Dow sinks after Fed chair calls out risks to the economy: May 13, 2020
Producer prices dropped sharply in April, falling 1.3% on a seasonally adjusted basis. It was the largest drop in the index since the Bureau of Labor Statistics began tracking it in 2009.
The lion's share of this decline -- more than 80% -- was due to a 3.3% drop in prices for goods, which in turn was driven by a 19% collapse in demand for energy.
The oil market crisis, driven by a global demand rout and storage limitations, pushed one oil futures contract to trade in negative territory last month. This pushed down energy prices across the board. Two-thirds of the April demand decrease for goods is linked to a 56.6% fall in gasoline prices, according to the BLS.
Excluding food, energy and trade services, the index still fell 0.9% in April, which was its largest decline in the series.
On an unadjusted basis, producer prices have fallen 1.3% over the past twelve months, their largest decline since November 2015.
This follows yesterday's drop in consumer prices, which fell at the fastest level since 2008. The drop was largely driven by energy prices, but also pushed down by lower prices on apparel and vacation spending.
The unemployment rate in the United States will peak at 25%, rivaling the worst period of the Great Depression, Goldman Sachs warned.
Economists at Goldman Sachs downgraded their labor market forecast "to assume that more workers will lose their jobs and a larger share of them will be classified as unemployed," the Wall Street bank wrote in a report to clients.
Federal Reserve Chairman Jerome Powell will speak at the Peterson Institute for International Economics at 9 am ET, and investors are already getting their 🍿 ready.
Powell, who has orchestrated the most extraordinary economic rescue plan in the history of the Federal Reserve, could to discuss the Fed's future stimulus plans.
To boost the economy, Powell's Fed has taken rates to zero, bought hundreds of billions of dollars of government debt and Tuesday began to shore up the consumer lending market by buying up $100 billion of asset-backed securities.
The Fed did all of that during the last financial crisis starting in 2008. But Powell's Fed has gone beyond what Ben Bernanke's Fed did, buying up debt from small towns and cities and buying corporate bonds to keep companies afloat.
Powell may hint at more stimulus during his speech Wednesday.
Stock futures are rising higher after two straight days of declines.
Investors are eagerly awaiting Federal Reserve Chairman Jerome Powell's speech at the Peterson Institute for International Economics at 9 am ET, in which he could to discuss future stimulus measures the Fed may take to boost the economy.
Investors had been giddy about the US economy beginning to reopen. But epidemiologists, including Dr. Anthony Fauci, have cautioned against overzealous lifting of stay-at-home orders. Fauci, the nation's top infectious disease expert, said Tuesday that the "consequences could be really serious" if states reopen ahead of the guidelines issued by the White House.