Consumer Prices Probably Fell in January: U.S. Economy Preview

[Joanne98]

Feb. 16 (Bloomberg) -- Consumer prices in the U.S. probably posted their first annual decline since 1955 and new home construction fell further in January, economists said before reports this week.

The cost of living probably dropped 0.1 percent in the 12 months to January, according to the median forecast in a Bloomberg News survey ahead of Labor Department figures due on Feb. 20. A Commerce Department report two days earlier may show builders broke ground on the fewest houses since record-keeping began in 1959, a separate survey indicated.

The Labor report may renew concern among some Federal Reserve officials about the risk of prolonged declines in prices, which erode profits and make debts harder to repay. The housing figures will underscore the difficulty President Barack Obama will have in arresting the industry’s three-year slump.

“Given the rising odds of deflation, there’s certainly no pressure on the Fed to raise rates and it gives them the green light for further credit easing,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. Meantime, housing is unlikely to recover in the first half of the year, he said.

Obama will unveil his strategy to stem the mortgage crisis the same day as the housing-starts figures. The focus of the plan will be to cut monthly payments to help keep struggling borrowers in their homes, aides said.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aB0ulIeI8LxA&refer=news

I haven't noticed comsumer prices dropping at all!

[ixion]

1. hmmmm... dropping? I think not.

From this individuals perspective, prices continue to rise.

[RedEarth]

2. Further credit easing won't have much of an impact since consumers

are already on the ropes. This crisis is going to play out over a number of years.