Tag Archive for 'economy'

Wells Fargo Reports: Through Hurricane Effects, CPI Inflation Looked Anemic

Consumer prices rose 0.5 percent in September as gasoline prices surged in the wake of recent hurricanes. Core inflation rose less than expected and suggests the trend in inflation remains rather tepid.

Here Comes the Story of the Hurricane

As was widely expected, the Consumer Price Index posted one of its largest monthly gains of recent years in September amid a jump in energy prices. The combination of refinery outages following Hurricane Harvey and millions of Floridians hitting the road to avoid the path of Hurricane Irma sent gasoline prices up 13.1 percent in September. All told, gasoline accounted for about three-quarters of the headline’s 0.5 percent increase last month.

Beyond energy, however, the effects of Harvey and Irma appeared much more modest. Replacement demand for autos following the storms was not enough to arrest the slide in prices that has been in train since early this year. Despite a 12-year high in new vehicle sales, prices slid 0.4 percent.Used vehicle prices were also down (0.2 percent), although the drops in August and September were the smallest of this year.

Hotel prices may have gotten a lift from the large-scale evacuations, but the 1.5 percent rise in September does not look unusually large relative to the swings in recent months; the lodging away from home index has swung by a greater magnitude in four of the previous five months.

Excluding food and energy, the core index suggests the trend in inflation remains weak relative to the start of the year. Core inflation rose 0.1 percent, which was enough to bring the 3-month annualized rate up to 2.0 percent. While that is above the current year-ago rate and points to the 12-month change edging a bit higher in the coming months, it continues to run below the roughly 2.2 percent pace of late last year.

Core services rose more moderately in September (up 0.2 percent) amid more subdued gains in shelter costs, medical care, and transportation. Meanwhile, core goods prices fell for a seventh consecutive month due to the aforementioned declines in prices for autos, but also apparel, prescription drugs, and household furnishings.

Transitory or Persistent Is Still an Open Question for the Fed

At a time when the Fed is closely examining all inflation data for clues about whether the slowdown that began last spring is likely to be temporary or persistent, today’s CPI report does not provide much comfort. As indicated in the statement and minutes following the September meeting, FOMC members expected to see inflation lifted temporarily by the hurricane-related bump in gasoline and other items last month. Yet the modest increase in core inflation is likely to keep many Fed officials concerned about the near-term path of inflation and whether another rate hike will be warranted in December. Fortunately for the data-dependent Fed, there will be two more CPI and PCE inflation reports before the December decision, meaning there is still time for greater clarity to emerge.

Source: U.S. Department of Labor and Wells Fargo Securities

Wells Fargo Reports: Construction Spending Rose in August

Total construction spending was up 0.5 percent in August, though July’s drop was worse than first reported. Public spending was up slightly in August after considerable weakness in June and July.

Outlays Up Across the Board in August

  • Construction spending was up 0.5 percent in August. Revisions brought more of June’s weakness to July. Beyond the month-to-month volatility and revisions, total construction is running 4.7 percent ahead of last year on a year-to-date basis.
  • Private construction is buoying total construction outlays as the government continues to spend less on most construction categories. Public outlays are down 5.3 percent year-to-date.

Private Residential Had Solid Footing Pre-Storms

  • Private residential construction outlays were up 12.6 percent year-to-date through August. Both single- and multifamily units were up solidly. Construction spending data in coming months are likely to be very volatile due to hurricanes derailing projects and as rebuilding gets underway. The seasonal adjustment will likely exacerbate impacts during fall months. We expect residential construction to be a drag on GDP until maybe next spring.

Construction Industry Associations AEM & ABC Support Tax Reform Framework

Association of Equipment Manufacturers (AEM) President Dennis Slater issued the following statement in response to the tax reform framework released on Wednesday by members of Congress:
AEM members support a simpler tax code that provides relief to both conventional corporations and “pass-through” businesses, a designation which includes a number of equipment manufacturers and their customers.
The unified tax reform framework released today by leaders in Congress goes great lengths toward meeting AEM members’ goals. Equipment manufacturers currently suffer from a tax code that puts U.S. manufacturers at a disadvantage versus our global competitors. Our industry stands with those in Congress who propose commonsense, permanent tax relief that will renew America’s manufacturing strength.
The current debate over tax reform is a moment of truth for our elected leaders. We will work in the coming months to encourage members of Congress in both parties to deliver on their pledge to advance pro-growth tax reform that supports manufacturing in America.
NOTE: AEM will be releasing the findings from a more detailed tax reform research project in the coming weeks, along with new advertising and grassroots advocacy efforts intended to help advance the industry’s priorities for tax reform.

Tax Reform Framework a Major Step Forward, Says ABC

Michael D. Bellaman, President, and CEO of Associated Builders and Contractors (ABC), issued the following statement supporting the Unified Framework for Fixing Our Broken Tax Code released today by congressional and administration leaders:

“The tax framework released today marks a promising step forward for the first genuine reform of the tax code in a generation. Associated Builders and Contractors is encouraged by the proposal, and we strongly support the tax reform process moving forward.

“The framework and its targets go a long way toward advancing ABC’s tax policy goals. Construction historically faces the highest effective tax burden of any industry. The vast majority of construction firms are small and family-owned businesses that pay taxes at individual rates. The equivalent rate reduction envisioned in the framework for businesses on both sides of the code, paired with a broader tax base, moves toward ABC’s vision of fair treatment for all companies regardless of size, structure or sector.

“While the framework is an important first step, there is much work to be done. Before this process can move forward, Congress must pass a budget resolution that instructs tax writers to turn this framework into legislative language. With so much left to the discretion of the committees, there is little time to spare. We look forward to working with both chambers to build on the structure of this framework in a way that promotes simplicity, fairness and economic growth.”

Tom Ewing’s Environmental Update

*  A DOE notice about SunShot 2030 caught my eye recently because it is one of many DOE renewable energy initiatives filling my inbox lately, in contrast, really, to gloom and doom “news” from many “sources” about hairy, brutish Luddites with pitchforks taking over the Department and smashing all the Keurig machines.  The Solar Energy Technologies Office wants comments on “integrated data and analysis needs across the solar value chain to inform near to mid-term plans for the development of resources such as information based network planning, real time optimization, and bankability tools in the context of DOE’s SunShot 2030 goals.” SunShot is a national effort to drive down the cost of solar electricity and support solar adoption.  2030 is 12 years away.  Sounds like things are continuing, not stopping.  Hurry up: comments are due October 6!
*  Corporations and other institutions have contracted for more than 2,300 MW of off-site solar, using power purchase agreements (PPAs), green tariffs, or bilateral deals with utilities.  The corporate procurement of utility-scale PV has grown from less than 1% of annual installed utility-scale capacity in 2014 to 9% in 2016 and it accounted for 17% in early 2017. To expand corporate procurement of off-site solar, both a purchasing pathway and cost competitive solar are required.  This insider’s look is from a new DOE/NREL (National Renewable Energy Laboratory) report titled “Charting the Emergence of Corporate Procurement of Utility-Scale PV.”  NREL will expand on the report, with discussions and commentary, in a webinar next Monday, October 9.

*  Also next Monday, California’s Air Resources Board holds a public workshop on the State’s “Beneficiary Mitigation Plan” for its $423 million allocation of the Volkswagen (VW) Environmental Mitigation Trust.  Eligible activities consist mostly of scrap-and-replace projects, including supportive infrastructure for zero- and near zero-emission advanced technology replacements, for the heavy-duty sector.  Program leaders also “strive to ensure that at least 35 percent of California’s allocation benefit low-income or disadvantaged communities that are disproportionately impacted by air pollution.”  If you can’t make the meeting you can submit comments to CARB.

Tom Ewing
“reply” or 
513-379-5526 voice/text

Tom Ewing’s Environmental Update

*  Last week, the National Highway Traffic Safety Administration (NHTSA) released a new voluntary guidance on automated driving systems—”Automated Driving Systems: A Vision for Safety.” This guidance is based on public comments received on the Federal Automated Vehicles Policy (FAVP) released a year ago, September 2016. The updated guidance is “to support industry innovators, States, and other key stakeholders as they consider and design best practices relative to the testing and deployment of automated vehicle technologies while informing and educating the public and improving roadway safety.” NHTSA is looking for public comments on the guidance and “additional ways to improve its usefulness.”  The document is part of DOT’s efforts to support the introduction of automation technologies that “hold the promise of fulfilling NHTSA’s mission of reducing the number of injuries and fatalities on our roads.”  Comments are due by November 14.
*  In Oregon, an interim joint House-Senate committee on energy and environment meets today for two hearings focused on transportation electrification.  One hearing is titled  “Public Utility Commission’s Resource Value of Solar and Transportation Electrification Dockets.”  Staff from OR’s Public Utility Commission will update legislators.  The second hearing topic is titled “Electrification Transportation Programs and Electric Vehicle Charging Stations.”  Testimony will be from utility experts and officials from vehicle trade groups.
*  Who knew, right, that we have a National Advisory Committee on Windstorm Impact Reduction (NACWIR or the Committee)?  Well, we do and the Committee holds an open video conference meeting next week, on Monday, from 9:00 a.m. to 10:00 a.m. Eastern Time. The purpose of the meeting: to finalize the Committee’s report on wind reduction assessments and recommendations. You can participate remotely. The NACWIR was established in accordance with the requirements of the National Windstorm Impact Reduction Act Reauthorization of 2015. The Committee is charged with offering assessments and recommendations on trends and developments in the natural, engineering, and social sciences and practices of windstorm impact mitigation, program priorities and coordination and, importantly, the effectiveness of the Program in meeting its purposes.
Tom Ewing
reply” or 
513-379-5526 voice/text