Time: It's Worse Than You Think (Inflation)

[UpInArms]

http://www.time.com/time/magazine/article/0,9171,1053641,00.html

Inflation is back. It's official, and you can blame costlier gasoline and other fuels. But make no mistake: the tab for common services like a hotel stay and garbage removal are jumping too, as is the sticker price on packaged foods and many other household items. Companies are finding that they can pass on part of their soaring raw-material costs.

Yet inflation--at 3%, about par for a growing economy--is actually worse than it appears. That isn't widely understood by the millionaires on Wall Street, who were shocked--shocked!--to learn that life is getting more expensive and sent stocks into a brief tailspin. But most of us have been dealing with stealth inflation for a couple of years.

One underappreciated development: folks have gone so much deeper into hock that even the lowest interest rates in a generation haven't cut their average monthly household debt payments, which are at an all-time high and increasing. As rates rise, that will get worse.

Inflation that you feel but can't see comes in many forms. Real estate prices have gone through the roof, so cash buyers are paying through the nose. Borrowers are increasingly resorting to floating-rate and interest-only loans, which all but guarantee that they will pay more over the life of their loans. Officially, though, housing looks like a bargain. Why? The housing component of the Consumer Price Index (CPI) is based on rents, which are tame and in some regions have even fallen.

...more...

[applegrove]

1. Wages are falling too. Don't forget that!! n/t

[leftchick]

2. I Blame bush**!

and it has been here for a while but now that it is taking off they ackowledge it! I was SHOCKED at my last grocery bill and am afraid to shop again this week. :grr:

[holboz]

20. Hear, hear...grocery bills outrageous!

Each month I have to completely re-evaluate our budget because food is costing more and more. About this time last year I spent about $275 a month on groceries for our three member family. Our grocery bill is hoovering to the $400/month mark now and it's breaking the bank.

And we don't eat junk or pre-packaged dinners. We eat fresh veg (or frozen in a pinch)and enjoy bananas and strawberries. Maybe this is where I go wrong...maybe I need to buy junk and pre-packaged food because it's often cheaper. So much for following the new food pyramids, eh?

I'm investing in some veggie and fruit plants. The local nursery has them on sale at 80 cents for a 4 pack.

[KansDem]

24. I blame "news" sources like Time...

Time has been kissing Bush's butt since he first announced his candidacy back in 1998. Time could have exposed the little SOB but instead, they played Bush cheerleader.

For the editors of Time to publish an article like this only shows how disingenuous they really are. F*ck you, Time, you enabled a monster like Bush to seized power. And now you have the gall to report on the consequences?

[kenny blankenship]

3. Wow, you mean we can add Official inflation to the other kind?

you know the rising gas, food and rents'n'realestate that have been eating up the incomes of working people for years--without being officially acknowledged?

[stillcool]

4. I'll second that wow....

Time mag is admitting inflation? Wonder when they got the okay.

[Ernesto]

5. There goes the housing market: just like the early '80's

You know, home construction, one of the only things keeping this economy going.
It's a replay of the days of st. ronnie: The repukes are getting just what they prayed for.

[deacon]

6. It's about time this is being acknowledge-- it's not slight inflation

there has been a spike in prices at the supermarket in the last two months here. A serious cost increase on ALL goods.

The pretendville of wall street and their bogus numbers does not change this fact.

Also here in CA. there is a serious leak in the real estate bubble. What starts in the west travels east. Hold on to your socks because the california real estate market is in almost identical condition to what it was in 1989, before it went into an 8 year funk.

[lyonn]

26. Your comment on housing in Ca surprises me

But, a few weeks ago I was in Carmel shopping and while in a shop a young girl working alone made a comment to a customer about the 20% off on items explaining that the store does that seasonally, but that when she, the worker, first saw the 20% off, she was new to the job, she thought the store might be going under like so many in town. It's good thing the boss wasn't there when the girl was telling her story, she might not be working. So then, while walking around, I did notice empty stores. I'm from Okla. and have no idea what your economy is like. All we hear on the news is the price of homes there. Also, while traveling the highways it seemed the State needed to mow or something as it looked very unkept. A sign the State needs money. We get to OK and the highways looked great, then it hit me, Oil you dummy. Not that wages are anything to talk about. I tell my son who is thinking of selling his house he best be quick. I figure by the end of summer this countries' economic situation will be obvious.

[Anarcho-Socialist]

7. 3% inflation is very troublesome...

...they're either going to slam the brakes on the economy by hiking interest rates (thus enabling slow down/recession), or let inflation rise and the economy overheat.

Either way, it isn't good.

[Barkley]

8. The "housing component of the (CPI) is based on rents"

That's some cost of living index ...

real wages are really falling.

The CPI also doesn't include the cost of bad quality products.

[mrdmk]

9. CPI is an indicator to be taken with a grain of salt

The seasonal adjustment was tweaked under Regan administration to show improvement from the problems the Carter administration was having. It was again adjusted under the Clinton administration and then under the Bush Jr. administration it went under the most radical statical adjustments.



Here are some links for the skeptics

http://mwhodges.home.att.net/statistic-wizardry.htm
http://mwhodges.home.att.net/inflation.htm
http://www.econlib.org/library/Enc/Inflation.html

[stevedeshazer]

10. Now that TIME has NO credibility, they run a real story.

Thanks, CNN/Time/Warner/AOL/Bush, Inc.
:eyes:

[MGKrebs]

11. Check out this recent email from Newsmax:

I thought these guys were supposed to be supporting the conservative administration!

A Special Message From Christopher Ruddy
Editor, NewsMax.com

Exclusive FIR Report on the “The Inflation Lie”:

Why the REAL inflation rate is probably 3 to 4 times what the government reports
How blatant political manipulation of the Consumer Price Index is wrecking our economy and YOUR finances
The absurd and self-serving official explanation of 2% inflation…when oil is up 100%, insurance 12% and food 10%
How a phony inflation rate is the main cause of the dollar's collapse
The warning issued by Australia's Treasury Secretary that a U.S. economic collapse is more than possible
Exchange-Traded Funds, Index Funds and other investments that THRIVE on high inflation
Select ETFs now returning more than 20 to 50% a year
How to get dozens of the best specific investment recommendations for BOTH conservative and aggressive investors month after month

PLUS: Receive a complimentary copy of the new best-selling financial book, "The Standard & Poor's Guide to Long-Term Investing: 7 Keys to Building Wealth" by Joseph R. Tigue

In the latest Financial Intelligence Report: “The Inflation Lie” you’ll learn:

How and why the government continues to distort inflation figures for its own benefit

Some shocking estimates of the REAL inflation rate

Why the massive inflation lie is laying the seeds of an impending economic crisis
AND

The ways your own finances could also be devastated

Make Money Out of Catastrophe

“The Inflation Lie” will show you how to spin this potential disaster and reap yourself huge returns from two types of investments that LOVE inflation:
Exchange Traded Funds (ETFs) and Index Funds

How Canadian Royalty Trusts, which invest in oil and natural gas, are poised for major new profits

[Historic NY]

12. Even the US Mail wants a 2 cent increase.............

I saw a Gallop poll today that said that * sucks on economic issues by a whopping 61%....people are beginning to notice as the hurt starts biting them in the ass.

[Rainscents]

13. But... but...but, it's Clinton's fault!!!

These thugs will never admit to real problems. All they know is band aid over the probelms. Right now we are in the state of boiling point... When the heat burst, all hell going to brake loose. People better wake up soon and if they don't they will soon.

Do you supose, bankrupcy bill that just past, they knew this was coming?

[dbt]

14. RE: the bankruptcy bill

Follow the money: bu$hler's campaign donors must realize their Return On Investment, even when the economy collapses for all but the super-rich, no?

[xchrom]

15. the united corporate dominion is having their way

with all of us.

why won't you folks just lay down and keep still?!?!
it's good for you -- er them er well it's good for somebody.
:spank:

[cyberpj]

22. just had to say this post caught my eye with it's great subject line

and the message portion was just as good, er, bad, er.....on the mark.

[leesa]

16. It's worse than YOU think Time...we've been aware of it for awhile now

YOU refused to report on it.

[Toucano]

17. Bingo! We've been talking about it for years.

The official numbers are easily manipulated for political gain.

Like the increase in chocolate rations.

[Lorien]

23. Yep-a trip to the grocery store

will make just about anyone understand.

[indepat]

18. Everything, absolutely everything, is coming up roses for you and for me

[demgrrrll]

19. This issue is like all the others. You see inflation all around you but

no one says a damn word so you question yourself. I went to Costco and picked up a small cart full of things for $79.00. We asked the cashier if their prices had gone up. She replied that everything was up because of gas prices. I would say we spent at least 10- 15 more dollars than we did last time. Not a fortune but if you take that across the board and add gas prices and other increases in your bills it does take a bite. No increase in salary and higher prices. It does not take a rocket scientist to figure out this is going to be a big deal to many people who are living on the edge. What a mess.

[The_Casual_Observer]

21. The "core" rate of inflation excludes anything that is inflated

and counts only depressed farm commodities and outsourced textile goods from china. My guess is that real inflation is actually running something like 20%-30% right now.

[WannaJumpMyScooter]

25. well, technically it is NOT inflation until the devalue

the dollar, right?