The Depression-era dream of a chicken in every pot got easier to achieve in April. But if you were hoping for a roast instead, it is going to cost you.
The Department of Labor’s Producer Price Index showed that overall prices fell by far more than expected, dropping 1.3 percent in April. The Producer Price index measures prices received by businesses at intermediate and final stages of production and sales rather than the prices paid by consumers, which is measured by the Consumer Price Index. Over time, the two indexes tend to follow the same trajectory. Now both are showing strong deflationary signals.
The details of the producer index contain even more surprises, showing just how much the coronavirus has disrupted economic activity in the United States.
Start with food. The price of beef and veal jumped 12.6 percent in April, while the price of chickens dropped 8.4 percent.
The price of fresh eggs soared 31.8 percent. So maybe opt for a grapefruit for breakfast instead: the price of fresh fruit dropped 10.5 percent. Dairy products fell 4.4 percent
Prices for passenger cars and light trucks also declined. Rental car prices fell by 20.5 percent. Recreational vehicles and campers actually held their ground but margins for those selling them crashed 15.1 percent.
On-site business spending has obviously crashed. Communications equipment prices fell three-tenths of a percentage point, as did office and store equipment. Electronic components and equipment dropped 1.4 percent. Commercial furnishings prices fell six-tenths.
Home furniture prices, on the other hand, rose three-tenths, suggesting higher demand for furniture from Americans sheltering at home. Household appliance prices rose 0.6 percent.
Computer prices were flat, resisting the overall direction of prices. Margins for retailers rose 5.1 percent. This likely indicates a rise in demand from workers upgrading their home computers and software to accommodate working from home.
Wall Street is not getting wealthy from the coronavirus. Brokerage and investment services prices fell 7.4 percent. Portfolio management prices declined 12 percent. Life insurance was flat. Management consulting prices declined 3.2 percent.
Demand for dental care is likely falling, as evienced by a price decline of 0.3 percent. Prices for x-ray type equipment fell one-tenth of a percentage point. Hospital outpatient care prices fell by nine-tenths of a percentage point while in-patient prices rose by five-tenths.