Analysts think that fear of deflation will push the Fed to launch QE2. However, Thursday's data show few signs of deflation. From MarketWatch:
U.S. wholesale prices jumped 0.4% in September, mainly because of higher meat and natural gas costs, the government reported Thursday.
Core producer prices, which exclude the volatile food and energy categories, rose 0.1%. The core number tends to draw the most attention of economists.
Meanwhile, US imports rose sharply in August, pushing up the trade deficit. MarketWatch reports:
The U.S. trade deficit widened sharply in August as imports from China flooded into the country at a record pace, according to data released Thursday...
The deficit with Japan was the highest since the financial crisis in October 2008. Imports from Mexico were also a record...
In August, exports rose slightly to their highest level since August 2008 while imports increased sharply.
Imports rose 2.1% to $200.2 billion, reversing a 2.1% decline in July.
While the sharp growth in imports suggests that demand remains resilient, lacklustre growth in employment means that the Fed is likely to act on QE2 anyway. Again from MarketWatch:
The number of people who signed up for state unemployment benefits jumped 13,000 to 462,000 in the latest week, the federal government reported, signaling no improvement in a weak U.S. jobs market.