Reports Bode Well For Food, Gas Prices, And Jobs

Americans are finally getting some relief from high gas and food prices.

Wholesale food prices fell last month by the most in nearly a year, and gas prices keep dropping after peaking in May. A separate survey suggests CEOs are feeling more optimistic and will hire more in the second half of this year.

It amounted to welcome news Tuesday after a rough patch that has stoked worries the economic recovery is slowing. More jobs and lower prices would both give Americans more money to spend on other things and rejuvenate economic growth.

Food prices at the wholesale level fell 1.4 percent, the Labor Department said. It was the largest drop since last June. About 40 percent of that decline resulted from steep declines in vegetable and fruit prices.

The drop in food prices followed harsh winter freezes, which had driven up prices of tomatoes and other vegetables in February. Even if prices don't fall further, economists say they probably won't go much higher, at least.

It may take as long as six months, but lower wholesale prices should work their way to the grocery store.

"That's a good thing for consumers, and it's even better that it comes in parallel with lower energy prices," said Gregory Daco, U.S. economist at IHS Global Insight.

Overall, the producer price index, which measures price changes before they reach the consumer, rose 0.2 percent in May. That's much lower than April's 0.8 percent gain and signals that inflation is in check.

Gas prices at the wholesale level rose in May by the smallest amount in eight months. At the pump, they're coming down. On Tuesday, the national average was $3.70 a gallon, according to AAA. Gas has fallen steadily since the national average almost hit $4 a gallon in early May. It's still about a dollar more expensive than a year ago.

For now, Americans remain cautious about spending. Another report Tuesday showed that retail sales fell 0.2 percent in May. It was the first decline in 11 months and came mostly because Americans bought fewer cars.

Auto sales fell 2.9 percent, the sharpest drop in 15 months. The decline was attributed to temporary factors, including fewer incentives offered by dealerships and a shortage of popular fuel-efficient cars because of disrupted shipments after the Japan earthquake.

Excluding the drop in car sales, retail sales rose 0.3 percent. That gain seemed to please investors, who were expecting broad declines because of high gas prices. The Dow Jones industrial average, which has fallen six weeks in a row, closed up 123 points, or 1 percent.

Mark Vitner, an economist at Wells Fargo Securities, said the retail-sales report shows that household budgets are still tight, forcing people to put off buying expensive items. Sales at electronics and furniture stores dropped in May.

Some of the biggest sales gains were reported by thrift shops and other stores that sell used goods, Vitner said, and by online retailers, which many shoppers use to find the best deals.

Lower food and gas prices "should provide some near-term relief," Vitner said, "but a sustainable pickup in spending will not likely occur until job growth picks up and the unemployment rate falls."

There were some encouraging signs that hiring could pick up in the second half of the year. The Business Roundtable, which represents CEOs for the 200 biggest U.S. companies, said 51 percent of chief executives plan to step up hiring in the second half of the year.

Last quarter, the figure was 52 percent said they planned to hire more over the following six months, the highest since the trade group began polling its members in 2002.

The survey began in mid-May and ended June 3, the day the government released a report that showed a steep pullback in hiring in May. The unemployment rate rose to 9.1 percent in May from 9 percent in April.

ManpowerGroup, one of the nation's largest staffing companies, said the proportion of businesses that plan to hire in the next three months is higher than at any time since the end of 2008, during the recession.

Melanie Holmes, vice president at ManpowerGroup, said the company's employment outlook is still at only about half the level associated with a healthy economy.

The Commerce Department said businesses added to their inventories for the 16th straight month in April, another sign that companies are confident people will spend more in the second half of the year.

The pace at which businesses sold those goods was the slowest in 10 months, but economists said it wasn't a concern because inventories are still historically small compared with sales. Companies are unlikely to get stuck with huge stockpiles of goods.

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  • by pete Location: Grifton on Jun 15, 2011 at 01:10 PM
    I agree. we have quit driving as much and are now eating out of the garden can't afford anything should see the line over where they give that free food accross from beamond's restaraunt in snow hill on thursday's. a line of car's all around the building. it rivals the food lion shoppers.thank's OBLAMA.
  • by B Location: Gville on Jun 15, 2011 at 12:09 PM
    Where are there lower food prices? Gas has come down a little, but the grocery stores once they raise a price, it isn't lowered back down when times get better, they just think that we have more money to spend, so they go up again.
  • by clint on Jun 15, 2011 at 11:49 AM
    Useless AP spin. I just hope we can hold on till 2012. Obama "One and Done" Count on it!!!
    • reply
      by Lavon on Jun 15, 2011 at 12:04 PM in reply to clint
      If your counting on those bozo candidates from the other night to beat Obama I would count something else if I were you.
      • reply
        by clint on Jun 15, 2011 at 12:46 PM in reply to Lavon
        The way things are going it will be "Anyone but Obama" You can count on it!!!
  • by The Real Truth on Jun 15, 2011 at 09:35 AM
    Don't know where WITN gets their "facts" from except maybe the Obama Camp, but here's the real truth....Study: Housing Collapse Steeper Than During Great Depression.....
    • reply
      by Ex tin foil hat wearer on Jun 15, 2011 at 10:39 AM in reply to The Real Truth
      Fox News?? Ha Ha Ha....."THE" most Misinformed news outlet? If you don't like my link, just pick another, its all over the internet.
      • reply
        by Obama Snake Oil Co on Jun 15, 2011 at 11:12 AM in reply to Ex tin foil hat wearer
        So now you wear a bucket on your head...hmmm...the old post you went to turned out to be another phony attempt at the liberal media, polling liberals...yep, they were mush brained kids with buckets on their heads and dressed up like Zombies.
        • reply
          by Fact Bringer on Jun 15, 2011 at 11:41 AM in reply to Obama Snake Oil Co
          The way you lash out at people who disagree with you seems to reflect frustration, anger, maybe even hate. Many of your comments like this one seem to have no facts, but only insults. This is how a child interacts.
        • reply
          by Obama Snake Oil Co on Jun 15, 2011 at 12:47 PM in reply to Obama Snake Oil Co
          No Fact Bringer, if you read the real truth story you know it was a fact. You cannot discredit a network that Soros spends millions on to spread smear through the country. Not even he can do it. Like any network, I watch several, they would correct a mistake. The liberal media sites will not. They spin stories that some like Ex tin foil hat wearer, now bucket head, repeat that were long dissproved by reliable sources. Like the media web sites saying Beck was losing sponsors...a lie, it only increased the list of people wanting to get on his air time show. Why? Neilson ratings say so. He is the most viewed at 5 pm according to them. Liberal sites will post it is made up...hey, where are your facts and info coming from...Rachael Maddow...yeah. You know that story he posted was a heap of garbage after the details came out. Like polling Tea Party on whether they would vote for Obama...what do you think they would poll to? See ya on the playground!
        • reply
          by Fact Bringer on Jun 15, 2011 at 02:59 PM in reply to Obama Snake Oil Co
          It's difficult for me to follow your chain of thoughts here. I'll leave it at this: insults will get you nowhere in society. Take a deep breath and think before you post- it reflects on you.
      • reply
        by Mattie on Jun 15, 2011 at 07:34 PM in reply to Ex tin foil hat wearer
        Everyone knows that Fox is slanted towards the right. Why else would they throw millions towards the right wing Clown Show?
  • by Grace Location: Winterville, NC on Jun 15, 2011 at 09:12 AM
    Since when is $3.50 a gallon considered "relief" at the pump? Since when is a $60-$120 fillup relief compared to a month ago when it was $65 to $125? Americans are being groomed to accept these prices and they don't even realize it. It doesn't help that the media throws out stories like this either. Do you realize the pandemonium there would be if gas went below $3.00??? There would be celebration. Do you also realize that not even 9 years ago, gas was $1.25 a gallon.......just food for thought. I for one do not celebrate "relief" at the pump when I drive less than 500 miles a month and fork out $150 a month in gas, and I'm one of the lucky ones. What about the ones with commute times over an hour one way?
  • by Rusty Shackelford Location: Pitt County on Jun 15, 2011 at 07:55 AM
    It sure looked to me like gas went back up in Greenville this week. I saw it at two different stations for $3.55 and $3.54 where it had been $3.49.
  • by Wolfgang Location: Chocowinity,NC on Jun 15, 2011 at 07:49 AM
    If you believe this the food prices are going down. Go buy a gallon of milk. To get a reallity check! If you belive this comedy news story. Reply to me I got an island to sell you for a cheap price. A nice island with lots of water for boating , fishing , fun in the sun - Called Manhatten Island
  • by frank on Jun 15, 2011 at 05:56 AM
    let me guess. . .Osama Bama wrote this? Lets tell everyone that everthing is ok and this dumb American's will believe it!! It's all we can do to keep food on the table now.
  • by cj on Jun 15, 2011 at 05:48 AM
    VERY slight drop in gas. Gas should cost about $2p/gal. plus reports all week that the price of crude is going up again. nice try WITN, but we live in the real world and see what is going on, and more importantly, what isn't.
  • by Working Man on Jun 15, 2011 at 05:41 AM
    What relief? I still spend $100 a week on gas and go to the grocery store and spend $100 and come out with only two bags of food!!!
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