Energy costs empty wallets

Steve Henn May 11, 2007

TEXT OF STORY

SCOTT JAGOW: Couple of important numbers out this morning: Prices at the wholesale level — that’s a good reading on inflation — and retail sales for April. That’s a sign of how consumers are feeling about things. Steve Henn tells us who’s happy and who’s not.


STEVE HENN: The prices producers pay are holding steady. The so called core wholesale inflation rate measures everything except food and energy. It was flat last April.

PETER MORICI: This is very good news for the stock market.

Peter Morici is an economist at the University of Maryland.

MORICI: It indicates that the Fed will not likely raise interest rates soon and it is more encouraging news that inflation will likely come under control.

But Morici says the news was not so hot if you happen to drive a car. Energy costs surged and that means consumer have less money to spend at the mall.

MORICI: Whatever new retail sales we had went into gas.

That was confirmed by this morning’s report on retail sales which showed a decline of two tenths of one percent. Consumers are feeling the pinch.

MORICI: Now they seem to be cutting back on clothing and other items to accommodate higher gas prices.

Morici says its obvious America’s economy is slowing down fast.

In Washington I’m Steve Henn for Marketplace.

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