INDICATOR: June Import and Export Prices/Weekly Unemployment Claims

KEY DATA: Imports: negative-2.7 percent; Excluding Energy: negative-0.3 percent; Exports: negative-1.7 percent; Farm: negative-4.0 percent; Unemployment Claims: 350,000 (down 26,000)

IN A NUTSHELL: “The falling costs of imported goods should take some pressure off of consumers who have seen their incomes go nowhere.”

WHAT IT MEANS: Households have been helped by falling energy costs and now we are seeing that prices of most types of goods that are imported are also coming down.

Import prices fell sharply in June led by another huge drop in petroleum related products. But it was not just oil. Food, capital goods, consumer goods and vehicle costs were also off, though only modestly.

Still, down is an awful lot better than up as it stretches the already stretched household budget. Indeed, the trip to the supermarket may not be as daunting, though there are indications that food prices could jump in the months to come.

On the export side, even the agricultural sector posted declines in the prices they are getting from foreign purchasers. The world economic slowdown is affecting prices everywhere.

In a separate report, unemployment claims fell sharply last week. Let’s not get too excited about that as it was the July 4th week and it is tough to seasonally adjust the data on a weekly data let alone one that has a holiday in mid-week.

I would not be surprised if the number gaps up next week. Still, this is another indication that the labor market may not be quite as weak as the job numbers have indicated: Job openings are rising, layoffs seem to be ebbing and unemployment claims look like they have stabilized and have started to drop.

Those factors seem to point to some additional hiring but we have been disappointed for the past three months and I will believe that payroll gains have improved up when I see it.

MARKETS AND FED POLICY IMPLICATIONS: If executives are going to assume the turtle position and hunker down to protect their companies from the uncertainties of Europe, the fiscal cliff and the presidential election, it will be up to consumers to carry the load.

Unfortunately, their incomes have been stagnant and when you adjust for inflation, they have been falling. With wages stagnant prices will have to fall if spending is to pick up and that could happen, at least for some products.

Unfortunately, the price decline is also an indication that the worldwide economic slowdown is biting and firms are scrambling to keep sales from cratering. The claims numbers may be starting to fall again, pointing to somewhat better job growth, income gains and hopefully spending in the months to come. Investors should really like these data.

But it is all about confidence and the unwillingness of politicians to take tough actions in Europe and the U.S. will continue to restrain business hiring or investment.