The Labor Department reported a modest increase in consumer prices in September. The increase in the consumer price index was .2% but it was 1.3% lower than last year.
Core CPI also rose .2% The core index excludes food and energy.
There were price increases in used cars and trucks, apparel and medical care. Energy prices climbed .8% in September.
These numbers indicate that inflation is not a threat, at least for the time being. On the flip side, it doesn't indicate much growth either.This has been the longest stretch of no growth since the Great Depression.
Separately, new jobless claims fell by 10,000 to 514,200. The number of workers continuing to claim unemployment also fell by 75,000 to 6 million. We should note that this figure is unreliable since 400,000 persons have exhausted their benefits this month and the number will grow to 1.4 million by year's end.
The States of Pennsylvania, Washington and Wisconsin saw the largest number of job cuts, mainly due to construction layoffs.
Overall, the September numbers are lackluster. We seem to be in a holding pattern, with the consumer holding the key to growth. Yet, with such high unemployment, the consumer has little ready cash to buy anything.
When do you expect an increase in consumer spending?
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Retailers can't wait for Black Friday, open Thursday
Reader Comments (Page 1 of 1)
10-15-2009 @ 5:08PM
Iridium said...
45% increase in the cost of food over 2 years.
100% real rise in the cost of gasoline.
Downward wage pressure.
Collapsing dollar.
=
MASSIVE INFLATION ALREADY!!!
Ask any real American and they will tell you that they are paying more money for everything they use day to day. The comfort that the average price of a 50" flat panel TV has fallen from $2400 to $1700 doesn't mean much when food cost 45% more than it did.
I'd rather pay $2400 for a TV than $4.85 for a box of Corn Flakes.
10-15-2009 @ 9:13PM
william lindblad said...
To Peter and Iridium:
Peter, Iridium wins on food inflation and I have ten on you and have been watching grocery prices and ag. since the oil embargo. I guess you have not noticed that one of the ploys to keep prices at bay has been to "downsize", no, I don't mean cut the labor force, I mean reduce the size of the can or box. The 45% increase may be a tad high - but it is in the ballpark over the last two years. Part of this was due to the increase in diesel fuel and there have been reductions in the past month. However, costs are still substantially more than 2-3 years ago and percentage wise, more than the CPI increases over this period of time.
Expect this lull to be short lived as it is based upon current corn and wheat harvests, which are abundant. It does not account for certain crops that were devastated by this years drought nor does it take in the continual water supply problems of California. Cal. is the largest ag. State in the U.S. and supplies 10+% of the national output.
I am not concerned as I have a large home garden, cold cellar and know what canning jars are.
nuff said!
Q.)When do I expect a SERIOUS INCREASE IN CONSUMER SPENDING?
A.) When we get jobs created at 10,000 a week as opposed to Dow 10,000
The above is tongue in cheek. The truth is we are still losing 10,000 a week and a return to a consumer driven economy is probably in the same time frame as the Arctic Sea being mostly ice free in summer. In other words, at least 5 years away.