INDICATOR: April Import and Export Prices
KEY DATA: Imports: -0.5%; Nonfuel: -0.2%; Exports: -0.7%; Farm: -2.2%
IN A NUTSHELL: "With the price of imports basically going nowhere, consumer inflation should remain tame and that is good for both households and the Federal Reserve."
WHAT IT MEANS: Import prices fell sharply in April led by a large decline in petroleum costs. But households are being helped in other ways as even excluding fuel, imports cost less. Food prices were down, though the cost of fish rose sharply again. Eating healthy is beginning to cost a lot more. Imported vehicle prices were flat again but other consumer goods costs rose, especially for nondurable manufactured products. That is surprising given the upward drift in the dollar. I would have expected more competitive pricing from foreign companies. Durable manufactured product import prices are still falling, though. As for exports, I suspect the farm sector is watching with horror as their prices are dropping rapidly. There was a large decline for the third month in the last four.
In a separate report, the National Federation of Independent Businesses index rose solidly in April. Unfortunately, the level of optimism is hardly pointing to irrational exuberance. The small business sector does not look like it is participating in the earnings orgy being feasted on by larger companies.