Headline PPI Up 1.4% in May, Housing Starts Fall

Rising food and fuel costs contributed to a 1.4% spike in May PPI, although the core rate remained subdued at up .2%  Americans who choose to regularly purchase food and fuel are not surprised by the spike as they come face to face with rising costs daily.  Although the Fed officials who were busy leaking their views yesterday to the Financial Times about rate rise expectations being overplayed may have wished they would have waited for the PPI report before opening their traps.  The Fed is going to need to tighten sooner rather than later.  The bond market seems to know this better than Bernake and his cronies. 

Meanwhile, housing starts fell 3.3% to a 975,000 pace, from a revised 1.008 million in April, the lowest level in 17 years.  Building permits also declined by 1.3% to a 969,000.  Yesterday, the National Association of Homebuilders released it builder sentiment index, which at 17, was a record low.  Rising foreclosures and delinquencies in mortgages make it nearly impossible to imagine a turn around in sentiment.  Naturally, the homebuilders are pleading for tax incentives and other bailouts from our Government.  Because when all else fails, our government can be counted to on to concoct something "stimulative" and expensive to help prop up our sagging economy.