Consumer prices fell by the most in six years last month, reflecting a drop in energy prices. The consumer price index declined .4% – the biggest decrease since December 2008 – as energy prices slumped 4.7% (gasoline prices fell 9.4%).
Lower fuel prices, combined with improvements in the labor market, drove consumer sentiment to an 11-year high. The University of Michigan’s consumer sentiment index rose to 98.2 – the highest since January 2004.
On another bright note, small business confidence rose to the highest level in over 8 years, as the NFIB small business optimism index rose to a reading of 100.4 – the best since October 2006. According to the report, “There’s no question that small business owners are feeling better about the economy. If they continue to feel that way 2015 could be a very good year.”
The index showed broad-based strength, with 8 of 10 components advancing, one holding unchanged and one declining by 1 percentage point.
In other upbeat news, Job openings climbed to the highest in nearly 14 years in November: the number of positions available rose to 4.97 million – the most since January 2001. At the same time, the pace of hiring slowed as the number of people hired slipped to 4.99 million following a 7-year high of 5.1 million in October. Currently, there are 1.8 unemployed for every job opening.
Retail sales dropped .9% in December, the biggest decline in almost a year, as consumers spent 6.5% less at gas stations (the largest decline since 2008). Sales also declined at electronics, clothing and department stores. Overall retail sales for 2014 rose 4% (the smallest gain of the recovery).
Industrial production cooled in December, slipping .1% as utility output dropped 7.3% (last month was the second-warmest December dating back to 1939), and marking the first decline since August.
Business inventories rose .2% in November as sales fell for the second straight month. At Novembers’ sales pace it will take businesses 1.3 months to clear their shelves.