U.S. Producer Prices Dropped “Unexpectedly” in July…

The PPI is the Producer Price Index.  The CPI is the Consumer Price Index.  The PPI reflects the price product producers are getting for their goods and services.  The CPI reflects the price consumers are paying for their goods and services.  They generally run together as lower production prices usually mean lower consumer prices.

trump hard hatHere again today, the fed is perplexed.  With a growing economy, and with labor market tightening, the people who control the monetary policy have continued to anticipate inflation, rises in the PPI and CPI.  However, as we have outlined, it’s not happening.

It’s a little wonky, but basically prices are NOT going up.  The Fed is perplexed.  We predicted this:

[…] The Labor Department said its producer price index for final demand slipped 0.1 percent last month, weighed by decreasing costs for services. That was the largest decline since August 2016 and reversed June’s 0.1 percent gain.

In the 12 months through July, the PPI increased 1.9 percent after rising 2.0 percent in the year through June. Economists had forecast the PPI to tick up 0.1 percent last month and 2.2 percent from a year ago. (read more)

Neither the PPI nor the CPI measure changes in food or energy costs.  Those high consumption sectors have always been removed from Fed measures.

IMHO the fed removed these sectors, used to calculate inflation, specifically because decades ago they decided to make the U.S. economy a pro-Wall Street ‘service economy’ and didn’t want people to see the data from rising costs in food and fuel.

You felt it at the grocery store, but the government never recorded those higher prices in their inflation numbers. It is all part of the scheme.  –Outlined Here– This was the effect of allowing multinational corporations and multinational financial constructs to control large portions of American food, raw materials, and energy production.

However, President Trump’s economic policy runs directly counter to the historic (last 30 years) approach.  The middle-class economy, the real economy, is now uncoupled from federal monetary policy which was primarily designed to help Wall Street.  With the two economic engines detached you see puzzling economic outcomes like today’s report:

“Another twist of the screw tighter for this labor market but inflation is not able to gain a foothold in this economy,” said Chris Rupkey, chief economist at MUFG in New York. “The pot is on the stove boiling but no inflation steam is coming out.” (read more)



In 1984 a name brand polo shirt would cost around $45, a really good 26″ TV around $600 to $1,000, a decent couch $1500, and a pair of name brand sneakers around $100. However, eggs (.49), milk ($1.79 gal), and store bread (2 loaves for $1).

Electric bill $100, water bill $20, phone bill $50.

In 2016 an imported name brand polo costs around $20, a really good 42″ TV $300 to $400, a couch for $500 and a pair of sneakers $50 – All imported, all Asian, all about half of of what they cost in 1984.

However, eggs ($1.99), Milk ($4.00+), and store bread ($2+ each). All domestic products and all double or triple 1984. Electric bill $250, Water bill $100, phone bill $100+. Again domestic consumables, again double, triple or even more.

egg prices

We consume and spend more on domestic goods such as food, energy, fuel, than we do purchasing imported durable goods. As a consequence, depending on lifestyle, the net out-of-pocket is essentially the same to a little more.

However, the income opportunity, the jobs, the good paying jobs, well, those are gone because the durables are no longer part of the domestic production.

To keep the unemployed pitchforks at bay, government policy (now directed by Wall Street globalists and corporations) subsidize the income gap. Ergo EBT, WIC and food stamp assistance necessarily increasing.

The pitchforks are dropped, but economic independence turns to dependence. With government policy adjusted accordingly – deficits necessarily explode. Stopping those deficits would require an actual budget. There hasn’t been a federal budget since ’07…. “Omnibus”,… Sound familiar?

Yes, under Donald Trump’s proposal the cost of “durable” goods -at least those we import- will increase. Your iPhone might cost $800 instead of $600. However, the North Carolina apparel, clothing and furniture manufacturing market will have an opportunity to revitalize – and with it, jobs, people as the tailors and the custom wood furniture makers would have opportunity to thrive again with their creations.

There’s going to be a period of pain as U.S. manufacturing finds its footing and begins to restart. However, in the longer term, it’s a shift from “dependency” to “independence”.

Those who were fully matriculated independent adults prior to 1984 know exactly what needs to be done.

Freedom is dependent upon it.

This entry was posted in Donald Trump, Economy, energy, Legislation, media bias, NAFTA, President Trump, Uncategorized, US dept of agriculture, US Treasury, USA. Bookmark the permalink.

73 Responses to U.S. Producer Prices Dropped “Unexpectedly” in July…

  1. tytanshammer says:

    This loss of economic feudalism is the reason why those corporations are attacking Trump so furiously through their political counterparts.

    Liked by 21 people

  2. Sentinel says:

    Sundance – do you anticipate any problems with the Bond Market? I’ve heard it mentioned a few times as a potential point of pain in the various media that I consume.

    Thanks for another great article.

    Liked by 1 person

  3. Delilah says:

    Ah, this goes back to your argument about Main Street, not Wall Street changing the whole paradigm…..interesting…

    Liked by 3 people

  4. adoubledot says:

    Love it, love it, LOVE! IT!

    Liked by 3 people

  5. Delilah says:

    So is there anybody still alive that knows how to predict this kind of market? Watch all the prognosticators grow suddenly silent.

    Liked by 2 people

  6. AmericaFirst says:

    Eggs were .39 a dozen at Aldi a few months ago. Then again, I spent almost $16 yesterday at the Farmers’ Market for a basket of okra. !!!!!

    Liked by 2 people

    • Yep, just paid $0.37 for a dozen eggs at my local Aldi yesterday and a gallon of milk was about $1.39. Perhaps Main Street is reacting much faster than anticipated? #MoreWinning 😀

      Liked by 2 people

      • Janie M. says:

        illinoiswarrior, my Aldi (in IL also) has been charging $.86/gal. for the milk for the past months – limit 6; eggs in the $.49- $.60 range). I have noticed Aldi raises the price of some of their groceries (like butter) to offset their sales prices. Still, it’s the source for the bulk of my groceries. Since I’m on a tight budget, I watch sales like a hawk (have 4 stores email their weekly sales ads to me).

        Liked by 1 person

      • ej says:

        Maybe its to offset our stupid sugar tax.

        Liked by 1 person

      • Gil says:

        I cant go to aldis here. Homeless and drug abusers hang out in front and a lot of rotten food. But in CA because of all the different regulations prices are high. As in eggs at a traditional grocery store are $4.00 a dozen. Gallon of basic milk is $5.00.
        My son is a bad eater so the only thing I can reliably get in him is milk and its “cream top, small farm, grass fed, whole, organic ” at -are you ready- $5.99 for a half gallon. Otherwise his food cost isnt so bad, but he only will eat the whole grain/organic more expensive foods.

        My grocery bills are pretty high. I could cut more and have but my husband didnt care for the sacrifice in quality. Farmers markets are all organic, boutique-y, and really expensive.

        Liked by 2 people

        • Everything has a special rule in CA. It is so over regulated right now.

          Liked by 2 people

        • That’s too bad. I have found if you have a Kroger (or SafeWay) with a gas station, shopping there and earning fuel points can be a really good way to save money. Also, the cool thing about Kroger fuel points is that they work at all Shell gas stations too not just Kroger stations!

          I know what you mean, I have family in California and they are barely making it because it’s so expensive. Where I live the cost of living is easily a third of what they have to deal with and our wages are pretty comparable.


          • Gil says:

            Safeway used to be here but are vons now. Vons was bought out by Albertsons about 2 yrs ago. Only 1 gas station for points but very out of the way. Kroeger here is Ralphs. Ralphs has been shutting stores down and leaving a lot of our socal market. The Ralphs is VERY expensive but has a gas station. Believe me, there are lots of places to go. I play the game of buying at a few different stores regularly but just cant do simple 1 stop shopping. 😡

            Liked by 1 person

            • That’s rough. Yeah, back here Kroger tends to run higher in general so that doesn’t surprise me… though sometimes they have really good sales. We have about 6 different grocery chains and I usually stop at 2 or 3 of them to do all my grocery shopping. Always looking for the best deal! 🙂


    • Oldschool says:

      Our local “farmers market” exists due to government grants and subsidies. In addition, because prices are so high, EBT card holders get double their dollars, again susidized by the taxpayers. These “local farmer’s markets ” are a huge scam, at least in my area. I go directly to the farm.


      • Gil says:

        Ok. I have seen ebt atms and was wondering. I see the same vendors at most too. And one company managing several city touted farmers markets. Hmmm. Thanks for the light bulb. Indeed, go to the farm.


  7. Michael says:

    Without manufacturing we cannot defend ourselves. I wonder if this has factored into the calculations of those who would destroy the US of A? /s

    Liked by 7 people

  8. Ditch Mitch says:

    I notice the largest increases are in textbooks, tuition, childcare and medical. Guess the professors, schools (including daycare) and insurance companies have to make a living gouging the American people. Notice they are all regulated government monopolies.

    Liked by 11 people

    • sledhead406 says:

      This! Right away you can see that the more inflated the price, the more heavily regulated/subsidized the market (directly or indirectly ->textbooks and tuition for example)
      See: student loans taken over by govt and handed out to every person that makes eye contact.

      Childcare I would guess went up due to demand as a second income became necessary to cover costs of heathcare and all the others?

      The less the government intrusion into the market, the less in inflated cost. The only industries with anything resembling free market are those at the bottom of the chart with decreasing costs, software and tech are the best examples.

      Liked by 1 person

  9. FofBW says:

    I feel like a frog that was put in a pot of water a few decades ago, then the heat was applied slowly so I did not feel it until it was almost too late.

    Liked by 6 people

  10. fleporeblog says:

    I absolutely love it SD! These morons that are considered the gurus have no damn clue what is going on. The pot is boiling but the inflation steam isn’t coming out. Are you kidding me! That pot is ice cold ❄️ because our President is only concerned about Main Street!

    From the article linked above:

    U.S. producer prices unexpectedly fell in July, recording their biggest drop in nearly a year and pointing to a further moderation in inflation that could delay a Federal Reserve interest rate hike.

    Fed Chair Janet Yellen told lawmakers last month that “some special factors” were partly responsible for the low inflation readings. Inflation, which has remained below the U.S. central bank’s 2 percent target for five years, is being watched for clues on the timing of the next interest rate increase.

    Those special factors this moron Yellen spoke about was cell phone contracts. She sounded as dumb as the Chinese bragging about how they have leverage over us.

    Liked by 9 people

  11. Delilah says:

    This reminds me of the argument about how the farms are hurting so bad now that they’re not able to get slave labor from illegal aliens….

    No, no, no. It just means that there will now be opportunity for the mom-nbe -pops to take back farming and not squeezed out by the big conglomerates anymore. They were the real heart and soul of America that we need to recapture.

    Liked by 11 people

    • WeThePeople2016 says:

      OAN covered this story on the farms hurting because of Trump’s stand on illegal immigration this morning calling it fake news. They called out CNN and CBS for pushing a story that is a couple of years old and under the O Administration. They even called it Fake News.

      Liked by 8 people

      • AmericaFirst says:

        OANN is really a Godsend, it is positioned to continue the fight to present real news, but, as a fledgling station, it really needs ALL OF OUR SUPPORT. If we want there to be anything that is not CNN Very Fake News we can’t be oblivious to the market.

        Liked by 1 person

  12. DanDeplorable says:

    Classically when the stock market rose bond values dropped.
    No idea whether that still holds true today.

    Liked by 1 person

    • mimbler says:

      Although there are other factors, the stock and bond markets compete for investor money. If the stock market pays enough of a premium to make up for the increased risk, it takes money out of the bond market and lowers bond values, but increases bond yields to compete which lowers the existing bond values that have lower yields.

      At least that is how I understand it,


  13. CountryclassVulgarian says:

    The pompous little azzes are always wrong and always “perplexed” at reality. Those of us who actually work for a living and pay for our own food, clothing and fuel are not surprised when these things happened. Guess it does help taking a semester or ten at Main Street University instead of Harvard.

    Liked by 4 people

  14. ej says:

    My only “concern” is that Trump gets us on the right track quickly, but the next idiot who comes along 4/8 years from now, reverses it quickly. Is there any insight as to whether President Trump’s impact can / will be long lasting? I hope so.

    If this works, the election “fundamentals” will be so strong, it will be nearly impossible for him to no be re-elected, especially in the Rust Belt where this will have a significant impact.

    Liked by 1 person

    • fleporeblog says:

      Don’t be! Trumpism will reign for the next 50+ years!

      Folks I constantly share great stories about Generation Z! I have two great articles that will bring a tremendous smile to your face because the future of this country hasn’t looked this good in decades.


      From the article linked above:

      Members of “Generation Z” are now beginning to graduate high school, and 2016 was the first time any of them were old enough to vote. At seventy million and counting, they’re also about to outnumber their predecessors.

      So, what’s so intriguing about this new brood? Well, according to a growing body of research, they may be, by certain measures, the most conservative generation since World War II—more than Millennials, Generation Xers and even the Baby-Boomers.

      These young people are products of conflict and recession. They can only remember a news cycle “marred by economic stress, rising student debt … and war overseas.” As a result, they’ve taken on what one team of Goldman-Sachs analysts called a “more pragmatic” and conservative outlook on the world.

      Of course, generalizations at this stage are very early and very subject to development. But according to polling in the wake of the 2016 election, Gen Z Americans didn’t vote like their Millennial predecessors. Eight out of ten of these kids identify themselves as “fiscally conservative,” and they prefer saving to spending—at rates not seen since the Silent Generation.

      Also I shared the following (from the tweet below) with our President who had an opportunity this evening to speak to 40K+ boys that are part of Generation Z. They loved and adored him and he feed off of their energy.

      ERIE, Pa. — Max Bloomstine has a positive view of the nation’s growing diversity, believes the American dream is attainable (but doesn’t believe he’s entitled to it) and is more into the “we” instead of the “me.”

      “Gen Z actually like and trust their parents, who have been transparent with them, much more than any generation before”

      Generation Z is a product of 9/11, global terrorism, school shootings, perpetual wars, the Great Recession, high unemployment and constant budget cuts. Because of all that, they are cautious, even fearful, of an uncertain world and economy. Security and safety are very important to them, as they have grown up in such an unstable society.

      Generation Z is also more religious than preceding generations — attending organized weekly church services at about twice the rate of millennials, Generation Xers and baby boomers.

      The Republican Party, if it plays its cards right, could make lasting inroads with this generation, even at an early age — something the GOP has struggled with for decades.

      Had he been able to vote last November, Bloomstine definitely would have picked Donald Trump for president.

      “I was not old enough to vote for him, but I was very engaged and informed all throughout the election,” Bloomstine said. “I liked most his independence from the political parties and his willingness to challenge them when he felt they were not serving the American people.”


      Brauer explains that, from 2012 to 2016, Democratic candidates lost 5 percent of the youth vote nationally (down from 60 percent to 55 percent). In Florida, Democrats’ margin of victory among the young dropped 16 percentage points. In both Ohio and Pennsylvania, the drop was 19 points. In Wisconsin, 20 points.

      “It is unlikely that such significant drops were simply due to the more liberal millennial generation changing their minds from one election to the next,” said Brauer.

      “It is much more likely the precipitous drops were due to the more conservative Generation Z being able, for the first time, to express their political inclinations, especially in the economically hard-hit swing states.”

      Therefore, Generation Z possibly had a major, yet completely overlooked, impact in this historic election. “Generation Z voters were likely attracted to Trump because of his strong stances on national security and economic recovery — the main concerns of that generation,” said Brauer.

      Folks 2018 and 2020 will be a blood bath because many more of those 70 million Generation Z men and women will be voting and they will ABSOLUTELY be voting to MAGA!

      Liked by 8 people

  15. fleporeblog says:

    Barry’s SNAP recipients are being liberated by our President!


    From the article linked above:

    Food stamp enrollment went down over the past year in 46 out of 50 states, according to the latest U.S. Department of Agriculture (USDA) statistics on food stamp enrollment.

    Nationwide, food stamp enrollment has been on the downswing. Food stamp use in the U.S. fell to its lowest level in seven years, and 1.1 million Americans dropped off the food stamp rolls since President Trump took office.

    Liked by 7 people

  16. Niagara Frontier says:

    The relationship between food and energy prices has always puzzled me. When food prices are up, we are told it’s because of the high cost of energy for farmers and suppliers to produce the food, and for the truckers to deliver it. Yet, when energy prices plunge dramatically, there is rarely if ever a corresponding drop in food prices.

    Can they really have it both ways?

    Liked by 2 people

    • WonkoTheSane says:

      Yeah, that’s always left me scratching my head too. When gas was close to 4 bucks a gallon the food prices (and just about everything else) went up. Now the price of fuel has been at nearly half the cost for a couple of years, but no decrease in food prices–although it seems to be getting a little better in the last couple of months. It also doesn’t make sense that since oil prices have dropped that buying oil by the quart is still at the level it was when oil was over $100 a barrel.

      Liked by 4 people

      • mimbler says:

        I think there’s a lag in dropping the prices because they only do it because of competitive pressures.
        So we see the price rise nearly immediately due to energy costs, because that is in the farmer’s interest to do so.
        But when energy prices go down, they just collect more profit until fellow farmers drop their prices to capture market and they are forced to drop their own prices to compete.

        That’s how it appears to me, anyway,

        Liked by 1 person

    • sledhead406 says:

      Energy is a big part, and does affect the production aspect. The disconnect you noticed is consumer side only and can be explained by an industry bottleneck. I cant answer for other food segments but the beef industry is controlled by about 7 packers that control about 90%+ of the supply.

      Around 92 million cattle in the US beef production supply
      They are raised by about 700,000 commercial cattle ranchers (myself being one)
      Then (vast majority) sold to about 10,000 large feedlot operations,
      Who sell (vast majority) to the big 7 packers.

      The packers have control over price paid up the production string as well as the supply hitting the shelves. They control the commodity price via regulations, lobbying and supply management.

      For example, currently I am looking at selling market steer calves at about $1.50/lb. This is a little over half of what it was two years ago (bubble), and as you all may have noticed, the price paid in the store is most certainly not 50% of what it was then.

      From a producer’s standpoint the prices of energy and food commodities are almost always in close correlation. Unfortunately the consumer still pays an inflated price regardless due to the bottleneck that allows packers to buck the ebb and flow of commodity markets.

      Liked by 2 people

    • TPW says:

      Sundance has good article about a month ago about who controls food prices…they make US pay more so that other countries can pay less……same crap with pharma

      Liked by 2 people

    • CaptainNonno says:

      Or a drought or a flood or a hurricane, tornado eRthquake you name it. Whether supply or s aff cited is r not, they will use weather events to increase costs of the local produce etc.


  17. scott467 says:

    “Neither the PPI nor the CPI measure changes in food or energy costs. Those high consumption sectors have always been removed from Fed measures.

    IMHO the fed removed these sectors, used to calculate inflation, specifically because decades ago they decided to make the U.S. economy a pro-Wall Street ‘service economy’ and didn’t want people to see the data from rising costs in food and fuel.”


    IMO, that is premeditated FRAUD, and there should be a criminal investigation to find out exactly who perpetrated it.

    It may be that statutes of limitations have long run out. It may be that many of the original conspirators are dead.

    But their names should be ruined. They should be pariahs in posterity.

    And the investigation should include who knows about and continues to perpetrate this FRAUD today, and they should be prosecuted to the fullest extent of the law, no different than Bernie Madoff.

    Lock ’em up.

    Not country club minimum security — Federal Penitentiary.


    Liked by 4 people

  18. scott467 says:

    “You felt it at the grocery store, but the government never recorded those higher prices in their inflation numbers. It is all part of the scheme. –Outlined Here– This was the effect of allowing multinational corporations and multinational financial constructs to control large portions of American food, raw materials, and energy production.”


    Again, the people RESPONSIBLE for this have committed economic GENOCIDE.

    MILLIONS of American lives have been destroyed. MILLIONS more Americans never started families because they couldn’t afford to. MILLIONS of Americans have committed SUICIDE over the past 30+ years out of economic despair.

    The people who did this to our country should be hunted down like Nazi war criminals, prosecuted in a special tribunal like Nuremberg, convicted, and executed.


    Liked by 3 people

  19. scott467 says:

    “However, eggs ($1.99), Milk ($4.00+), and store bread ($2+ each). All domestic products and all double or triple 1984. Electric bill $250, Water bill $100, phone bill $100+. Again domestic consumables, again double, triple or even more.

    We consume and spend more on domestic goods such as food, energy, fuel, than we do purchasing imported durable goods. As a consequence, depending on lifestyle, the net out-of-pocket is essentially the same to a little more.”


    There is no “depending on lifestyle” for those who are struggling to get by. Food and water are necessities. Buying that polo shirt can wait another year (or 5, or 10, or 20… or 30 years… or forever, as the case may be).

    And what was NOT mentioned is that while the cost of necessities tripled (or more), real income was stagnant or dropped.

    And worse, due to inflation, what income was earned was worth even less, by a LOT.

    Liked by 6 people

  20. NJF says:

    I get so aggravated every time I go food shopping.

    I remember when oil was $100/bl & and all the smarty pants people said, “higher oil prices mean higher prices at the grocery store.”

    I thought, ok, that makes sense.

    So why does my shopping cart total increase nearly every week now? Not only are prices still continuing to rise, but the damn packages keeps getting smaller!!!

    Thanks SD for making this stuff so much easier to understand.

    Liked by 4 people

    • Oh now you have gone and done it! You just hit one of my HOT button issues.

      Who the hell do they think they are fooling when they package products exactly the same at exactly the same price but you are actually getting 20% less real product inside.


      There now I feel better. I just had to get that off of my chest. Geez I need a beer.

      Wait what the hell a 10 oz beer? At the same price? GRRRRRRRRRRRR

      Liked by 6 people

      • Gil says:

        Ive just noticed here that all beer, even domestics has gone up. We are talking about $9 a six pack, even at walmart. Hops is an issue due to cost and demand but come on! Dont get me started about all the microbrew out there. I see something to try then at the 16 ounce bottle price its about $15. Ive seen as low as $10, as high as $22. 10 ounce beers are sacrilegious.


      • dutzie60 says:

        When is the last time someone bought a 5 lb. bag of sugar? I remember when it was reduced in size, prices had been increasing quite steadily and fast. I went to the store saw the price of sugar and thought, well, at least sugar hasn’t gone up. Then I picked up the bag and just about croaked. I could tell immediately it was smaller and thought, those rotten $$%%***. LOL This is only an example as I’m sure you all know.
        Since then I buy a true 10 lbs, at Costco for about the same price as the grocery store’s -5 lb.- bag. 🙂

        Liked by 1 person

  21. TexasDude says:

    Just a note, Apple profits somewhere over $400 per iPhone. Labor cost are just $5 per unit.

    Liked by 1 person

  22. Ditch Mitch says:

    From Motley Fool’s:
    When bonds fall, but stocks rise
    Stocks tend to rise when the economy is either doing well or starting to show signs of improvement. That’s partially because profits are increasing, which leads to a higher valuation for stocks. However, rising profits can also lead to increased inflation. It’s that increased inflation that can cause bond prices to fall when inflation forces the Federal Reserve to step in to try and slow the inflation rate by raising interest rates. Rising rates makes it costlier for companies to borrow money because they need to pay a higher interest rate when they issue new bonds. This impacts the bond market because these new bonds then push down the prices of lower-yielding existing bonds, which increases the rate of those bonds to match the rates of the new bonds. However, as long as profits are increasing, stocks could keep going up, while bonds could continue to fall even while rates are being lowered.


  23. BobBoxBody says:

    I just got in from the store before reading this and it just hit me that the cost of eggs has plunged the past few months, and that the cost of pork has been surprisingly low for the last few months as well. Chicken has been kind of high, but that seems to be coming down now somewhat.

    I’ll gladly take a cut in the cost of food over buying more expensive and better made local goods.


  24. omyword says:

    COPRA is that scheme by which social security payments are adjusted each year. According to them, there has been NO cost of living increase in 8 years! While on average it may be somewhat close, the average retiree, is not buying Nike shoes, Cars, Sofas, etc. the average retiree is buying eggs, (would buy meat if the could afford it) milk, etc. Paying for rent, mortgages, phones and water, lights and gas, All of which have increased 400%. Last years increase was 0.3%! That is 3 dollars on a thousand! Buy food on THAT! WISH POTUS would fix that, someday!!!!

    Liked by 2 people

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s