Out Like a Lamb

Consumer price numbers end March with a bang.
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A Beautiful Woman on a Balcony

SAN FRANCISCO -- "Up."

Thus one of your narrator's favorites as the March

consumer price indices

were

released today.

The overall index.

Troughed in spring 1998. Was rising at a 1.4% year-on-year rate then; is rising at a 3.7% rate now (see our

data page for a chart). Accelerated by 1 full percentage point between January and March.

The services index.

Troughed in June 1999. Was rising at a 2.4% year-on-year rate then; is rising at a 2.9% rate now. Accelerated a tenth during each of the first three months of the year.

The services less energy index.

Troughed last autumn. Was rising at a 2.5% year-on-year rate then; is rising at a 3.0% rate now. Accelerated two-tenths between February and March.

The core (excluding food and energy) index.

Troughed in August 1999. Was rising at a 1.9% year-on-year rate (slowest since 1966) then; is rising at a 2.3% rate now. Accelerated two-tenths between January and February and three-tenths between February and March.

The all items less energy index.

Troughed in August 1999. Was rising at a 1.9% year-on-year rate then; is rising at a 2.3% rate now. Accelerated two-tenths between January and February and another two-tenths between February and March.

Other.

    The housing index just posted consecutive greater-than-0.3% increases for the first time in 10 years; it is now rising at a 2.9% year-on-year rate (up from the recent low of 2.1% it hit in May 1999). Housing accounts for almost 40% of the total CPI, mind you, so, to the extent that this index continues to post increases that look more like the real world and less like some dumb gubmint joke, it will exert a meaningful upward pull on the pace of overall price acceleration. The medical care index just posted consecutive greater-than-0.3% increases for the first time since spring 1998; it is now rising at a 3.9% year-on-year rate (up from the recent low of 3.4% it hit in September 1999). This measure of medical-care cost increase decelerated from 9.7% (!) in 1991 to 2.5% in 1997. That helped to produce a deceleration in benefit-cost increases, and that helped to produce a deceleration in overall compensation-cost increases. The fact that the medical-care unwind is complete (and now slowly turning the other way) means that a key source of help on the price front is no longer available to us. The first-quarter employment cost index, owing partially to what goes down as the biggest quarterly increase in the CPI for medical care since 1994, now looks even more likely to print at least 1.1% for a second straight quarter (we wrote a little about the ECI, which measures the change in both wages and salaries and benefit costs, on Monday. This number is the next big thing on the economic calendar; it won't be released until April 27.

Epilogue

Your correspondent can't imagine that the feds are any more likely to push through a half-point May

hike today than they were yesterday. Maybe it's just me, but these guys seem way, way, way too sissy for that.

They seem more likely to just keep tightening in quarter-point increments until they get the slowdown they want. That was the case before today's numbers hit; that's still the case now.

Anyway.

"You want to go out Friday ... and you want to go forever."

Thus the "Up" favorite on ... well ... on whatever strikes your fancy.

Good weekend.

Side Dish

Best ass-kicking?

Cubs sweeping Atlanta.

Los Angeles sweeping Giants.

Anything Knight.