Inflation is eating US wage gains

[babylonsister]

So much for that booming economy. :eyes:

http://www.csmonitor.com/2007/0319/p01s01-usec.html

Inflation is eating US wage gains

Food, housing, and healthcare costs rose at a 6 percent yearly rate in the past three months.

By Mark Trumbull | Staff writer of The Christian Science Monitor

Page 1 of 3

Brian Fortinberry, who runs Front Range Barbecue in Colorado Springs, Colo., is feeling the brunt of a spike in prices.

Beef costs about 10 percent more than it did in January, he says. Fruit and lettuce are also pricier. Gasoline has gone up, adding to costs when his restaurant does a catering job. And Colorado voters just raised the minimum wage – pushing up his payroll tab.

"We haven't increased our prices, but we're looking to do that," Mr. Fortinberry says. "Eventually you have to pass it along."

The economy may be a bit cooler than it was a year ago, but inflation is still running hot. It's not like the runaway price train of the '70s, but it's enough so that people notice at the grocery checkout, when they pay for day care, or when they buy college textbooks.

Some prices – namely for housing, food, and medical care – have been more noticeable than others of late, jumping at a 6 percent annual rate during the three-month period from December through February, the government reported Friday. Retail gasoline prices rose 7 percent in just two weeks, according to a March 12 report by the US Energy Information Administration.

Of course, not everything is getting more expensive. The core rate of inflation – prices of all goods and services minus volatile food and energy – has been edging up, not soaring, for the past three months. Still, at a 2.6 percent annual rate, inflation is hotter than Federal Reserve officials would like.

Economists are divided over what happens next. Some say inflation is bound to taper off – though maybe not for some months – as the ripple effects of a housing-market downturn cool the economy. Others say that rising prices will persist and that the economy, instead of cooling off, will run close to its speed limit.

more...

[w4rma]

1. What wage gains? (nt)

[havocmom]

2. K & R

Everything WORKING people need to purchase is going up. When the figures look bad enough, the people in charge just change the parameters for how inflation is figured, then they tell us lies.

The price I pay for DRINKING water went up 10% since January. Have to buy it as the stuff from the tap is listed officially as not fit for stock animals and makes me sick. The price jumped 5% between Dec and January. Big increases in 4 months - due mostly to the price of diesel.

I honestly do not know how working families make it at all anymore. Fruits, veggies, milk going up so fast.

[Manifestor_of_Light]

3. A lot of us ain't working either.

[Lefty48197]

4. Plus, our 401K's haven't gone up a nickel in six years.

Except for the money that's been deposited out of our paychecks, our 401K's haven't gone up jack squat since the Bush sponsored looting of America began.

[MazeRat7]

5. Two observations (or perhaps predictions)

1) The cost of beef is going much higher since corn demand for ethanol production is now in the equation.

2) I do believe the fed will reduce rates in May to help slow the inflation.

I think the consumer, which has basically kept the economy afloat by spending more than they make, is going to have a "holy shit" moment and radically reduce not only how much they spend but how much they are willing to pay.

(well ok.. thats actually three).

Anyway, those are just some of my thoughts on a couple of points in the article.

Finally, I'm betting there will be one more major sell off in the markets before the summer but after that I would not be surprised to see most companies trading "sideways" (or maybe up 5-7%) over the remainder of the year.

(Doh... now thats four).. time to stop.

At least those are my bets for the next couple of quarters. Your mileage may vary ;)

MZr7