail sales tumbled by the largest amount in nine months, a decline that was blamed on unusually cool weather during the month and not seen as evidence that consumer spending, the engine that drives the economy, was threatening to sputter out.
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The Commerce Department said that retail sales dropped 0.5 percent, the first decline since August, and the biggest drop since a similar 0.5 percent decrease in June of last year.

Analysts noted that the decline, which was bigger than the 0.2 percent drop that had been expected, followed a sizable 1.5 percent increase in April.

"After having emptied their wallets in April, consumers took a bit of a vacation in May and retailers felt the pain," said Joel Naroff, chief economist at Naroff Economic Advisors.

Cool weather dampened sales of summer clothes, but with temperatures heating up, many economists predicted a rebound in June. They also said the trend for consumer spending, which accounts for two-thirds of total economic growth, was likely to remain strong as employment growth continues in the month ahead.

But it seems that the economy is on solid ground.

In further evidence that the economy is on solid footing, the 600,000-member National Federation of Independent Business reported Tuesday that its small business optimism index rose to 100.8 in May, a point higher than April with eight of the 10 components pointing to strength in the months ahead.

Federal Reserve Chairman Alan Greenspan, testifying to Congress last week, said the economy, despite being buffeted by a spike in energy prices earlier this year, seemed to be on "reasonably firm footing" with inflation remaining under control.

Greenspan's assessment has bolstered the belief that the Fed will boost interest rates for a ninth time when policy-makers meet at the end of this month. The Fed began a campaign of gradual quarter-point rate hikes a year ago in an effort to make sure the economic recovery did not generate unwanted inflation.

But, just like last week's unemployment drop, there is not a mention of this good news on CNN's home page or its Money section home page. (Remember that all the bad news about the economy was front page news even if it was distorted or speculation.) On CNN you actually have to dig around to get this good news.

The New York Times...nothing. I tried the business section, the front page (which has sports news and Michael Jackson news instead) and the National Section (which leads with Jack-O).

The Star Tribune...same thing: Nothing.

The USA Today (McNews): Headline is "Economy softens in May Inflation falls, but so do retail sales." Uh, you dummies, if the economy is softening while inflation falls then why is there an interest rate hike being considered?

Bias. And I still have to laugh at my debate coach, Eric Fuchs, who was the most objective person in the U of MN Speech Department. He chided me for holding the belief that there is an inherent liberal bias in the reporting within the Main Stream Media. He told me that I should read the New York Times for the most balanced reporting and drop the conspiracy theory of media bias. Eric, Ya still want to claim there's no liberal bias in the MSM?