weekend commentary - No Inflation Here ... unless you buy food and/or energy
from
(snip)"Whether it's at the pump or in checkout line at the grocery store, cost of living items are on the rise.
A survey by the Wisconsin Farm Bureau shows food prices are up 5 percent this year.
The bureau's 'Marketbasket' survey totals the cost of 16 food items. In the first three months of 2011, the total was $48. That is up $2.39 from December's price for the same items.
Topping the survey's list
•Apples increased 24 cents (18 percent) to $1.52 per pound.
•A gallon of whole milk increased 50 cents (17 percent) to $3.41 per gallon.
•One pound of bagged salad increased 33 cents (15 percent) to $2.48.
•A five-pound bag of flour increased 25 cents (12 percent) to $2.34.
•One pound of ground chuck climbed 32 cents (10 percent) to $3.41.
However the study shows Wisconsin's price is more than $1 less than the national survey of the same 16 food items.
Prices are rising at the gas pump as well.
According to AAA, the price for a gallon of regular grade gasoline in the Green Bay area is $3.767. That is up nearly 25 cents in the last month ($3.529) and about 90 cents from a year ago ($2.883) from this time last year.(snip)
There is also a statistic floating around that the 'average' American was spending 23% of their income on food and energy as of the end of 2010. As food and energy prices rise, while paychecks remain stagnant ( or even shrink as a result of rising state and local taxes ) that percentage must rise as well. This is obviously problematic for exotic dancers whose incomes are derived exclusively from the now less than 77% of 'average' customer income.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
World-wide demand is increasing as the recession slowly subsides. Also for oil speculators are at it again. They love it when trouble erupts in the world.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
Here are the March CPI numbers from the Bureau of Labor Statistics :
The CPI went UP .5 % ; an annual rate of over 7% and it EXCLUDES food and energy costs.
The "all items" index which INCLUDES food and energy went UP 2.7 % . That is the type oif increases we saw during the worst days of Jimmy Carter. Gasoline alone has risen 14.4% in the last three months. It went up 5.6% in March alone.
Food went up .8 %. An annual rate of over 10% ! "At home" food went up 1.1 %. That's the stuff we buy at the supermarket and consume in our kitchens and at our dining room tables. Away from home food went up .3% meaning that a LOT of restaurants and fast food places are eating the difference. For now.
Electricity went up 1% ; apparel .8 % while medical care, the thing Krugman et.al. tell us is breaking every budget from sea to shining sea went up only .1 %; an annual rate of barely 1.5%.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
Projecting annual increases by extrapolating a monthly increase is apt to be very wrong.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
Quote:
Originally Posted by
threlayer
Projecting annual increases by extrapolating a monthly increase is apt to be very wrong.
That ASSUMES that correctives are applied by the Fed, Treasury and Congress.
NOT very likely to happen.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
No, my comment assumes the data are stochastic -- that is, random variations around a real value (call it the mean). The variance is apt to be very large relative to the mean and your sample size is extremely small.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
Quote:
Originally Posted by
threlayer
No, my comment assumes the data are stochastic -- that is, random variations around a real value (call it the mean). The variance is apt to be very large relative to the mean and your sample size is extremely small.
Your assumption. Not mine. Gone food shopping or bought gas lately ? I rest my case.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
Gas is up a lot; food is moderately stable here.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
latest update from MarketWatch
(snip)The Federal Reserve would have you believe that everything is fine, focusing on core inflation rates and ignoring broader measures of inflation as they affect food and energy. These commodity-driven prices, as our central banking overlords would have you believe, are naturally more volatile and shouldn't be overstated.
You would think after Fed bureaucrat William Dudley was castigated for talking up the affordability of iPads while ignoring real family expenses, our Federal Reserve officials would have woken up to reality. But after the publicity stunt by Chairman Ben Bernanke on Wednesday, it's clear that the Fed — and perhaps many Americans as a result — is in denial when it comes to the inflationary trends crippling U.S. households.
While it's all well and good for investors to focus on surging precious metals and the profit opportunities there, let's not overlook the dark side of inflation that is eating away at family budgets. Here are nine crushing costs of inflation that are breaking many American households:
1. Beef
In a revised forecast Monday, the U.S. Department of Agriculture said consumers will see higher price tags on ground beef and steak, projecting 6% to 7% increases year over year. That's up from a previous forecast of just 4.5% to 5.5% inflation for beef prices. Beef prices have surged in the last several months as supplies shrink, exports boom and grain costs soar.
2. Pork
Don't think you can just switch from cow to pig to avoid this trend — pork could see retail price increases of as much as 7.5% over 2010 levels according to the USDA.
3. Grains
Even going vegetarian is more expensive than it was a year ago. Corn prices have doubled, from $3.49 a bushel in July to well over $7.70 currently. Wheat prices have rolled back a bit in recent weeks, but topped 2008 highs in February to set a new record and remain very high currently.
4. Gasoline
The average U.S. price of a gallon of gasoline has jumped about 12 cents over the last two weeks to $3.88, with the highest average price for gas tallying $4.27 in Tucson, Ariz. This is with oil at $112 a barrel — if crude prices reach 2008 peak levels of $145, four bucks for gas may seem cheap.
5. Copper
The price of copper at the end of 2008 was just $1.30 per pound. Currently, copper is trading around $4.30 after setting a record of $4.60 in February. Unlike gold and silver, which are largely used in luxury goods or as investments, copper is used in a wide range of household items — from electrical wiring to air conditioners to water pipes.
6. Diapers
Consumer-products company Procter & Gamble PG (NYSE: PG - News) said this week that list prices for Pampers are up 7% on average over last year, with even Pampers wipes up 3%. To be clear, that's not a retail price hike, just a cost increase to stores. Retailers will decide how much of those price increases to pass along to shoppers. Kimberly-Clark KMB (NYSE: KMB - News), maker of Huggies, said Monday it plans to raise prices for similar reasons — rising costs for the petroleum products and paper pulp that go into the diapers. It will be the third such announcement for Kimberly-Clark since the middle of March.
7. Paper towels and toilet paper
If you don't have infants, you're not off the hook. P&G also said that Charmin toilet paper and Bounty paper towels are both listing for 5% more now with retailers and distributors than they were a year ago. KMB's diaper price update will also be accompanied by a boost for its flagship Kleenex tissues.
8. Shipping surcharges
Freight shipper United Parcel Service UPS (NYSE: UPS - News) will be hiking its fuel surcharges from 7.5% to 8.5% as of May 2 for ground freight and from 13% to 15% for air freight. That really hurts small businesses. If you are a storekeeper simply trying to keep your shelves stocked, you have no choice but to pay more and endure smaller margins — or hike prices yourself and add to this inflationary mess.
9. Wages
Perhaps the most insidious factor of our current inflationary spiral is the fact that while all these other items are costing more, household purchasing power is shrinking because wages and salaries aren't keeping up. While the consumer price index rose 2.7% in March to clock the fastest 12-month pace since December 2009, a staggering 18.3% of personal income is now made up of food stamps while wages account for just 50.5%. That's the lowest since the government started keeping records in 1929."(snip)
from
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
Some more lousy numbers :
Import prices are up 11%.
Imports excluding fuels are up 4.5%
Imports from China are UP 3%. This time last year, Chinese import prices were flat.
The dollar is down 7% vs. the Euro ; 5% vs. the Pound.
France in the 1950's ; Britain in the 60's ; the U.S. in the 70's . All infused their economies with devalued currency resulting in inflation leading to stagflation.
The latest CPI and PPI numbers come out this week.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
And the hits just keep coming :
PPI up 7%.
Core PPI (excluding food and energy ) up 2.2%.
Core intermediate and crude commodities are both up over 10%.
The latest CPI is up .4%.
Core CPI is up .2%.
What is NOT up are wages. The American consumer is trying to pay for higher priced gasoline and food with the same sized paycheck. When this happened in the mid-70's and again in the late 70's and early 80's there was enormous pressure for higher wages and that really let loose double digit inflation. Supposedly, the lousy employment picture is supposed to keep the unions housebroken when contract time comes and keep their wage demands under control. Who wants to bet on that ? Look what the pandering dummies are trying to do in NYC . They want to mandate payment of a "living wage" on all City contracts over $100,000. These are the same dummies who killed a job creating retail project for an unused Armory in the Bronx that to this day still lies empty. Why ? Because the developer balked at being told how much to pay to whom. Because the retailers who would have moved in did not want to be obligated to pay more than the legally required minimum wage. So nothing got built and nobody got hired. Brilliant ! This in an area with the highest unemployment rate in the City. Brilliant ! At least the politicians who killed the project can feel really good about themselves.
They accomplished absolutely nothing positive but did prevent hundreds of people from being hired albeit at minimum wage.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
Quote:
Originally Posted by
Eric Stoner
Your assumption. Not mine. Gone food shopping or bought gas lately ? I rest my case.
Let's see here. you rest your case on a personal anecdote, rather than the time-proven universal science of statistics? At least in your eyes, you win.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
Quote:
Originally Posted by
threlayer
Let's see here. you rest your case on a personal anecdote, rather than the time-proven universal science of statistics? At least in your eyes, you win.
Are you serious ? Are you trying to claim that gasoline and food have NOT been going up ? You can read the BLS and other stats as well I can and they are NOT good.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
I was saying prices are inching up, but projecting an annual increase on the basis of a monthly increase is just not reliable.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
Quote:
Originally Posted by
threlayer
I was saying prices are inching up, but projecting an annual increase on the basis of a monthly increase is just not reliable.
Yeah, BUT when you couple the latest stats with the unhappy history of creating too much money, then it is not hard to see a healthy dose of inflation just around the corner.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
^^^ there are scores of news reports on the topic of 'margin compression' i.e. US companies being forced to absorb higher costs for 'inputs' ... from transportation fuel to raw materials to energy ... without being able to pass on those higher costs to retail customers. With 1Q earnings reports now coming out, this 'margin compression' is very apparent in terms of earnings per share versus expectations etc. for many US companies. As such, a 'coiled spring' of future inflation has now been created in that these US companies need to increase prices to retail customers ASAP in order to satisfy their stockholders / investors.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
^^^ Funny you should mention that. In Niall Ferguson's latest column in NEWSWEEK he relates the following story : The President of the N.Y. Federal Reserve , William Dudley, was trying to explain to an audience in Queens why they had no reason to fear about inflation. Dudley, former chief economist at Goldman Sucks said that today one can buy an Ipad2 that costs the same as an IPad1 but which is twice as powerful. An audience member immediately responded : " I can't eat an IPad ! ".
The plain fact of the matter is that Bernanke et.al. were so intent on avoiding a replay of the 1930's that they are replaying the 1970's. It helps to remember that Obama has appointed nothing but "doves" to the Fed. i.e. dummies who don't give a damn about inflation and who think the Fed's main job is to promote full employment. They've succeeded in giving us the former while not affecting the latter.
Regardless of the "core inflation" numbers ( strip out food and energy and core CPI for March was ONLY 1.2 % ) the American consumer has to deal with food and gasoline prices on a daily basis. Obama's response was to cluck about tax breaks for the oil industry and set up a Justice Department task force to investigate price gouging and fraud in the oil markets. That was AFTER weeks of trying to blame it all on events in the Middle East. Ignored of course was a threefold increase in the monetary base in as many years.
According to Ferguson, John Williams and some other prominent economists , the CPI has lost credibility because it has become a bogus index. The BLS has "improved" the way it calculates inflation 24 times since 1978. Under the "old" methods the CPI is already running at 10%.
Vying with Joe Biden and Nancy Pelosi for the title of "Village Idiot" is Treasury Secretary Tim " Turbo-Tax " Geithner. Just last week Tim repeated his mantra that : " Our policy has been and always will be ... that a strong dollar is in the interest of the country. " If he's not a contender for V.I. then Geithner is a stone cold LIAR !. Take your pick. On his watch the dollar has depreciated 17% and he has yet to lift a pinky to do anything about it.
Since Obama is now the Food Stamp President ( 13 million more Americans are getting them now compared to when he took office ) and since the price of food "doesn't count" Mr. Dudley can say: "Let them eat IPads".
As to Melonie's points about the margin squeeze, the following have all increased dramatically in price in the past year : Airfares; paper products; automobiles; socks and underwear ; cotton products; rice; corn; wheat; fast food ; sneakers ; car batteries ; candy; coffee; cocoa etc. etc. Retailers have hit the limit of eating the price increases from their suppliers and have had to pass along the costs to the consumer.
Re: weekend commentary - No Inflation Here ... unless you buy food and/or energy
speak of the devil ... from
http://static.safehaven.com/authors/amerman/21045.png
(snip)Let's begin by looking at the cost of imported food. The monthly rate of inflation was 1.8% for April of 2011, meaning food purchased from outside the United States rose in cost by about 1.8%. If we annualize that monthly inflation rate it becomes 24%, and this is quite compatible with the trailing annual rate of inflation (last 12 months) of 20%. When we look at the cost of putting imported food on our table, both the trailing and the most current numbers indicate a very high rate of inflation on imported foods sold in grocery stores and restaurants.
(The annualized numbers use compounded monthly inflation rates, i.e. ([(1.018) ^ 12] - 1) = 23.9%, rather than the simple multiplication of 1.8% X 12 = 21.6%, however, understanding the math is incidental compared to what is a high rate of inflation either way.)
The cost of energy rose by 6.7% in the month of April. (We'll ignore the 118% annualized rate as an outlier.) When we look at year on year and compare April 2011 to April 2010, there has been a 37% increase in the cost of imported energy.
Of course April's single month energy numbers have been offset by the plunge in commodity prices in general, and by the plunge in oil prices in particular that occurred the first half of May. That notwithstanding, however, over the last 12 months the cost of energy in US dollar terms has risen at quite a high rate, and the roughly $4 dollar a gallon gasoline took a good chunk out of all of our wallets the last time each of us in the US refilled our tanks.
The cost of imports in general rose 2.2% in April of 2011, following a 2.6% rise in March. Our trailing 12 month average rate is 11% for all US imports. If we annualize the April numbers, then import inflation is rising at an annual rate of about 30% per year, and if we annualize the March monthly figures the rate is about 36% per year.(snip)
(snip)There is another problem here that is very much intertwined with government policy, with the massive federal budget deficits, and with the massive direct creation of money out of thin air by the Federal Reserve. What this all adds up to is that the generational redistribution of wealth within the United States is already well underway. As inflation continues to mount and becomes increasingly undeniable, then younger workers, people who have most of their careers ahead of them, will demand substantially higher prices for the services they provide. And although this ability to increase wages is going to be limited by the depressed state of the economy, at least in many sectors, overall these workers are going to succeed in at least partially keeping up with inflation over their remaining decades in the work force.
Higher import prices mean fewer import purchases, given strictly limited financial resources for many consumers, and if we have less imported goods available for consumption for the US as a whole, that means there is a lower standard of living on average. The numbers have to add up, and if one group is at least partially keeping up, that means there's another group that isn't, and it's those people who are going to feel the disproportionate drop in their standard of living. Those people who will be on the losing end are for the most part older Americans: older workers, older savers, older investors, and current retirees. They simply don't have the ability to bring in another lifetime's worth of wages and income, and they are not receiving yields on their investments that will offset the negative effects of inflation on a pretax basis, let alone an after-tax basis.
I wrote the article linked below, "Bullets In the Back: How Boomers & Retirees Will Become Bailout, Stimulus and Currency War Casualities", to examine in depth the ignored but vitally important generational results of US government policy and Federal Reserve policy. When we add up the massive deficits, the direct creation of trillions of dollars out of thin air, and currency strategies that involve driving up the cost of imports, the combined effects can be compared to the government taking tens of millions of older Americans, lining them up in a row and systematically machine gunning them in the back.
The phrase "machine gunning in the back" may seem extreme and over the top, and I've gotten some pushback on that phrasing. The provocative language is entirely appropriate however (in my opinion), when we consider the lack of a national dialogue about a deliberate government induced redistribution of wealth that will likely reduce the standard of living for tens of millions of people over a period of decades. We are talking about a nation whose standard of living is based on imports, and the cost of those imports are increasing for people across the board at an average annual rate in excess of 10%, with an acceleration to 30%+ in recent months - and that is a situation which demands strong language. Particularly when incomes are not rising in synch, which then necessarily means standards of living are falling for many millions of people.
If your income isn't rising now and is not likely to be keeping up with inflation in the future, then every time you go to the grocery store and you pay 20% more for a food item - you are taking a bullet in the back to pay for federal government policy.
When you go to the gas pump and you pay 37% more than you did a year ago, then you are taking another bullet in the back to help pay for irresponsible deficits and monetization.
Any time you buy something made from outside the United States, and costs are climbing at an annualized rate now about 30% every year, you're taking bullet in the back with that purchase, followed by another, and another. Each of these is hitting you directly in your standard of living, this is far from accidental, and the situation is just likely to get worse.(snip)