Economy Watch: Gas Prices Spike
- Jul 15, 2013
Mortgages weren’t the only thing seeing an increase in price recently. An arguably more visceral increase has struck the U.S. economy—and with it, consumer’s propensity to spend money to support growth—a rise in the price of gas.
According to the AAA Daily Fuel Gauge Report on Sunday, the price of a gallon of regular averages exactly $3.60. Only a week earlier that average was $3.474, and a year ago the average stood at $3.393. Gas is the most expensive on the West Coast, as well as Illinois, Michigan, New York and Connecticut, where the average can reach well over $4 a gallon.
Observers chalk the sudden rise up to vague disruptions of refineries—“production hitches” for instance—along with the fact that the peak-driving season is upon us. AAA predicts that the price could go up another 10 cents to 15 cents in the weeks ahead.
PPI headed up
The Bureau of Labor Statistics reported on Friday that the official Producer Price Index for finished goods increased 0.8 percent in June. That follows wholesale prices that were up 0.5 percent in May but fell 0.7 percent in April. Prices for finished wholesale goods moved up 2.5 percent for the 12 months ended June 2013, the largest 12-month rise since a 2.8 percent increase in March 2012.
In June, most of the rise in finished goods prices can be traced to energy—mostly for gasoline (see above)—with the energy index increasing 2.9 percent, according to the BLS. Also contributing to the advance the PPI was the price of food, up 0.2 percent for the month on a wholesales basis.
The index for finished goods without food and energy edged up only 0.2 percent in June, but it was the eighth consecutive monthly advance. A major contributor to the June increase for so-called core prices was passenger cars, which rose 0.8 percent. An advance in light motor trucks prices was also a factor in higher core prices.
Consumers a bit more grumpy
Consumer sentiment, which was been on a roll lately, saw a downtick for mid-July. The preliminary Reuters/University of Michigan consumer sentiment index for the month was off slightly to 83.9, compared with the final June reading of 84.1.
Apparently consumers are a bit nervous about what’s to come. The expectations component of the index dropped to 73.8 from 77.8 at the end of June. The current conditions component, on the other hand, improved to 99.7 in mid-July from 93.8 for June.
Wall Street took something of a breather on Friday, though the equities markets were still up. The Dow Jones Industrial Average ended the trading day up 3.38 points, or a mere 0.02 percent. The S&P 500 gained a more substantial 0.31 percent and the Nasdaq advanced 0.61 percent.