Economy Watch: Price Spike, Led by Usual-Suspect Gasoline
While the consumer price index rose in April, led by food and energy, real hourly earnings fell behind. And while the Sahara in Vegas closes, another giant casino opens in China.
By Dees Stribling, Contributing Editor
Food and energy, those famed non-core consumer items, pushed the U.S. consumer price index upward once again in April. The CPI, released on Friday by the U.S. Bureau of Labor Statistics, was up 0.4 percent from March to April, and up 3.2 percent from April 2010, which was the largest 12-month spike in prices in more than two years.
Fully half of the increase was because of gas prices, though all of the components of the household energy index rose as well. Food was up, too, though not quite as dramatically. Still, the price for most basic at-home food items, such as meats, poultry, fish and eggs; for dairy and related products; and for nonalcoholic beverages all posted “notable increases,” as the BLS puts it. Maybe “noticeable” would be more apt, since consumers are bound to notice, and grumble.
The index for all items except food and energy–that notorious “core rate” of inflation–rose 0.2 percent in April, the third increase of that size in the last four months. Categories of consumer goods making major contributions to the core raise included both new vehicles and used cars and trucks, as well as medical care and shelter.
Employees’ earnings down
Simultaneously, the BLS reports that real average hourly earnings for all U.S. employees declined 0.3 percent from March to April. There was a nominal uptick in average hourly earnings of 0.1 percent. But that small upward bump was swamped by the 0.4 percent increase in the U.S. CPI.
Moreover, real average hourly earnings fell by 1.2 percent from April 2010 to April 2011. Pretty much everyone who draws a paycheck lost something, on average, over the last year.
And yet, the Reuter’s/University of Michigan’s Consumer sentiment index for April rose more than 2.5 points to 72.4, the highest reading in two months. The 500 households surveyed thought that current conditions are a little dodgy–mainly because of the price of gas–but said that, on the whole, their expectations have improved. Perhaps because the declining price of oil bodes well for the price of gas in the not-too-distant future.
Vegas loses casino, Macau gains one
The storied Sahara hotel and casino, former haunt of A-list celebrities and a fixture on the Strip in Las Vegas, is closing its doors for good on Monday. Back in March, owner SBE Entertainment said the property was “no longer economically viable.” Its 59-year run–practically forever in Vegas terms–has been ended by the recession, which has hit the gaming and entertainment industries particularly hard.
On the other side of the world, however, the multi-billion-dollar casino complex Galaxy Macau opened on Sunday to the sound of firecrackers and the sight of a Chinese lion dance. There is no recession for gaming in China, and the new property aims to take advantage of the eagerness to gamble among the burgeoning Chinese middle class.
Wall Street was feeling blue for Friday the 13th, with the Dow Jones Industrial Average dropping a bit more than 100 points, or 0.79 percent. The S&P 500 lost 0.81 percent, and the Nasdaq declined by 1.21 percent.