DEFLATION, here we COME!

[radwriter0555]

Underlying U.S. Inflation Slows to 37-Year Low

Reuters
Tuesday, September 16, 2003; 4:10 PM


By Eric Burroughs

NEW YORK (Reuters) - Underlying U.S. consumer prices rose at the slowest annual rate in 37 years in August, the government said on Tuesday in a report that highlighted the Federal Reserve's worries about "undesirably low" inflation.

The main Consumer Price Index rose 0.3 percent in August, below economists' forecasts of a 0.4 percent gain despite a surge in energy costs, the Bureau of Labor Statistics said.

The core CPI, which strips out the impact of volatile food and energy prices, rose just 0.1 percent on the month. On a year-over-year basis, the core CPI, which is viewed as a better gauge of inflation trends, slowed to a 1.3 percent rate in August from 1.5 percent in July.

The data suggested the economy is not yet safe from the dangers of deflation even as it enjoys a burst of growth. For that reason, the Fed repeated at a policy meeting Tuesday that it would keep its federal funds rate at a 45-year low of 1 percent for a "considerable" amount of time.


More

http://www.washingtonpost.com/ac2/wp-dyn/A19953-2003Sep16?language=printer

duck n cover kiddies

[charlie]

1. What good is an assessment that excludes energy prices?

The cost of energy affects everything and it looks to be poised to go higher.

The situation that we're in now reminds me of nothing more than the 70s, when the costs of Vietnam and the Great Society came due and the OPEC gas crunch hit. We had massive inflation then.

[madrchsod]

3. massive inflation

to say the least but you could get 15+ interest on 1000 dollars every couple of months. the spread between credit interest and interest on money was just a few point spread now it`s alot! i had a c.o.l in my union contract back then ,ya, those were the days....

[madrchsod]

2. ahhh.. deflation

what a wonderful thing. if you haven`t noticed,walmart has competion..in your area do you have "dollar stores" and stores like "big lots"? they may not challenge walmart outright but they are on the rise and their stock is performing very well. hell that`s where i buy alot of stuff it`s cheaper than walmart.

[sandnsea]

7. No Walmart

But we do have a Dollar Store and we're not a low-income zip code. Interesting, to say the least.

[Wwagsthedog]

4. Is it time to buy gold?

It seems that our economic future is a bit forboding. What the link did not address is the fact that long term interest rates are rising. The fed can only affect short term rates. If long term rates continue to rise, our ballooning deficit will cost more to service, and so on. Several bubbles could burst including the stock and housing markets if the job market continues to deteriorate and if debt service sucks up more and more capital. Will those who gained the most from recent tax cuts bail out the economy? I think not. Like the republican inspired depression, they will profit again from the misfortune of others.

[Emboldened Chimp]

6. Gold is over $370 now

I was shocked to see it that high. I hadn't checked in about a month; last time I did it was below $350.

[sandnsea]

8. $270 in 2001

Somewhere in that neighborhood. That's a huge leap for gold, things are not looking good.

[Art_from_Ark]

10. One of the main reasons why gold was so cheap in 2001

was that European central banks were dumping gold to meet the requirements for the 2002 monetary union. Joining in the sell-off were Russia, Australia, and even Switzerland. The low price also represents the fact that in 2001, we had a huge budget surplus so inflation was not a concern. I think part of this recent increase represents a natural return to pre-sell-off levels. Of course, part of it also represents concern about the future, especially inflation. I would be interested to know if central banks are buying today.

[fob]

5. The deflation thing has been buzzing for some time.

Can anyone tell me why I am paying HIGHER prices for almost everything I buy daily/weekly?

Gas
Food
Building materials

Am I missing something here?

[Art_from_Ark]

9. What appears to be happening is deflation and inflation at the same time

Inflation for things that are made at home (building supplies, food), services (medical treatment, college education) and important commodities with limited supplies (gasoline), while deflation is occurring with goods that are available in abundance, especially from cheap foreign sources.