What have you always wondered about the economy? Tell Us
Gas prices drop to the $2.15 per gallon mark at a gas station in Toledo, Ohio which currently has some of the lowest recorded gas prices in the country. J.D. Pooley/Getty Images

Good news for consumers?

Stacey Vanek Smith Nov 14, 2006
Gas prices drop to the $2.15 per gallon mark at a gas station in Toledo, Ohio which currently has some of the lowest recorded gas prices in the country. J.D. Pooley/Getty Images

KAI RYSSDAL: It’s one of those economic statistics that doesn’t affect the consumer directly. The Producer Price Index it’s called. Wholesale inflation’s another way to say that. What businesses charge each other. And it was down hard last month. Take out food and energy…down by the most in 13 years. Which could mean some relief for consumers down the road. Marketplace’s Stacey Vanek Smith crunches the numbers.


STACEY VANEK-SMITH: Gas prices dropped nearly 8 percent in October. The wholesale cost of light trucks was off almost 10 percent. Prices for commodities were pretty much down across the board. All of this is bad news for manufacturers, but could be good news for Joe Consumer.

Hugh Johnson is chief investment officer with Johnson Illington Advisors:

HUGH JOHNSON: Those declines in the Producer Price Index, the declines in energy prices, quite frankly are good news. It really helps the consumer to continue to spend when consumers’ confidence has been a little bit shaken more recently by the decline in housing, the decline in housing prices.

That could help retailers this holiday season and help calm worries about inflation. Johnson says dropping producer prices almost certainly mean the Federal Reserve won’t raise interest rates in the near future.

But Mesirow Financial’s Diane Swonk says not so fast. She says our economy is at a turning point and could still go into recession. After all, just a couple of weeks ago, sagging productivity had analysts crying inflation. So Swonk warns against getting trigger happy with economic data.

DIANE SWONK: This is the stage of the game where monetary policy is more of an art than a science. Because, it’s kind of like saying, you know, one foot in a bucket of ice and one foot in a pot of boiling water and the Fed’s trying to figure out through a landmine of data at the moment.

As for the benefit to consumers, Swonk isn’t so sure. Wholesale costs are just one component of product prices. A much higher percentage, she says, is made up by labor costs. And those have been climbing.

In New York, I’m Stacey Vanek-Smith for Marketplace.

News and information you need, from a source you trust.

In a world where it’s easier to find disinformation than real information, trustworthy journalism is critical to our democracy and our everyday lives. And you rely on Marketplace to be that objective, credible source, each and every day.

This vital work isn’t possible without you. Marketplace is sustained by our community of Investors—listeners, readers, and donors like you who believe that a free press is essential – and worth supporting.

Stand up for independent news—become a Marketplace Investor today with a donation in any amount.