Still, in the U.S. the labor participation rate reversed course and increased in November, reflecting, in part, the end of the government shutdown. The average workweek increase by .1 to 34.5 hours and hourly earnings were up 2.0 percent annualized through November. Person income increased but spending also increased. Consumers are spending, although Black Friday retail sales numbers were down Cyber Monday showed a 20 percent increase over 2012. Christmas consumers must have been bidding up the wages of pipers and drummers online. The cost of items included in the Christmas Index purchased online declined by 1.7 percent over the past year, but were still more expensive than buying in person. This must be the cost of shipping birds, a tree and transportation of various pipers, dancers and leapers.
The annual increase in the Christmas Index has exceeded general inflation. The Federal Reserve’s preferred inflation measure, the personal consumption expenditure index, reflects annual inflation of about 1 percent. The subdued inflation rate provides the Fed with room to allow interest rates to rise or begin tapering bond purchases without igniting inflationary pressures. The continued slack in the labor markets and underutilized capacity affords them some time. Even the trade balance is supportive of tame inflation, with strong exports relative to imports, unless you count those from the North Pole.
The Christmas Index is to give you some ideas for those final items or for the person on your list that already has everything. My list does not include birds, gold or drummers, unless you count beating the snow shovel on the walk! It tends to run more along the lines of woolen socks and sweaters. May your holiday season be safe and warm.
David Helscher is a senior vice president and trust officer with Clinton National Bank.