The U.S. Labor Dept. is out with a trio of reports today (Nov. 15) that together paint a mixed picture of the state of the economy.
The most widely watched of the reports, the Consumer Price Index, showed growth close to the targets preferred by the Federal Reserve, suggesting that the Fed could consider cutting its overnight funds and discount rates again at its December meeting. The CPI rose 0.3% in October, compared to the month before, with the so-called "core" CPI, which exempts food and energy prices, up only 0.2%. Soaring energy prices were kept in check by a slow increase in housing costs (0.2%) and flat clothing costs. Energy costs were up 1.4%, led by a 1.5% increase in electricity and a 2.3% increase in fuel oil.
Energy prices are up 12.3% for the first 10 months of 2007, on a seasonally adjusted basis. The index for petroleum-based energy is up 20.6% during the same period. Some economists believe these price increases have not yet shown up in overall consumer prices but eventually will.
The Labor Department's Bureau of Labor Statistics reported that real average weekly earnings fell by 0.2% from September to October after seasonal adjustment. The decrease in real wages was related to the 0.3% increase in the CPI, which wiped out a 0.2% increase in average hourly earnings. On a year-over-year, seasonally adjusted basis, average weekly earnings were up 3.5%, but, when adjusted for inflation, earnings decreased by 0.3%.
Finally, the Labor Department's report on initial jobless claims for the week of Nov. 10 showed an increase of 20,000 from the previous week's revised figure to 339,000. That was far more than the 3,000 new claims that were expected by analysts on Wall Street. The four-week moving average was 330,000, unchanged from the previous week's revised average of 330,000.
The stock markets at first took the economic data in stride, with the major indices posting small gains. In late afternoon trading, however, the markets sank broadly, with the Dow Jones Industrial Average off more than 1% and the Nasdaq down nearly 1.5%. Builder stocks were down across the board, with Dominion, Comstock and Standard Pacific hitting or nearing new lows and beleagured TOUSA falling to thirteen cents a share.