May 28, 2010

THIRTY YEARS INTO THE EPOCH THERE'S NO SIGN OF ITS END IN THE FUTURE:

The Recovery: Why Deflation Remains a Threat: Economic growth isn't strong enough yet to keep deflation at bay—and turmoil in Europe and market jitters amplify the risk (Peter Coy, 5/27/10, BW Magazine)

Bargains are everywhere in America these days. Men's shirts and sweaters were 3.4 percent cheaper this April than a year earlier. Prices also fell for eggs, peanut butter, bananas, potatoes, hotel and motel rooms, cosmetics, curtains, rugs, tools, and lawn care. Excluding gasoline and other energy items, the consumer price index rose just 0.9 percent for the year. That's the smallest increase since January 1962, when John F. Kennedy was President.

Everybody likes to save money, but flat to falling prices are not entirely good. They're a symptom of continued weakness nearly a year after the U.S. economy supposedly hit bottom. The same softness of demand that keeps goods cheap is pressuring workers. Annual growth of average hourly earnings fell from 3.5 percent in April 2007 to 1.6 percent this April.


As demography and therefore economies in the developed world collapse, as innovation makes energy in particular cheaper, and as manufacturing shifts away from China where it's become too expensive, how exactly is any pressure going to develop on prices in America?

Posted by Orrin Judd at May 28, 2010 5:44 AM
blog comments powered by Disqus
« BUT THIS TIME WE'LL ROUND THEM UP AND PUT THEM IN A SOUTHERN CAMP: | Main | FIRST TO THIRD: »