Bill Losey’s Weekly Economic Update for Feb. 21, 2011

INFLATION UP 0.4% FOR SECOND STRAIGHT MONTH
The federal government’s Consumer Price Index hasn’t seen back-to-back increases of this magnitude since June-July 2008. As overall CPI rose 0.4% in January, core CPI rose 0.2% – the biggest increase in that indicator in 15 months. In addition, the Labor Department’s Producer Price Index climbed 0.8% for January.

CONFERENCE BOARD LEI TICKS UP 0.1%
January brought a tiny increase in the Conference Board’s Leading Indicator Index. New manufacturing orders, consumer expectations and low interest rates were the indicators pushing the index into positive territory.

RETAIL SALES, INDUSTRIAL OUTPUT DISAPPOINT
Blame the weather, not the shopper: the Commerce Department said retail sales were up 0.3% for January, underneath the 0.5% gain forecast by economists surveyed by Bloomberg News. On the upside, retail sales posted their seventh straight monthly gain. The weather also may have been a factor in the 0.1% retreat in U.S. industrial production last month. The Federal Reserve did revise December’s gain in that indicator from 0.8% to 1.2%.

HOUSING STARTS UP 14.6%
This is the biggest jump in new construction in four months, according to the Commerce Department. While building permits fell 10.4% from December levels, that comes on the heels of a 15.3% rise in December as firms rushed to get permits before building code changes took effect for 2011 in several states.

STOCKS ON PACE FOR A FINE FEBRUARY
Last week continued the pattern we’ve seen recently, with the Dow calmly gaining between 10-100 points on the typical trading day. The numbers for the week: DJIA, +0.96% to 12,391.25; NASDAQ, +0.87% to 2,833.95; S&P 500, +1.04% to 1,343.01.