Wholesale Prices Stabilize
In August, wholesale prices rose by 0.2%, aligning with expectations, while core prices excluding food and energy increased by 0.3%, slightly exceeding forecasts. On an annual basis, producer prices increased by 1.7%, while core prices rose by 3.3%. Wholesale prices are typically a good indicator of future inflation increases or decreases, as it will trickle down to the consumers once the goods are priced for sale. Unemployment claims for the week ending September 7 increased slightly to 230,000, but the labor market remains stable.
Inflation Drops
Inflation in August fell to its lowest level since February 2021, with the consumer price index (CPI) rising 0.2% for the month, bringing the 12-month inflation rate to 2.5%. However, core CPI, excluding food and energy, increased by 0.3%, slightly above expectations, keeping the Fed cautious about inflation. Housing-related costs, particularly shelter, accounted for much of the core CPI increase, while energy costs declined. The Fed is expected to cut interest rates by 0.25% at its upcoming meeting, with concerns shifting to slowing job growth and the broader economy.
Boeing Worker Strike
Boeing's factory workers went on strike after rejecting a new labor contract, halting production of the company's top-selling airplanes. The strike, supported by 96% of union members, comes after workers deemed the proposed 25% wage increase insufficient to cover rising living costs and criticized Boeing for unfair labor practices. The work stoppage poses significant financial risks, with analysts estimating a potential $1.5 billion impact if it lasts 30 days, along with disruptions to Boeing’s supply chain and aircraft deliveries. Boeing and the union have expressed a desire to resume negotiations, but no immediate resolution is in sight.
