Several indicators are giving mixed signals about how well the economy is performing as well as how things may look down the road.

Thursday the U.S. Labor Department reported prices at the wholesale level fell in May, posting the largest drop in five months.
The Producer Price Index fell by 0.4%, following a 0.2% decline in April. The drop was due mainly to lower costs for gasoline and diesel fuel and was in sharp contrast to a 0.1% increase predicted by analysts.
Prices excluding food and energy were unchanged and are now 2.7% less than last May. The only product experiencing significant inflation is steel, up 4.5% in three months. This is an adjustment to the competitive protection afforded by recent higher tariffs and is now nearly complete.
"With inflation only up to 0.0%, the Federal Reserve Board can delay raising interest rates until late summer at the earliest," says Newport Communications Senior Economist Jim Haughey, "giving the economic recovery several more months to gather speed before the momemtum is slowed by rising credit costs."
However, he notes, "Zero inflation, including falling prices for many manufactured goods, is a tough environment for carriers to get freight rate increases."
Meantime, the Commerce Department reported retail sales were weaker in May, falling 0.9%, the biggest drop in six months.
However, the May decline was almost entirely due to short term volatility in a still very strong motor vehicle market and to falling prices at gas stations, says Haughey.
“Sales were unchanged at retail stores, which generate most of the consumer truck freight," Haughey says. "Soft goods continued to be relatively weak with month-to-month sales off 2.9% at clothing stores and 0.9% at department stores. Similarly, hard goods continued to be relatively strong with sales up 0.9% at furniture stores and up 2.1% at electronics/appliance stores."
Haughey notes that the first two months of the spring quarter are 3.6% higher, at an annual rate, than the first quarter.
He says, “This assures 3-4% GDP growth for the current quarter.”
These reports follow the release of the Federal Reserve’s “Beige Book” on Wednesday, in which policy makers said the recovery of the U.S. economy appears to be uneven.
Their snapshot of business activity in April and May indicates the economy has “modest but uneven growth, with some major sectors showing signs of improvement while others softened or remained weak.”
The report notes that consumer spending is holding its own, while the manufacturing sector, which has been the hardest hit by the recession, largely reported higher production levels, shipments and orders, but there were pockets of weakness.
The report will be reviewed by Fed policy makers when they meet later this month. It’s expected the news will lead to interest rates being unchanged for the time being.