BLS Daily Report

[Richardson_D <Richardson_D@xxxxxxx>]

BLS DAILY REPORT, FRIDAY, FEBRUARY 18, 2000

RELEASED TODAY:
   CPI -- On a seasonally adjusted basis, the CPI-U rose 0.2 percent in
January, the same as in each of the preceding three months.  The food index
declined 0.1 percent in January after registering small increases throughout
most of 1999.  The energy index continued to advance, up 1.0 percent in
January. ...  Excluding food and energy, the CPI-U rose 0.2 percent in
January, following an increase of 0.1 percent in December.  The January
advance reflects larger increases in shelter costs and educational books,
coupled with an upturn in the price of cigarettes. ...
   REAL EARNINGS -- Real average weekly earnings grew by 0.6 percent from
December to January after seasonal adjustment.  This growth was due to a 0.4
percent increase in average hourly earnings and a 0.3 percent rise in
average weekly hours.  These gains were partially offset by a 0.2 percent
increase in the CPI-W. ...  From January of 1999 to January of 2000, real
average weekly earnings grew by 0.7 percent. ...

__Producer prices for finished goods were unchanged on a seasonally adjusted
basis in January, after edging up just 0.1 percent in December, BLS reports.
The so-called core PPI for finished goods -- excluding food and energy
prices that are subject to wide monthly swings -- declined 0.2 percent
because of a sharp 4.9 percent decrease in cigarette prices.  If the cost of
cigarettes is removed from the calculations, the overall finished goods
index rose 0.2 percent, the agency explained. ...  (Daniel J. Roy in Daily
Labor Report, page D-1).
__Inflation remained tame in January despite robust growth, as the nation's
economic strength continued to foil predictions of higher wholesale prices.
...  Meanwhile, as market watchers anxiously anticipated the release of the
CPI, a broader inflation measure that is more closely watched than the PPI,
the Federal Reserve threw what amounts to cold water on the monthly ritual
of awaiting the report by announcing that it will no longer use the CPI as
its prime measure of inflation.  Instead, the Fed will use the personal
consumption expenditures index, or PCE, which it believes to be more
accurate.  Fed officials have long complained that the CPI overstates
inflation, in part because it is based on a fixed basket of goods.  The PCE,
by comparison, is regularly updated to reflect changes in spending trends
and is considered to be a more comprehensive measure. ...  Analysts
attributed the cigarette-price decrease in the PPI report to an increase in
the excise tax on cigarettes, which went into effect at the beginning of the
year.  Initially, tobacco companies paid the tax without raising prices
accordingly. ...  (Yochi J. Dreazen in Wall Street Journal, page A2).

__Federal Reserve Board Chairman Greenspan testifies before Congress that
the Fed remains wary of "inflation pressures" despite several recent
interest-rate hikes designed to slow economic growth. ...  Greenspan also
said he does not think productivity gains have been exaggerated.  He said,
if output per hour were overstated, then compensation per hour would
decline.  He said it is "most likely" that productivity has been
underestimated. ...  (Daily Labor Report, page A-13).
__Greenspan signaled that the central bank is likely to raise short-term
interest rates again in coming months, possible several times more, to cool
off the red-hot U.S. economy and keep inflation under control. ...
Greenspan cautioned that the impact of some special factors that have helped
keep inflation low, such as weak economies abroad and falling prices for
non-oil imports, is waning. ...  He emphasized that a key reason U.S.
economic growth has been so strong is the major rise in the value of assets,
such as corporate stocks and owner-occupied homes.  As those values have
gone up, American households have become wealthier and chosen to spend about
3 or 4 cents of every dollar of added wealth -- a phenomenon called the
"wealth effect." ...  The continuing low rate of inflation was confirmed by
a report that producer prices for finished goods were unchanged last month
and up only 2.5 percent in the last 12 months -- in the face of a 17.5
percent jump in energy prices. ...  (John M. Berry in Washington Post, page
A1).
__Greenspan warns of another rise in interest rates and gives a caution to
Wall Street that stock prices shouldn't rise faster than the income of
households. ...  (New York Times, page A1; Wall Street Journal, page A2).

Initial claims filed with state agencies for unemployment insurance benefits
decreased by 20,000 to a seasonally adjusted 283,000 in the week ended Feb.
12, the Department of Labor announced. ...  (Daily Labor Report, page D-9).

The Census Bureau releases new reports on U.S. finance and insurance
industries, providing 1997 figures for a range of factors that includes
total employment, revenue, and annual payroll estimates per employee. ...
Release of the figures derived from the bureau's Economic Census marks the
first time that Census has reported on these industries using the North
American Industrial Classification System. ...  (Daily Labor Report, page
A-4).

A group of business leaders and labor economists told the House Education
and the Workforce Subcommittee on Oversight and Investigations the shortage
of skilled and unskilled workers in the United States is an urgent problem
that Congress must address. ...  Business leaders described their companies'
mostly unrewarded efforts to recruit and retain quality workers in an
economy in which "there has never been a better time for the worker in terms
of employment opportunities."  Meanwhile, economists described to the panel
a "worker dearth" they say must be addressed by policy decisions such as
abolishing the Social Security earnings limit and reforming immigration laws
to place a greater emphasis on the skills and education of visa applicants.
...  (Daily Labor Report, page A-11).

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