As input prices were rising and growth was slowing, we picked up on an interesting vibe from small business owners/managers. They expressed a desire to raise their prices. The action was being "deferred" because gasoline was moving up too quickly in front of them. This week has seen a dramatic pull back in many commodities that were leading the rise up. Gasoline will not fall as quickly as it rises, but a pullback should emerge before the summer tightness.
The question is: If gasoline comes off, will those other businesses use it as a window to raise their prices?? This is a delicate and dangerous dance for the Fed. Here is what we do know: Positive job growth, low rates and lower gasoline prices are a powerful combination of inputs boosting confidence at the business and consumer level. developing.