Producer Price Index rises (May 14th, 2024) an Exploration of Possible Broad Systematic Causes

The Producer Price Index rose .5% in April indicating that prices will be passed onto consumers. There is some expectation that it will begin to decline in the near future. We are still a little at a loss of why its happening but the U.S. economy has been booming. One of things I have been discussing for a while is how as the U.S. moved up in a higher competitive platform it should see higher inflation but that may decline at some point as homeostasis from economic settlement and efficiency is created. That time would be soon as major adaptations sparked by COVID occurred creating truncated change. With luck a new platform benchmark. Human capital is part of that process as people learn new skills to work within that platform. 

Before you get all excited this is theory play meaning it could be true or it could also not true. Its just some thoughts on one possible explanation among many different explanations but it doesn't appear anyone has come up with solid theoretical stepping stones and this may be a semi solid mud of an idea. Not being true doesn't really matter but it would certainly be interesting if it was true. Time answers these types of questions. Let us put the possibility of it being true at about 38%. 

Human capital is important and we are in an era of rapid transition so we should expect a slightly higher interest rate while we make innovative leaps with AI, technology and advanced manufacturing characteristic of a higher economic platform shifts. Human Capital in the Smart Manufacturing. 

Slightly higher inflation increases human capital investment so it might be the time to start thinking about new universal ways of doing things that encourage broader economic development. That also means removing socio-cultural restrictions for success, updating institutions, and protecting freedom of speech/religion to ensue full economic engagement and decision making. Inflation and Human Capital. 

(I will explain at some other point why the above paragraph is important but it is a core foundation of our long-term economic health in history and a broader adaptation of the sociological side of our economic development that stabilize the economic gains. Economic and sociological change accompany each other in history but we don't always see them as co-factors. i.e. the sociological-economic platform)

Improvement in our infrastructure mixed with improvements in human capital can lead to increases in productivity. In general productivity can reduce production costs depending on what are the drivers of this increase in cost are. Human Capital and Macroeconomic Development.

The following information was quoted from May 14th, 2024 Producer Price Index. You can also check out some of the charts at the bottom of their page. 

"The Producer Price Index for final demand rose 0.5 percent in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices declined 0.1 percent in March and advanced 0.6 percent in February. (See table A.) On an unadjusted basis, the index for final demand moved up 2.2 percent for the 12 months ended in April, the largest increase since rising 2.3 percent for the 12 months ended April 2023.

Nearly three-quarters of the April advance in final demand prices is attributable to a 0.6-percent increase in the index for final demand services. Prices for final demand goods moved up 0.4 percent.

The index for final demand less foods, energy, and trade services moved up 0.4 percent in April after rising 0.2 percent in March. For the 12 months ended in April, prices for final demand less foods, energy, and trade services increased 3.1 percent, the largest advance since climbing 3.4 percent for the 12 months ended April 2023. (BEA, May 4th, 2024 PPI, para 1-3)"

A good article you may want to read CNN US. Wholesale Prices