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Todayâs Top Stories From the Breitbart News Desk
The Department of Labor’s Producer Price Index (PPI) may seem an unlikely place to find signs of a stronger-than-expected economic recovery, but these are unusual times.
The PPI is the lesser-known cousin of the Consumer Price Index (CPI). But where the CPI measures prices consumers pay, the PPI measures prices sellers receive at various stages in the economy. Typically, the two more or less track each other, although they’ve been known to diverge from time to time.
The August PPI figures came in hotter than the expected 0.2%, showing a 0.3% monthly increase. That’s good news because it suggests healthy demand in the economy. Even better news, a 0.5% rise in the services component drove the price increase, showing rising demand in a part of the economy that the pandemic and social-distancing rules have hit particularly hard.
The least understood component of the PPI is likely “trade services.” Where the rest of the index is based on changes in prices for goods and services sold, trade services measures the margins of sellers – the difference between what they pay for inventory and what they ultimately sell those items for.
This jumped 1.2% in August, accounting for two-thirds of the rise in the overall services component. Increased profitability is the best economic stimulus there is. Rising margins in August can, at least in part, offset the loss of various government support measures, such as enhanced unemployment benefits and the wind-down of the Paycheck Protection Program.
Stocks initially seemed pleased with the data this morning but sold off in the afternoon. Investors appear to be nervous about the heady valuations of many of the pandemic favorites, especially tech stocks.
The S&P 500’s IT sector was the second-worst performer today (energy was the worst). Year to date, however, IT is up nearly 44%. So even with the sell-off, many of these companies may appear expensive to investors nervous about market risk.
â Alex Marlow, Breitbart News Network
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TOP STORY
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[Services Sector Prices and Store Margins Indicate Economic Lift In August](
U.S. producer prices rose more than expected in August, buoyed by a bounce in the prices businesses received for services. The higher-than-expected figures indicate solid demand in August and point toward a recovery for the services sector after the pandemicâs staggering blows. [[Click here for more](
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