With every piece of good economic news comes some bad financial news.
Amid declining energy prices, United States consumer prices fell in the month of November, a sign that inflation levels will still remain below the Federal Reserve’s target rate of two percent just before we ring in 2015.
The Department of Labor released a new report Wednesday that showed the consumer price index fell 0.3 percent as gas prices dropped for the fifth consecutive month. Excluding volatile food and energy costs, the core inflation rate rose just 0.1 percent from October.
Over the past 12 months, prices have risen 1.3 percent, a decline from the 1.7 year-over-year jump that the Labor Department noted in October. Meanwhile, the department’s energy price index has descended just under five percent in the last 12 months, while gas and fuel oil prices are down 10 percent.
In addition, prices for apparel, furniture, personal care and vehicles tumbled last month, while prices for alcohol, medical care and shelter shot up and cost consumers a little bit more. It is expected that this trend will continue heading into the New Year as oil prices are maintaining the downward spiral.
The latest data is prompting many analysts to suggest that the U.S. central bank will delay any hike in interest rates. The consensus had been for several months that Fed Chair Janet Yellen would raise rates from its current near zero sometime in the second quarter of next year. With reported low inflation levels and a weak labor market, the Fed could back away from any such rate hikes.
U.S. current account deficit widens
The Department of Commerce reported Wednesday that the current account deficit increased in the third quarter because the jump in exports was offset by an additional boost in the secondary income shortfall. This is an important measure because it measures the flow of goods, services and investments that enter and exit the country.
According to the report, the current account gap rose 1.9 percent to a total of $100.3 billion from an adjusted $98.4 billion in the second quarter. It now represents a little more than two percent of the U.S. gross domestic product.
Exports of goods and services jumped 0.9 percent to $592 billion in the third quarter, and imports tumbled 0.2 percent to $716.3 billion. The current account gap is projected to shrink within the next few quarters as oil prices lower.
Investors continue to swarm to the U.S. dollar as a safe haven. During the July-to-September period, the greenback’s value appreciated 7.1 percent when compared to other currencies – it may not be saying much, though, because the euro, pound and yen have been in a downturn as of late.
Economists were surprised by these figures as it was forecast to dwindle to $97.5 billion, according to a Reuters poll. They may have been deceived because the account deficit had been slipping in recent quarters due to the significant revitalization of the domestic energy production.
Officials say the current account deficit is still quite low in terms of historical levels. For four years prior to the economic collapse, quarterly deficits usually exceeded $150 billion.
