PPI Rises, Consumer Confidence Moderates

- The PPI for January rose .3% versus estimates of a .2% gain and a downwardly revised .6% increase in December.
- The PPI Ex Food & Energy for January rose .4% versus estimates of a .2% gain and a .1% rise in December.
- Preliminary Univ. of Mich. Consumer Confidence for February fell to 87.4 versus estimates of 91.0 and a reading of 91.2 in January.

BOTTOM LINE: US wholesale prices rose .3% in January, led by higher costs for vehicles and machinery, Bloomberg said. Prices of raw materials actually fell .5%. I continue to believe measures of inflation will decelerate throughout most of the year as commodity prices fall, unit labor costs remain subdued and economic growth slows to average rates.

Confidence among US consumers slipped for a second month in February, Bloomberg reported. The expectations component of the index fell to 74.4 from 78.9 in January. The current conditions component of the index fell to 107.7 from 110.3 the prior month. I continue to believe consumer confidence makes new cycle highs later this year as the job market remains healthy, gas prices fall, inflation decelerates, stock prices rise, long-term interest rates remain low and housing stabilizes at relatively high levels.