WSJ Goes Inflation Crazy!

Tuesday, April 15, 2008 | 06:54 AM

After last week's inflation snafu, the WSJ makes up for it this week -- and then some. Just in time for today's 8:30 PPI report, the Journal's pages are chock full of all sorts of inflation goodies:

For Many, Inflation Is the Worry:  Life keeps getting worse for the consumer, with few signs it's going to get better soon. That means the economy's woes could drag on far longer than many thought. A growing worry is inflation. Economic slowdowns and weak consumer spending normally curb price pressures, but that isn't happening this time around, at least so far.   

Food Inflation, Riots Spark Worries for World Leaders: Surging commodity prices have pushed up global food prices 83% in the past three years, according to the World Bank -- putting huge stress on some of the world's poorest nations. Even as the ministers met, Haiti's Prime Minister Jacques Edouard Alexis was resigning after a week in which that tiny country's capital was racked by rioting over higher prices for staples like rice and beans.

Higher Food Prices May Be Here to Stay: For all the economists and consumers who hope high food prices are temporary, here's one reason why they probably won't be: Farm costs are skyrocketing, making permanently higher prices essential for farmers to keep expanding production.

Those articles -- all from Monday's paper -- are followed today by a Martin Feldstein OpEd, Enough With the Interest Rate Cuts. Feldstein argues that "It's time for the Federal Reserve to stop reducing the federal funds rate, because the likely benefit is small compared to the potential damage."

There seems to be a growing recognition amongst the cognesceti  that several of the usual plays out of the manual are not working. Consider each of the following factors (in decreasing order of dissemination), and the impact they have on the economy, the Federal Reserve, and the current US election cycle:

• Slowing economic growth is failing to slow price increases;

• There is a widespread recognition that CPI as assembled by BLS fails to adequately capture inflation pressure;

• Inflation expectations have increased, despite all of the reassurances from the usual cylons solons;

• The Boskin commissions dishonest backdoor attempt to cut Social Security is receiving increasing scrutiny for its role in understating inflation. (See Fleckenstein: Greenspan's Bubbles)

There is a slow but steady realization coming to the fore that there is no such thing as a free lunch, and the sooner the leaders of this nation figure that out, the better off we will all be . . .


Google Trends: Inflation, 12 months, (Worldwide)



BTW, if you wish to incontrovertibly demonstrate your lack of mental acuity, place a comment stating  that price increases and/or inflation is a lagging indicator. Use the name "half wit."


UPDATE: April 15, 2008 9:14am


U.S. March Producer Prices Rise More Than Forecast    

Prices paid to U.S. producers rose almost twice as much as forecast in March, reflecting higher fuel and food costs that threaten a pickup in inflation. The 1.1 percent gain followed a 0.3 percent increase in the prior month, the Labor Department said today in Washington. So- called core producer prices that exclude fuel and food increased 0.2 percent, as forecast.

Rising raw-material costs are hurting profits as slowing demand makes it difficult for companies to pass increases on to consumers. The need to avert a deeper economic slump will prompt Federal Reserve policy makers to lower the benchmark interest rate again this month even as inflation accelerates.





WSJ: "Inflation is back"

For Many, Inflation Is the Worry   
WSJ, April 14, 2008; Page C1

Food Inflation, Riots Spark Worries for World Leaders
IMF, World Bank Push for Solutions;
WSJ, April 14, 2008; Page A1

Higher Food Prices May Be Here to Stay
WSJ, April 14, 2008; Page A2

Enough With the Interest Rate Cuts
WSJ, April 15, 2008

Tuesday, April 15, 2008 | 06:54 AM | Permalink | Comments (50) | TrackBack (1) add to | digg digg this! | technorati add to technorati | email email this post



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» Why Inflation Can Lead or Lag Economic Cycles from The Big Picture
Yesterday, we reviewed the PPI data. Today at 8:30, we get the Consumer Price Index (CPI). There is a certain faction of folks who missed the early warning signs of inflation, and are now telling us not to worry about inflation, since the threat of an ... [Read More]

Tracked on Apr 16, 2008 7:40:34 AM


Barry - it's good to be King, isn't it ? Obviously they pay attention. Maybe inflation awareness will metastasize :) !

Posted by: dblwyo | Apr 15, 2008 7:24:19 AM

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