For Most Americans Inflation Is Getting Worse, Not Better
Prices paid by U.S. consumers rose more than forecast in September as food and energy costs climbed, while core measures showed inflation remains contained.The 0.3 percent increase followed a 0.1 percent decline in August prompted by falling oil prices, the Labor Department said today in Washington. So-called core producer prices, which exclude fuel and food costs, rose 0.2 percent for a second month in line with forecasts.
With inflation under control, Federal Reserve policy makers have leeway to consider cutting their benchmark rate again later this month to keep the economy growing in the face of a deepening housing recession. Fed Chairman Ben S. Bernanke this week reiterated the central bank would "act as needed'' to foster sustainable growth along with price stability.
That's right -- inflation is under control. Well, except for the following prices from the agricultural and oil markets respectively.
Let's ignore the headline number and look at the following two paragraphs from the BLS release:
Consumer prices increased at a seasonally adjusted annual rate (SAAR) of 1.0 percent in the third quarter of 2007, following increases in the first and second quarters at annual rates of 4.7 and 5.2 percent, respectively. This brings the year-to-date annual rate to 3.6 percent and compares with an increase of 2.5 percent for all of 2006. The index for energy, which advanced at annual rates of 22.9 and 32.9 percent in the first two quarters, declined at a 14.8 percent rate in the third quarter of 2007. Thus far this year, energy costs have risen at an 11.7 percent SAAR after increasing 2.9 percent in all of 2006. In the first nine months of 2007, petroleum-based energy costs (energy commodities) advanced at a 20.6 percent rate and charges for energy services (gas and electricity) increased at a 1.3 percent rate. The food index rose at a 5.7 percent SAAR in the first nine months of 2007 after advancing 2.1 percent in all of 2006. Grocery store food prices increased at a 6.7 percent annual rate in the first nine months of 2007, reflecting acceleration over the last year in each of the six major groups. These increases ranged from annual rates of 4.0 percent in the index for other food at home to 17.7 percent in the index for dairy products. The CPI-U excluding food and energy advanced at a 2.5 percent SAAR in the third quarter, following increases at rates of 2.3 percent in each of the first two quarters of 2007. The advance at a 2.3 percent SAAR for the first nine months of 2007 compares with a 2.6 percent rise in all of 2006. The deceleration largely reflects a smaller increase in the index for shelter and a downturn in the index for apparel. Shelter costs, which rose 4.2 percent in all of 2006, have risen at a 3.2 percent annual rate in the first nine months of 2007. The index for apparel, which last year registered its first annual increase since 1997, has declined at an annual rate of 1.7 percent thus far in 2007. The annual rates for selected groups for the last seven and three-quarter years are shown below.
So -- why am I focusing on these two paragraphs rather than the headline number? I am personally having a really difficult time believing the "headline" inflation number largely because my personal experience just isn't jibing with an "inflation is benign" scenario. Here's why. I go shopping every 4-5 days. Over the last year or so I have seen chicken increase from about $4-$5 to $7-$8. Milk is now almost $4/gallon when it use to be $2.99/gallon. Simply put, the numbers just aren't adding up. While I don't know what is wrong exactly with the BLS' calculations and/or methodology, it simply isn't tracking what I am seeing at the retail level. Now I realize that the prices above are for food which isn't part of "core" inflation. This also illustrates how incredibly stupid the Fed's reliance on "core" inflation is. Core inflation is a great measure if you don't consume food or energy. For that small minority of the population that actually does consume food and energy, total inflation is a hell of a lot more relevant to daily life.
Let's look at three sentences from the first indented paragraph from the BLS report:
This brings the year-to-date annual rate [of total consumer prices] to 3.6 percent and compares with an increase of 2.5 percent for all of 2006.Thus far this year, energy costs have risen at an 11.7 percent SAAR after increasing 2.9 percent in all of 2006.
Grocery store food prices increased at a 6.7 percent annual rate in the first nine months of 2007, reflecting acceleration over the last year in each of the six major groups.
These three sentences -- which are part of the BLS report -- are not reported in the financial press. And they sure should be because they show some serious price acceleration for goods we have to buy in modern society.
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Ok. Lets figure the MIDDLE INCOME with ALL AMERICANS ADDED. MIDDLE INCOME IS $280,000.0
Inflation with ALL COST ADDED is nearly 27% like it or not
Maybe home values are what's keping it down. In Miami,Phoenix, and Vegas that would make for deflation??
That's still not the middle income. That is the average, with all American's added, but take out the top 20% and that number dips in the $40 to $50K range, or a family of 4. Still, you point that inflation is out of control, is still right.
"Lets figure the MIDDLE INCOME with ALL AMERICANS ADDED. MIDDLE INCOME IS $280,000.0
GOOD GRIEF! Where do you come up with this garbage?
$280,000 is the TOP 1 1/2% of all households.
The income at the 50th percentile of all households (meaning 49% of all households have have less and 49% have more) is $48,201
"Helicopter" Ben Bernanke isn't worried about inflation, so why should we?
In fact, while facing the largest surge in consumer prices (as noted in the post) he drops interest rates by an amazing half-point! On top of that he bails out certain crooked banking organizations to the tune of $300 bil.
So stop worrying so much! If you're a billionaire you won't hardly notice.
It's for this very reason that the SCHIP program should be expanded to include more middle class wage earners. The buying power of a family of five has shrunk considerably over the past 2-3 years just based on fuel and energy costs alone, not to mention the attendant increases in the price of such luxuries as food and clothing.
Everything is going to hell in a handbasket but did you see the chimp this morning still smirking and not answering questions. I hope all you evangelical "christians" who put these guys in power rot in hell.
Time for a victory garden!
There's a whole lot more wrong than leaving food and fuel out of the numbers. There's also something called "value added" that skews the numbers too. Bushco is cooking the books big time, and noone seems to care that apples = oranges nowadays.
Too many charts! Huff readers only want to beat up on Bush, in fact I think Bush took my parking spot at the welfare office, yesterday, now that is something to get worked up about.
Thanks! for caring.
Shame on you, you selfish, Democrat welfare queen! Why don't you work two jobs to make ends meet, something "Dear Leader" described as, "uniquely American."
I like the charts.
Keep them coming.
Only, at my age, it would help if there was an easy way to make them larger.
Switch to Opera as your browser, allows a 10X magnification. One of the charts filled my 19" LCD.
When we can no longer afford to buy anything, THAT'S when this money-driven society will collapse.
Why do you think crime is the biggest growth industry in the United States?
much of the rise in food costs can be attributed to our nation's foolish push for more ethanol, a fuel that cost more energy and resources to make than it produces. corn has doubled to $4/bushel which makes nearly everything we consume more expensive to buy. here in california i was paying $3.65/gal of milk a few months ago. now it's $4.45. my favorite ice cream went from $2.83/gall
Be glad your in Calif. prices here on the east coast are much higher.
You're screwed if you live in an urban or suburban area in the East with hot summers and cold winters. My friends out there really have it tough. They pay a fortune for fuel and food.
Dude, if you don't make 250 a year, you're fucked.
American freedom is expensive, based on that, even if you make $100,000 you're still likely to owe more than you have.
I'm moving to Germany but I'll still post snarky stuff here, like, "Nyah nyah, I'm in Germany and you're still in that concentration camp they used to call America."
Have fun in Germany. Why don’t you take some of these whining, U.S. hating libs with you? If your going for greener grass, beware of what you ask for. You just might get it! And by the way, the last concentration camps I remember were in Germany. Good luck and keep in touch.
We had Concentration Camps here in America - just ask the Japanese Americans who were interred in them during WWII.
http://en.
"Concentration camp (n; 1901): a camp where persons (as prisoners of war, political prisoners, or refugees) are detained or confined."
Based on that definition, "concentration camp" would appear to be an accurate term for the ten American camps. After all, those held in these camps were, for all intents and purposes, prisoners of war in their own country, and they were certainly political prisoners.
Furthermore, some US Government officials actually referred to the American camps as "concentration camps." President Franklin D. Roosevelt, who signed Executive Order 9066, referred to the American camps as "concentration camps." Secretary of the Interior Harold Ickes, a member of Roosevelt's cabinet, also made this reference.
Supporters of the "concentration camp" terminology thus contend that its use by these high-ranking US Government officials, including two Presidents, coupled with the generic, original meaning of the term (which had nothing to do with the Holocaust) makes it the most accurate and appropriate of the various options available.
By definition, you could classify Guantanamo as a Concentration camp and, for that matter, American Indian reservations qualify as well.
mack,
Noticed you didn't respond to bonddad after he schooled your poseur opinion?
Inflation is a monetary event: The more money the government prints on paper the less it is worth. Inotherwords, the supply of that printed paper is increasing whereas demand for it from the rest of the world is decreasing and it becomes less valuable (The Canadian dollar is now worth MORE than the US dollar).
By fungible real assets like commodities with the most fungible being GOLD (you can't print more of it with the stroke of a pen)
Add my own 25% increase in personal healthcare costs, and my yearly inflation is far, far beyond the skewed figures of "core" inflation that we have been presented. Hopefully, more people listen to this than the rhetoric that is fed to us and blindly swallowed.
Just a couple of quick thoughts.
This report was produced by the same people that gave us the Petreyus report. This is all smoke and mirrors. If you decide to bypass the most damning numbers your report doesn’t look nearly as bad. And for the $100 lunch people, things are good.
Now let me also add this one little tidbit. I get my yearly review in June, I to a massive 3.7% raise this year. This was large by comparison of the last 4 years. Our fiscal year begins in October. New Insurance rates took effect at that time. So I am actually taking home $8 less than I was a year ago. Now lets add the cost of those little extras that I like to pamper myself with, Food, Electricity, Natural Gas and Gasoline.
Now I know I will get some Right Wing, Pro-Big Business nut job telling me that I am crying because I didn’t get a big enough raise this year and that is not a good enough excuse for not trusting this administration. But let me just say that you are wrong and obviously do not live in the same reality that I do.
My money does not go as far as it used to and I am making less of it!
Go to places like Australia and you now have 2/3rds the spending power of what you did a year ago.
They can spout all the numbers they want, all I know is that EVERYTHING in the grocery store has risen AT LEAST 100%, an item that used to cost a quarter is now 50 cents. "Sale" prices are now above what regular prices used to be. They just keep going up & up & up with no end in sight!
Agreed, hellinabucket! Since Bush & Co. took office, the costs of running my household--food, insurance, gasoline, fuel oil, electricity, etc.--have at least doubled.
In 2000, my average electric bill was $42. Now it's over $100. In 2000, my monthly grocery bill for my daughter and myself was around $125. Now it's more than $300. My mortgage was $650. Now it's $980.
And, no, my income has not doubled. In fact, aside from a minor COLA adjustment each year, it's not changed.
I'll bet your property taxes have SKYROCKETED, right? In Westchester County, NY (where I live) property taxes have JUMPED MORE THAN 50% since Bush took office--naturally, this increase gets passed on to me via rent increases.
Isn't there kind of a vicious circle here?
The US increasingly relies on food and oil produced overseas, in part because they are cheap.
The US government borrows a ton of money from foreigners, to pay for war and tax cuts for the rich.
The huge stockpile of dollars overseas exceeds demand, so the dollar falls.
This fall in the dollar causes foreigners to want to decrease their dollar exposure; which reduces demand for dollars, causing the dollar to fall more.
The food and oil imported from overseas, which used to be cheap, rise in price because we're still paying the foreign producers in dollars, which are now worth less.
If this is the case, the financial page reports probably will not reflect it quickly. The high rate of deficit spending reflects priorities that the {mostly Republican} rich want. The idea that moving production of necessities overseas exposes the people of the US to currency risk makes globalization look less attractive. Neither the idea that the Bush administration is too expensive; nor the idea that globalization is risky are conventional wisdom. If this is what is going on, it will take time to sink in. Things that the media owners don't want to have the media think probably take a longer time than usual to sink in.
It is worth noting that most financial journalists are well paid. The direct cost of food and energy is probably less important to them than to the median US resident.
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