The Labor Department reported that producer prices rose 0.4% in August, more than the 0.3% analysts expected, the New York Times reported. This was also double the July figure of 0.2%. But when food and energy prices were removed, the core index rose only 0.1%, meaning inflation was in food and energy.

With these numbers, the government no doubt will loudly proclaim that inflation is not a problem. If you multiply 0.3% by 12 (the difference between the overall index and the core index), you get 3.6% -- all of it in food and energy.

You don't have to be a U.S. Department of Labor statistician to know the trend in the United States regarding wages and salaries: they're heading lower, in many job categories.

And the reasons are complex: globalization, automation, and lack of unionization have driven real wages and salaries for many job segments down to decade-long lows, and in some cases to levels not seen in more than a generation.

Thailand is the world's largest exporter of rice. This year Thailand wants to sell 5 million tonnes of rice, which is equal to one fifth of the world's annually traded supply. Dumping this large an amount would upset the world rice market and drive prices into the cellar.

Last year rice had a sharp jump in price to $1100.00 a tonne. Since then the price has been cut in half to about $580.00 per tonne. Recently the Vietnamese government sold 500,000 tonnes of rice to the Philippines, the world's largest importer, at $420.00 a tonne. There is talk of another sale of 1 to 1.5 million tonnes

Now you can begin to see the magnitude of the proposed Thailand sale. Thailand's problem is due in part from purchasing excess rice from farmers to keep prices high. Now, however, the Thai's are facing a dilemma. If they make this large sale, they could lose about $100.00 per tonne. On the other hand, if they don't work off the inventory, the price of rice will not rise.

Has the price of rice come down in the supermarket?

MSNBC reports that two-thirds of people surveyed by Pew are hurting thanks to flat incomes and rising prices. I've posted on this here, here, and here. But MSNBC's stories of how these numbers affect families make for compelling reading. This could be the key issue that determines the outcome of the 2008 elections.

Pew's statistics suggest that rising prices and flat income are a chief concern for U.S. citizens. In July, 45% of the public -- compared to 24% in February -- say rising prices are the biggest economic problem. 66% say their incomes are lagging behind their living costs. Gasoline prices are hovering below $4 a gallon while prices of fruits and vegetables have risen 7.6%, dairy products have jumped 9.2%, and cereal costs 10.4% more.

Here are three of MSNBC's stories:

• School teacher. Carol Netzel, a retired elementary school teacher, says people feel as though their incomes don't cover their growing expenses. MSNBC quotes Netzel as saying: "It doesn't matter what the economists say. All the people I chat with at the grocery store, the gas station, shopping for school clothes, all are feeling very depressed because of the beating their budgets are taking."

There have been few positive data points for the U.S. economy of late, and a modest GDP report is hardly a cause for a celebration, but all things considered, the Federal Reserve, business executives and investors will take it, mixed bag as it is.

The U.S. economy grew at a modest 1.9% pace in Q2, the U.S. Commerce Department announced Thursday, as the world's largest economy received a mild, if temporary, boost from federal tax rebate checks. Still, economists surveyed by Bloomberg News had expected the economy to grow at a 2.4% rate in Q2.

Further, revised Commerce Department data indicates the economy contracted 0.2% in Q4 2007, the first drop in real gross domestic product since the 2001-2002 recession. The U.S. economy grew 0.9% in Q1.

Economist David H. Wang, not a part of the Bloomberg News survey, told BloggingStocks Thursday the Q2 U.S. GDP report is a mixed bag, concerning overall U.S. economic health.

"On the one hand, the 1.9% figure is not that bad. I actually am a little surprised that it was that high, given high energy prices and the pullback in retail sales," Wang said. "On the other hand, you can see in the Q2 data the continued drag of the housing sector's recession, with the Commerce Department now saying the economy contracted 0.2% in Q4. Housing is taking at least 1 percentage point off GDP, probably closer to 1.2-1.3 percentage points, and it's hard to project a sustained recovery without a turnaround in housing, given the sectors it affects."

Meanwhile, inflation inched higher in Q2. The personal consumption expenditure price index increased to a 4.2% annual rate, with core prices, which exclude the often-volatile food and energy component, rising to 2.1%, slightly above the U.S. Federal Reserve's target zone. Few economists expect the the PCE data to influence the Fed at its meeting next Tuesday: the Fed is expected to keep its benchmark, short-term interest rate the same at 2%.

Import prices increased 0.2% in February 2008 -- lower than expected -- as imported oil prices declined for the second time in three months, the U.S. Labor Department announced Thursday, in a statement.

Economist surveyed by Bloomberg News had expected import prices to rise 0.6% in February 2008. Import prices increased 1.7% in January 2008. In February 2008, imported petroleum prices declined 1.5%.

Meanwhile, exports prices increased 0.9% in February 2008, as U.S. exporters received stronger prices for agricultural products. These have experienced strong international demand as emerging markets spend more on food as their economies develop and real incomes rise.

Turning back to imports, the price indexes for consumer goods, automotive vehicles, and capital goods all rose, up 0.3%, 0.2%, and 0.1%, respectively. Conversely, foods, feeds and beverages prices edged down 0.1%, the first decline for the index since a 0.2% decrease in March 2007. Still, prices for foods, feeds and beverages have increased 11% in the past 12 months.

The price of oil is falling, and it may stay down for some time. But prices could well remain in the $90 range.

Saudi Arabia has indicated that it could increase production by two million barrels a day, according to The Associated Press. President Bush has urged the kingdom to release more oil.

Signs of a recession in the U.S. would indicate that demand here should fall off as consumers cut back on purchases of gas and heating oil.

Even with these two pieces of news, oil trades around $92. There are factors that could keep it there which, in turn, could undermine a recovery in the U.S. economy.

Almost on cue, the European Central Bank took a page out of U.S. Federal Reserve's playbook Wednesday.

In a widely-expected statement, ECB President Jean-Claude Trichet warned that the euro-zone's inflation surge was likely to last longer than expected, Bloomberg News reported Wednesday.

The comments came one day after the ECB made $500 billion in short-term loans available to banks to avert a year-end liquidity crunch. The $500 billion move was part of a coordinated effort among the world's major central banks to increase liquidity in the international finance system to head-off a potential credit crunch stemming from subprime mortgage and related asset defaults. Many economists and analysts expect the major central banks -- the ECB, the Fed, the Bank of England, the Swiss National Bank and the Bank of Canada -- to continue to sequentially add liquidity to the system through at least Q1 2008, and probably longer.

On Wednesday, Trichet said the euro-zone "faces a 'more protracted' period of elevated inflation than previously expected, indicating no imminent plan to reduce interest rates."

In almost all economic environments, the U.S. Federal Reserve is taciturn regarding its likely next monetary policy decisions.

But of late the Fed has deviated and taken a specificity-is-better route, with Federal Reserve Governor Randall Kroszner stating before a Manhattan group that another rate cut would probably provide few additional stimulative benefits for the U.S. economy.

"The current stance of monetary policy should help the economy get through the rough patch during the next few years," Kroszner said during remarks at the Institute of International Finance in Manhattan, Bloomberg News reported.

The Fed has cut benchmark interest rates twice, starting in September. The Fed Funds rate, the rate banks charge each other, now stands at 4.50%, and the discount rate, the rate the Fed charges banks for short-term loans, is at 5.00%.

In his IIF remarks, Kroszner added that he expected the housing recession to worsen, with weaker home sales, but that longer-term, he expects the U.S. economy to return to a sustainable growth rate after a difficult few months.

Fed Analysis: Kroszner's remarks were candid, if not the good news on interest rates Wall Street likes to hear from the Fed. Kroszner's candor indicates that The Fed is looking past October's 0.5% decline in Industrial Production and related, recent soft economic data, toward what the Fed believes will be an accelerating U.S. economy in Q1, stimulated by the Fed's September and October interest rate cuts. Nevertheless, the stand-pat Fed stance is likely to draw criticism in investor and economic circles if additional Q4 data reveals a barely-growing U.S. economy.

Producer prices rose just 0.1% in October, while the core rated registered no increase, the U.S. Department of Labor announced Wednesday, with both stats coming in below consensus expectations.

The consensus had called for a 0.3% rise in PPI and a 0.2% rise in core PPI.

The October 2007 statistics were aided by falling energy prices, which fell 0.8%, including a 3.1% drop in gasoline prices and a 2.5% drop in heating-oil prices, the Labor Department said.

"All-in-all, it's a pretty good PPI report," economist M. David Chandler told bloggingstocks. "Of course, the October statistics don't reflect the delayed pass-through of higher gasoline prices and heating oil prices, which will probably show up in the November, but that still doesn't blot-out the fact that overall PPI costs were mostly contained in October."

However, on a 12-month basis, PPI is up 6.1%, while core PPI is up 2.5%. Both statistics exceed most economists' ceiling for reasonable PPI inflation in a growing economy.

"We still have above-average PPI on a 12-month basis, and I don't doubt that the Federal Reserve is watching this, particularly the core PPI," Chandler said.

The dollar, it seems, can't stop falling; oil, on the other hand, can't stop rising (let alone decline a little); General Motors (NYSE: GM) is taking a $39 billion charge; there's talk that Morgan Stanley (NYSE: MS) may take an as-yet undetermined (oh no) charge related to subprime debt, and the housing market remains sluggish, nationally, to put it diplomatically.

Other than that, to cite a famous line by Groucho Marx, things are fine.

Still, you may be wondering, "Is there any good news out there, financially-speaking?"

Indeed there is: The U.S. Labor Department announced Wednesday that U.S. non-farm productivity surged to an annualized rate of 4.9% in the third quarter -- the largest increase in productivity in four years -- and well above Wall Street's consensus of about 3.5%-3.7% productivity growth.

Everyone's favorite mega-retailer, Wal-Mart Stores, Inc. (NYSE: WMT), has announced that it will be more aggressive this holiday season with its price chopping strategy. It will rollback 20% more items than it did in the 2006 holiday shopping season.

The retailer reduced the prices on 15,000 items this week alone in what may be its biggest push in quite some time to get more customers in stores this holiday season. Although I'm repeating myself from prior Wal-Mart posts, the point is still valid: the retailer seems incapable of conceiving any growth strategy outside of the pricing arena.

Wal-Mart has said that it wants to recruit higher-end customers in stores who will spend more money on higher-margin products, yet it continues to default to low prices as a main tactic. Perhaps the retailer wants the pseudo-affluent to see just how much they can really save by shopping at its locations? Your guess is as good as mine at this point.

A blog post I recently read, written by Amy B. Scher , reminded me about one of the best practices that a person can use to protect and gain the greatest value from their own money. Negotiating the bottom line on your purchases is not old school and it's certainly not "dirty pool". Seeking to negotiate downward adjustments to your purchase prices shows that you have respect for the work that you have done to earn your income and it also shows that you understand capitalism in motion. The following list is only a partial exposure of the ways you can negotiate lower costs for yourself. With some considered imagination you can easily put the negotiation concept to work for yourself in a multitude of buying situations and as you do, the practice will become quite natural and very rewarding.

Six Sigma Pricing: Improving Pricing Operations to Increase Profits by M. and N. Sodhi should be required reading for everybody in business, whether in finance, sales, or marketing. This is the most accessible, non-jargon-filled explanation of Six Sigma processes I have read. Using case studies, the authors prove that, just as Six Sigma procedures can be used to define, analyze and reduce defects or deviations in manufacturing processes, these same procedures can be applied to the complicated realm of pricing to examine and then reduce "defects" or fluctuations in pricing. Using Six Sigma methodologies company-wide will help everyone involved in setting and abiding by published prices understand that repeated, unnecessary, unauthorized differences between list prices, discount prices, invoice prices, and realized prices have a direct and usually negative impact on a company's bottom line.

Pricing consistency and control is internal to a company to a large extent. Deviations from list prices do happen primarily because different people in different departments have different goals: greatest profit for people in finance, market share for those in marketing, volumes of sales (and sales bonuses) for salespeople. The authors argue that companies need to build cross-functional pricing teams so that representatives of all groups involved with pricing can have input into how and why pricing is set the way it is for maximum company profitability.

Even readers unfamiliar with basic statistics can benefit from this book. Chapter 7 includes a basic nontechnical overview of the statistical tools involved in Six Sigma analysis. The point of this book is not to teach HOW to implement Six Sigma procedures in pricing processes, though Chapter 6 provides enough basic information to get a team started. Rather, the authors prove WHY companies should implement Six Sigma methodologies to stem "profit leaks." Numerous graphs, tables, and flow charts provide visual reinforcement of the information in the text. Each chapter contains a brief summary. Chapter 13 provides a useful checklist of steps to take, and in what order, to deploy Six Sigma thinking across nonmanufacturing processes in order to better control the outcome.

Microsoft (NASDAQ: MSFT) has expanded its footprint from PC and server operating systems to internet portals and video games. Now, it is going a step further to help create the impression that it is still one of the leading edge developers in the tech community.

The world's largest software company has introduced a computer that looks like a table and works with a touchscreen. The first markets for the new product, named Surface, will be hotels and casinos where it can be used to buy tickets and play games.

The new product is a pet of Bill Gates, who believes that the next generation of PCs will need to be more intuitive and easier to use. The new product runs the Microsoft Vista OS.

If Gates is right, the new method for using PCs, making them extensions of hand motions and writing instruments could be very good news for companies beyond Microsoft. As PC sales have slowed, firms that are PC-centric including Dell (NASDAQ: DELL), AMD (NYSE: AMD), and Intel (NASDAQ: INTC) have suffered.

That may change now if a new generation of PCs drives better sales.

Douglas A. McIntyre is a partner at 24/7 Wall St.