Across the board, U.S. prices fell .4% in April, as measured by the Consumer Price Index. An 8.1% drop in gas prices offset mild price increases in most other goods and services. Used cars and trucks were up .6%, while new vehicle prices rose .3% as did the cost of going out to eat. Grocery prices only rose .1%, as did medical supplies. Health care services actually dropped .1% last month.

Since gas prices usually drop this time each year, it's important to look at price changes year-over-year to remove the effect these seasonal variations. Here again, inflation was mild, with prices rising just 1.1%. That's because gas prices were 8.3% lower than this time last year. This offset a 2-3% increase in prices for just about every other category.

Read More...

Retail sales rose .1% in April, to $419 billion, after a .4% decline in March. Increases in spring-inspired categories, such as clothing (up 1.2%), gardening (up 1.5%) and sporting goods (up .5%) offset a 4.7% decline in gas station sales (a result of a seasonal drop in gas prices).

Three other categories also received large boosts, a sign that the economy continues on its steady path of recovery. First, online retailers continued to take business away from brick-and-mortar stores, posting sales gains of 1.4%. Second, automobile sales were up a solid 1%. Third, big box retailers posted solid 1% gains. Even department stores saw a meager but welcome .3% rise, the first increase in months.

Read More...

In a speech to the banking community this morning, Federal Reserve Chairman Ben Bernanke warned that economic shocks are an inevitable consequence of a free-market economy. That's because investors will always search to increase return in areas of the financial system that are less regulated. The government's role is to help banks to put enough cushions in place to absorb these shocks. This is all part of the Dodd-Frank Wall Street Reform Act. Read More...

A reader asks:

Hi Kimberly, I came across this article today and wanted to run it by you. This makes it sound like China really has a large stronghold in world reserves and has stopped buying the dollar on top of their stockpiling gold. Couldn't this lead to a collapse of the dollar soon if true?

Answer: I don't disagree that China may replace the U.S. as the world's most powerful economy, and that the yuan may become the world's global currency. It could even occur in our lifetimes. However, it will be a long, slow process that result in a dollar decline, not a collapse. Read More...