Patterico's Pontifications

12/15/2009

Economic News Raises Inflation Concerns

Filed under: Economics — DRJ @ 2:28 pm



[Guest post by DRJ]

Today’s economic news brings unwelcome news about inflation:

“The government said wholesale prices jumped 1.8 percent last month, more than double the gain analysts expected. Core inflation, which excludes often-volatile food and energy costs, rose 0.5 percent, the biggest increase in more than a year.

Analysts said the increase in food and energy costs was likely a concern for Fed officials.

“They’re the twin pistons of inflation,” said Christopher Wolf, managing partner and co-chief investment officer at Cogo Wolf Asset Management LLC in San Francisco.

Meanwhile, the Fed said industrial production rose 0.8 percent in November, the biggest gain since August. The rise in production meant factories ran at a higher capacity. The portion of capacity being used remains below average, but if factories start seeing demand increase prices could rise.

The reports put inflation on investors’ screens. If prices start to rise too quickly the Fed could be forced to raise rates and risk choking off a nascent economic recovery.”

Add this to unemployment over 10% and this reminds me more and more of the Carter years.

— DRJ

25 Responses to “Economic News Raises Inflation Concerns”

  1. All that’s missing is an International Hostage Crisis.
    I guess we’ll just have to settle for being held hostage by the idiots in DC.

    AD - RtR/OS! (7e8f29)

  2. Comment by Scott Jacobs — 12/15/2009 @ 2:36 pm

    Funny! I’d forgotten that one.
    But, I thought you were talking about Ralph Lauren.

    AD - RtR/OS! (7e8f29)

  3. AD, we’ve got three long years to go. I am pretty sure, and sorely hoping I’m wrong, that we’ll be again humiliated by the Iranians in a more concrete way than we already are with their nuke program.

    Hell, 9/11 terrorists are going to lecture us from ground zero. That’s practically a victory speech.

    Dustin (44f8cb)

  4. Inflation during a period of economic stagnation is Stagflation. The following is from Wikipedia:

    “Economists offer two principal explanations for why stagflation occurs.

    First, stagflation can result when an economy is slowed by an unfavorable supply shock, such as an increase in the price of oil in an oil importing country, which tends to raise prices at the same time that it slows the economy by making production less profitable. This type of stagflation presents a policy dilemma because most actions to assist with fighting inflation worsen economic stagnation and vice versa.

    Second, both stagnation and inflation can result from inappropriate macroeconomic policies. For example, central banks can cause inflation by permitting excessive growth of the money supply, and the government can cause stagnation by excessive regulation of goods markets and labor markets. Together, these factors can cause stagflation; equally, either can, if taken to such an extreme that it must be reversed abruptly.

    Both types of explanations are offered in analyses of the global stagflation of the 1970s: it began with a huge rise in oil prices, but then continued as central banks used excessively stimulative monetary policy to counteract the resulting recession, causing a runaway wage-price spiral.”

    So, there it is, Obama’s excessive monetary stimulation during a long and deep economic recession and you create, not jobs, but the death spiral of capitalism. Welcome to the jungle.

    ropelight (5883b5)

  5. No, but I would settle for buying Parking Lot Futures in Downtown Tehran, and Qom, and other assorted areas in Iran.

    What matters is not what I will settle for (if you would have known me 30-years ago, you would know what my true feelings are/were about “America Held Hostage”), but what will the Israeli’s settle for.

    Since it is readily apparent that this administration has virtually no influence on, or in, Bibi’s government, the Mad Mullahs have to be particularly sensitive on how their actions appear to the Israeli’s; particularly since they have demonstrated in both Iraq and Syria that they will not brook a hostile nuclear presence in their neighborhood.

    AD - RtR/OS! (7e8f29)

  6. Inflation was the logical and inevitable result of their reckless actions.

    JD (8607be)

  7. I thought rising energy costs were supposed to be a good thing. Isn’t that the justification for “cap-and-trade”?

    Steven Den Beste (99cfa1)

  8. Not merely the justification, good sir, but the entire purpose.

    SPQR (26be8b)

  9. The Dems seem always to have to relearn basic economic principles, it would appear – and the rest of the proletariat bears the costs. We were lucky that Clinton was stymied by Congress when he attempted similar machinations during his 1st term – the only thing the Dems can save our country from is themselves.

    Dmac (a964d5)

  10. The way to cure inflation is to spend spend spend!! Recessions wither and die when faced with boisterous government spending. Simple as that. It just sucks it took us this long to discover it.

    With a government as wise and spendy as ours, prosperity won’t long be a stranger.

    happyfeet (71f55e)

  11. “So, there it is, Obama’s excessive monetary stimulation during a long and deep economic recession and you create, not jobs, but the death spiral of capitalism. Welcome to the jungle.”

    Some people say that central banks are independent, and thus monetary policy is the result of action of the central bank, not the president. Any paultards around?

    imdw (9af31a)

  12. If you’re referring to the explosive growth over the past 10 months of Federal jobs paying in excess of $100K/Year, you’re absoluttely correct!

    Dmac (a964d5)

  13. Average Federal worker pay $30,000 over private sector

    Federal employees making salaries of $100,000 or more jumped from 14% to 19% of civil servants during the recession’s first 18 months… Federal workers are enjoying an extraordinary boom time in pay and hiring during a recession that has cost 7.3 million jobs in the private sector. – source usatoday.com

    DCSCA (9d1bb3)

  14. i’ve still got my Jimmy Carter money clip….

    its a pop tab bent over a penny.

    Ear Leader is writing his place in the history books. %-)

    redc1c4 (fb8750)

  15. redc1c4 – I’m turning down the heat and putting on a sweater and marinating in some malaise.

    daleyrocks (718861)

  16. #15, red, I’ve still got my “WIN” button from Jerry Ford’s “Whip Inflation Now” campaign. I wrote to the White House in support of his program and got a button and a form letter thanking me.

    ropelight (5883b5)

  17. Don’t forget the tax increases programmed to wack the middle class. And Obama is toying with protectiionism so he could achieve what only Hoover and Roosevelt did – a true depression. Maybe the fire side chats will begin in 2011. It worked for FDR. Myself, I’m practising standing in simulated ques.

    cedarhill (f5b0fe)

  18. > Add this to unemployment over 10% and this reminds me more and more of the Carter years.

    I am on record over a year ago as saying that Obama would make people appreciate Jimmy Carter.

    Call me “O Bloody Kreskin” from now on, thank you.

    O Bloody Hell (8ca3a3)

  19. Bloody, before he’d even won the election I said that Obama would make us long for the halcyon days of Carter.

    Scott Jacobs (d027b8)

  20. Analysts said the increase in food and energy costs was likely a concern for Fed officials.

    DOH. Inflation, I wonder how that happened!

    Patricia (b05e7f)

  21. Went grocery shopping at the nearby military commissary this past weekend. Was surprised to discover several products had increased in price 15-30%. Even veterans are being slammed…

    Timothy (52c386)

  22. commissaries stopped being a bargain ever since congress told them they had to charge prices comparable with the local economy….. if you’re at Ft Irwin, and the nearest competition is at Barstow, ~50 miles each way, you win. otherwise, its either convenience, or no sales tax, like here in CA to make it maybe worth the trouble of shopping there.

    redc1c4 (fb8750)

  23. red,

    THOSE DAMN TIP HUNGRY BAG CARRIERS!!!!!!!!!

    I couldn’t stand to see some E3 trying to feed his family nervously dig through his pockets because one of those ladies could not move out of his car’s way without a tip.

    I got so sick of those comskis. I had a Comski when forward deployed and that was really convenient, but the idea of not paying employees so they can beg for tips is extremely inappropriate.

    Dustin (44f8cb)


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