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Core consumer price index fell 0.1% in January, the first drop since 1982

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TomCADem Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-19-10 11:30 PM
Original message
Core consumer price index fell 0.1% in January, the first drop since 1982
Source: Washington Post

Government data released Friday showed that a closely watched measure of inflation fell in January for the first time since 1982, potentially giving the Federal Reserve more leeway to keep interest rates at ultra-low levels.

The Labor Department said that the core consumer price index, which excludes volatile food and energy prices, dropped 0.1 percent last month. The dip was unexpected; economists surveyed by Bloomberg had predicted an average increase of 0.1 percent.

When energy and food costs are added in, consumer prices overall rose 0.2 percent, the Labor Department said. But the core figure is widely considered a more precise gauge of long-term inflation trends.

The Fed does not think that inflation will be a problem through this year, if only because the economy is still in a wobbly recovery. When people are out of work and don't have as much money to spend as they used to, there's less demand for goods, which keeps inflation down. Institutionally, that's the Fed's view.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2010/02/19/AR2010021905362.html
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Hestia Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-19-10 11:51 PM
Response to Original message
1. Well, that sucks even more for I Savings Bonds - they are literally paying zero percent! Zero...
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earthside Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Feb-20-10 12:08 AM
Response to Original message
2. Deflationary spiral.
It's when a recession becomes a depression.

This economic crisis isn't over by a long shot.
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naaman fletcher Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Feb-20-10 12:13 AM
Response to Reply #2
3. That the line of the banks and the rich...
Consumer prices going down is a bad thing? Aha!! but the owners don't want prices to go down, so they will take tax dollars to prop up prices. The deflation is bad meme is a total scam.
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earthside Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Feb-20-10 12:30 AM
Response to Reply #3
4. Oh, so that's why ...
... the Great Depression was really a 'golden age'!!!

The reason people get laid off is because businesses cannot make any money because price pressure is downward; meaning more folks have to be laid off to have enough money to stay in business, which means people have less money to buy, so prices have to be lowered and then there is less profit and more employees have to be let go, so on into a spiral.

That's a very bad thing.

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metapunditedgy Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Feb-20-10 12:49 AM
Response to Reply #4
5. Perhaps there is a larger systemic problem that needs to be solved. n/t
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naaman fletcher Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Feb-20-10 12:55 AM
Response to Reply #4
6. Yet...
Your spiral theory suggests that once a recessions stops, it never ends until everyone is broke. Yet the history of the world, and even just the US, suggests that is not the case or else the economy would have gone to zero the very first time their was a recession - yet that didn't happen.
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fasttense Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Feb-20-10 08:02 AM
Response to Original message
7. So, what is left to measure if food and energy are removed from the price index?
"The Labor Department said that the core consumer price index, which excludes volatile food and energy prices."

They also manipulate the housing costs to make it appear less inflationary.

So what remains to be measured by this silly index? Bird House?
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Igel Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Feb-20-10 12:22 PM
Response to Reply #7
9. Everything else.
For some purposes, all the price increases/decreases are important. For others, some aren't important.

Look around. If you see something consuming food or energy, then that consumption is more expensive.

My computer and the lump of lard that's in front of it typing, my printer, the stove, the hot water heater, the car in the driveway, the tv and DVD player and the 6-year-old sitting in front of it, my clock radio, the washing machine and dryer and the wife that's putting clothes from one to the other. It costs more to run them all, people and gadgets. It's easier to use metonymy and list the things doing the energy consumption than list the energy sources themselves--the chicken nuggets, electricity, methane, gasoline, pancakes, blueberries, milk, etc.

Then there are all the things that aren't energy: The glass on my desk, the scissors and pens and Dictionary of Russian folk dialects and the novel/stories by Osorgin, the stapler and index cards I use for learning vocabulary, the paper in the printer; the printer, the stove, the hot water heater, the car, the driveway, the tv and DVD player and the DVD in the player, the clock radio, the washing machine and dryer, the clothes and the water in the clothes that the dyer will remove, the toilet paper I have on my desk in lieu of kleenex.

The energy sources tend to be unstable and vary a lot in the course of a year: gasoline goes up in spring, down in fall; blueberries are more expensive now than in the summer (but we picked ours in the summer), etc. Since they tend to be very volatile, sometimes they account for the majority of the change in prices so that if you look at the price index over time you see a waveform--with longer changes as milk prices creep up over years and then back down, as beef prices react to the slaughter of steers when increased grain prices make keeping them less profitable, and then a slow decline as the heards build up when grain prices come back down. If you want to know how the underlying price structure is doing, energy--both in terms of food and chemical and electrical--really has to be kept separate. You have to look at it and not pretend those prices don't matter--but they matter for some uses and not for others. For me, paying bills, they all matter. For an economist looking at inflation and monetary policy, they matter far, far less.

"Important", like "good" and "bad" or "meaningless," always has an implied grammatical and semantic complement: important/good/bad/meaningless for what?
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Uncle Joe Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Feb-20-10 04:06 PM
Response to Reply #9
13. Are annual increases on Social Security Checks based on the core index? n/t
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Po_d Mainiac Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Feb-20-10 05:36 PM
Response to Reply #13
14. BINGO!..........KA-Ching..n/t
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roamer65 Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Feb-20-10 12:07 PM
Response to Original message
8. Meaningless, "cooked" statistics.
Edited on Sat Feb-20-10 12:09 PM by roamer65
By the old 1980 measurement, inflation is running at nearly 10%.


http://www.shadowstats.com/alternate_data/inflation-charts
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CanonRay Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Feb-20-10 02:39 PM
Response to Original message
10. Well, nobody needs energy or food, right??
so these stats sound pretty accurate. :wtf:
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CanonRay Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Feb-20-10 02:39 PM
Response to Original message
11. Well, nobody needs energy or food, right??
so these stats sound pretty accurate. :wtf:
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Rapier09 Donating Member (209 posts) Send PM | Profile | Ignore Sat Feb-20-10 02:55 PM
Response to Original message
12. A deflationary economy sounds so much nicer then it is

People fighting over pennies,no one having any money for all these discount prices.
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