AP Turns Better Than Expected Economic News Into a Calamity
Some good economic news was released by the Labor Department today. However, if you rely on the AP as your source for such things, you’d never know it:
“Surging costs for gasoline and other energy products fueled inflation at the wholesale level in August, pressure that is expected to become even more intense once the full impact of Hurricane Katrina is felt.
“The Labor Department said its Producer Price Index, which measures inflation before it reaches the consumer, jumped a sharp 0.6 percent in August following an even bigger 1 percent increase in July.”
Curiously, this AP reporter felt that it was unnecessary to inform the reader that this inflation figure was less than expected, and signaled to Wall Street that prior to the advent of Katrina, rising fuel prices have not dramatically impacted our economy. Here’s how Bloomberg reported the same data:
“U.S. producer prices rose less than forecast in August, suggesting limited signs of accelerating inflation before Hurricane Katrina sent crude oil to a record high and pushed up costs of other raw materials.”
“‘We got some relief here, good numbers,’' said Richard DeKaser, chief economist at National City Corp. in Cleveland, in an interview.”
“Economists were expecting a 0.7 percent rise in producer prices, based on the median estimate of 60 economists surveyed by Bloomberg News. Estimates ranged from increases of 0.4 percent to 1.2 percent. The core rate was forecast to rise 0.1 percent.”
Amazing difference in perspective, yes? Want to take a guess which view investors sided with? Well, according to another Bloomberg report on the subject:
“U.S. 10-year Treasuries rose the most in almost two weeks after a government report showed wholesale prices increased less than forecast in August.
“Signs of tame inflation spurred investors to buy government debt after a slump pushed yields to the highest since before Hurricane Katrina, which hurt the outlook for economic growth. Inflation erodes the value of the fixed payments on bonds.
“‘The market is breathing a sigh of relief,’' said Alex Li, an interest-rate strategist at Credit Suisse First Boston in New York. ‘As long as inflation is in check it will probably make the Fed less hawkish than otherwise,’' he said of the Federal Reserve. Credit Suisse is one of the 22 primary U.S. government securities dealers that trade with the Fed's New York branch.”
My guess is that Bloomberg got it right. What’s yours?