Archive for Inflation

Only Food And Gas Prices Jumped, Everything Else Held Steady

So if you don’t eat or drive, you’re doing fine.

U.S. consumers paid more last month for food and gas. But outside those volatile categories inflation was mild.

The consumer price index rose 0.3 percent in March, the Labor Department said Friday. That’s slower than February’s 0.4 percent rise.

Gas prices increased at a slower pace than the previous month. Excluding food and gas, so-called “core” prices increased 0.2 percent in March.

Inflation has eased since last fall and is expected to stay mild. In 12 months that ended in February, prices rose 2.7 percent. That’s below last year’s peak year-over-year rate of 3.9 percent.

Don’t worry, silly, it’s all good. :)

- Aggie


The Misery Index

The Misery Index is the sum of unemployment and inflation.

If you go the the link. you will see that it stood at almost 13% in September, the highest it has been in decades. When you consider the fact that the unemployment numbers are skewed to the low side because we don’t count people who have lost their unemployment benefits, and inflation is skewed to the low side because we don’t count unnecessary items like groceries, you conclude that we have reached Carter era pain.

Congratulations to Barack Obama and the Democrat Party for bringing us the good old days!

Can you please bring Elvis back too?


- Aggie



In a spirited debate with friends recently, I was pressing the attack on Obama’s record of failure and shattered promises. I usually wouldn’t bother, preferring to enjoy their company rather than endure their opinions, but the wine was flowing and they wouldn’t shut up.

My rhetorical adversaries were trotting out all the tired themes and memes (I don’t yet trust that word—we haven’t been formally introduced), including the granddaddy of all excuses: blaming Bush.


To these die-hards, there is no blaming Obama for Bush’s ever-more evident catastrophes, and any attempt at even mild criticism is deeply rooted in America’s unique loam of racial antipathy.

Well, if the shoe fits, I guess:

If you really want to light the fuse of a liberal Democrat, compare Barack Obama’s economic performance after 30 months in office with that of Ronald Reagan. It’s not at all flattering for Mr. Obama.

The two presidents have a lot in common. Both inherited an American economy in collapse. And both applied daring, expensive remedies. Mr. Reagan passed the biggest tax cut ever, combined with an agenda of deregulation, monetary restraint and spending controls. Mr. Obama, of course, has given us a $1 trillion spending stimulus.

By the end of the summer of Reagan’s third year in office, the economy was soaring. The GDP growth rate was 5% and racing toward 7%, even 8% growth. In 1983 and ’84 output was growing so fast the biggest worry was that the economy would “overheat.” In the summer of 2011 we have an economy limping along at barely 1% growth and by some indications headed toward a “double-dip” recession. By the end of Reagan’s first term, it was Morning in America. Today there is gloomy talk of America in its twilight.

My purpose here is not more Reagan idolatry, but to point out an incontrovertible truth: One program for recovery worked, and the other hasn’t.

Can’t have enough Reagan idolatry, as far as I’m concerned. I missed it at the time, so caught up in Carter and Mondale idolatry as I was. (I can’t believe I just wrote that.)

You young uns won’t remember how bad it was under Carter. But it was really, really bad. End of America bad. No reason to live bad. Iran was pulling our strings, oil shocks rattled the economy, a malaise was settling over the country—and then there was the Misery Index.

The Misery Index, seized by Ronald Reagan during the campaign against Carter, was the simple (even simplistic) metric that added the inflation rate to the unemployment rate. The two were (are?) thought to be mutually exclusive: inflation meant there was too much money chasing too few goods, thereby raising prices. Unemployment implied less money in the system, hence falling (or at least stable) prices. Like I said, simplistic. And it didn’t take into account stagflation.

The table I link to above shows how bad (really, really bad) it got: not only did the Misery Index reach a record high of nearly 22 under Jimmy Carter, the change from the beginning to the end of his administration was a plus-7. Under Reagan, it reached a low of 7.7, with a net from beginning to end of minus-9.6. Not only did Reagan leave the economy better than he found it, he left it better than Carter found it.

While we’re on the subject, W’s net MI was minus-.44, while Obama’s is a plus-4.9. Do I think he can hit up there with Carter? No, but then I’m supposedly a racist. If some peanut farmer from Georgia can nearly ruin a great nation of two centuries’ age, who am I to suggest that a community organizer from Chicago (or Hawaii, or Kansas, or Kenya) can’t do worse?

I take it back. Of course he can.

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If You Don’t Pass The Tax Increase We’ll Stop Picking Up The Trash And Get Rid Of Kindergarten Teachers

That’s what happens in New England every time the citizens look askance at a proposed property tax increase. Obama seems to have the same strategy.

President Barack Obama is seeking $3 trillion to $4 trillion in deficit cuts over the next decade, a move that would require putting Social Security, Medicare, defense spending and tax reform on the table as part of a balanced approach to cuts, Democratic officials familiar with the negotiations told CNN.

The officials, speaking on condition of anonymity, did not say what types of cuts would have to be considered under such a proposal. In the past, one Social Security adjustment debt negotiators have discussed is cost-of-living.

Ok, the first thing we notice is that he’s talking about a decade, meaning that if he wins and gets more democrats in congress they can just shelve the entire thing. Secondly, he is scaring people with the elimination of cola (cost of living adjustment). If at any time in the future we have an inflation, people who depend on Social Security will be plunged into deep poverty. And everyone understands this. It is fear mongering. It would be much more sensible to say that people are living longer, at least until we dismantle the health care system, and therefore we need to increase the retirement age for people under fifty or forty or whatever. Instead, he is trying to scare old people. What do you suppose are the chances of experiencing another inflationary period in the next ten years?

- Aggie

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Stagflation.. Carter.. Obama

Salt peanuts, anyone?

Do you remember the Carter campaign of 1976? There was dumb music, a pause, and Jimmah said: Salt Peanuts!

I thought it was cute. I voted for him. I wonder if Barack can say: Salt Peanuts!

A scramble for supplies prompted by Japan’s crisis may add to the specter of stagflation stalking the U.S. economy.

Already, high oil prices and geopolitical uncertainty have taken some of the buzz out of 2011 growth prospects. The first quarter in particular looks like it will end on a much weaker note than initially thought. Morgan Stanley’s tracking estimate of annualized real gross-domestic-product growth has dropped from 4.5% to 2.9% over the past six weeks. A similar one from tracking firm Macroeconomic Advisers has slipped to 2.5%.

Considering the fiscal and monetary stimulus in place, from the Federal Reserve’s $600 billion bond-buying program to the package of tax cuts and extensions passed in December, that’s hardly encouraging. “People got a little too excited,” about the potential for strong growth this year, says Bank of America Merrill Lynch economist Ethan Harris. The economy’s underlying growth rate, he says, looks closer to 2.5% than 3.5%.

That isn’t much above stall speed. But even that level of growth would mean cost pressures are likely to persist, to the chagrin of businesses and households. Stagflation is persistent inflation combined with stagnant consumer demand and relatively high unemployment.

Commodity and raw-material prices have soared over the past year largely because of tight global supplies and strong demand. The loose-money policies of central banks world-wide also have encouraged the run-up. And now, Japan-related disruption threatens to further exacerbate price pressures.

Stagflation begat the Misery Index, the sum of unemployment and inflation. We have more sophisticated leadership today and more sophisticated journalists. Instead of reporting the percentage of unemployed Americans, plus the percentage of those who have run out the clock on unemployment benefits and thus don’t show up in unemployment statistics, we hide it, rather effectively. As recently as three years ago (Bush era) those numbers appeared in every article about the economy. As they say in the rural areas of southern Missouri: Not no more!

The new, sophisticated journalism also takes at face value inflation statistics that don’t include the price of food or fuel. That makes it so much better.

Will the public catch on and demand more accuracy? Doubtful.

- Aggie

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Excluding Food And Gas, Inflation Was Tame

Tell Grandma to stop complaining.

Why is the media so eager to prop up this horrendous administration? Is it fear of losing face? Do they want to have been right about Bush and about Obama, to the extent that they can’t admit the train wreck that we’re experiencing? At some point it becomes absurd.

Wholesale prices jumped last month by the most in nearly two years due to higher energy costs and the steepest rise in food prices in 36 years. Excluding those volatile categories, inflation was tame.

The Labor Department said Wednesday that the Producer Price Index rose a seasonally adjusted 1.6 percent in February — double the 0.8 percent rise in the previous month. Outside of food and energy costs, the core index ticked up 0.2 percent, less than January’s 0.5 percent rise.

Food prices soared 3.9 percent last month, the biggest gain since November 1974. Most of that increase was due to a sharp rise in vegetable costs, which increased nearly 50 percent. That was the most in almost a year. Meat and dairy products also rose.

Energy prices rose 3.3 percent last month, led by a 3.7 percent increase in gasoline costs.

Separately, the Commerce Department said home construction plunged to a seasonally adjusted 479,000 homes last month, down 22.5 percent from the previous month. It was lowest level since April 2009, and the second-lowest on records dating back more than a half-century.

The building pace is far below the 1.2 million units a year that economists consider healthy.

There was little sign of inflationary pressures outside of food and energy. Core prices have increased 1.8 percent in the past 12 months.

Still consumers are paying more for the basic necessities.

So nothing to worry about. But hang onto that job, ok?

- Aggie

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Obama Job Approval Rating Slips In All 50 States

Pouting in the White House

Obama’s overall average approval rating in 2010 was 47%, down 11 percentage points from the 58% he recorded in his first calendar year in office. For purposes of this state-by-state analysis, Obama’s average is calculated for the calendar year, and is therefore slightly different than the yearly average calculated beginning with his inauguration on January 20, 2009.

Broadly speaking, residents of 20 states gave Obama an approval rating within three percentage points of his national average (between 43.8% and 49.8%). Twelve states plus the District of Columbia had average approval ratings above that range, and in 18 states, approval fell below it.

Differing Degrees of Decline

Obama’s approval rating fell in 2010 compared with 2009 in all 50 states and the District of Columbia, although the general rank order of the states based on Obama job approval was quite similar in both years.

Obama’s approval rating fell the most in Vermont and the least in Mississippi. There appears to be no systematic pattern explaining the degree to which Obama either gained or lost approval across the states.

Change in Barack Obama Job Approval, 2009-2010

It would be interesting to know exactly what has happened to his popularity in Vermont? My guess is that Obama is not moving to the Left dramatically enough for them, but it might be that some of the people in northern Vermont, which is more conservative, are getting disgusted.

People are easily swayed. My guess is that he can improve those numbers if he can improve the economy. But, like his true predecessor, Jimmy Carter, he’s going to have problems at the gas pump and a serious inflation.

- Nostra-Aggie

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Shhhh…. Don’t Wake Up The Boss

Don’t look now, but our borrowing costs are going to increase.

Geithner Quietly Tells Obama Debt Expense to Increase to Record

Barack Obama may lose the advantage of low borrowing costs as the U.S. Treasury Department says what it pays to service the national debt is poised to triple amid record budget deficits.

Interest expense will rise to 3.1 percent of gross domestic product by 2016, from 1.3 percent in 2010 with the government forecast to run cumulative deficits of more than $4 trillion through the end of 2015, according to page 23 of a 24-page presentation made to a 13-member committee of bond dealers and investors that meet quarterly with Treasury officials.

While some of the lowest borrowing costs on record have helped the economy recover from its worst financial crisis since the Great Depression, bond yields are now rising as growth resumes. Net interest expense will triple to an all-time high of $554 billion in 2015 from $185 billion in 2010, according to the Obama administration’s adjusted 2011 budget.

“It’s a slow train wreck coming and we all know it’s going to happen,” said Bret Barker, an interest-rate analyst at Los Angeles-based TCW Group Inc., which manages about $115 billion in assets. “It’s just a question of whether we want to deal with it. There are huge structural changes that have to go on with this economy.”

Shhh.. Close your eyes, quietly hum a happy tune, and ignore that big, scary, ugly truth that is glaring at us.

Welcome back, Carter.

- Aggie

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Fire Up The Printing Presses!

Geithner thinks we will hit debt limit by March 31st.

Give me some o’ dat’ ol’ time inflation
Some of dat’ ol’, ol’ time inflation,
Give me some o’ dat’ old time inflation,
It’s good enough for meeeeee…

The United States could hit the legal limit on its ability to borrow as soon as March 31 and faces serious consequences unless Congress acts by then to raise it, Treasury Secretary Timothy Geithner said on Thursday.

“Even a short-term or limited default would have catastrophic economic consequences that would last for decades,” Geithner said in a letter to U.S. Senate Majority leader Harry Reid that was issued by Treasury.

Geithner said it was hard to pin down exactly when the current $14.3 trillion ceiling on the debt limit would be pierced but urged Congress to act before the end of the first quarter.

“The Treasury department now estimates that the debt limit will be reached as early as March 31, 2011, and most likely between that date and May 16, 2011,” he wrote.

He said Treasury could engage in extraordinary measures, such as suspending sales of state and local government securities, but preferred not to because it is disruptive.

He warned that failure by Congress to raise the debt limit, which would effectively put the United States into default on its obligations for the first time in its history, would have consequences “potentially much more harmful than the effects of the financial crisis of 2008 and 2009.”

Oh, goody! I just love a disaster! Who was it that said: Never waste a crisis? Wasn’t it the future governor of Chicago?

Well, yes, I do believe it was.

- Aggie

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Thou Shalt Not Tug on Wonder Woman’s Hot Red Leather Jacket

In answer to Katie Couric’s question about which periodicals she reads:

So, imagine my dismay when I read an article by Sudeep Reddy in today’s Wall Street Journal criticizing the fact that I mentioned inflation in my comments about QE2 in a speech this morning before a trade-association. Here’s what I said: “everyone who ever goes out shopping for groceries knows that prices have risen significantly over the past year or so. Pump priming would push them even higher.”

Mr. Reddy takes aim at this. He writes: “Grocery prices haven’t risen all that significantly, in fact.” Really? That’s odd, because just last Thursday, November 4, I read an article in Mr. Reddy’s own Wall Street Journal titled “Food Sellers Grit Teeth, Raise Prices: Packagers and Supermarkets Pressured to Pass Along Rising Costs, Even as Consumers Pinch Pennies.”

The article noted that “an inflationary tide is beginning to ripple through America’s supermarkets and restaurants…Prices of staples including milk, beef, coffee, cocoa and sugar have risen sharply in recent months.”

Much as she energized the Republican base, helped galvanize the Tea Party, and generally drove liberals bat-[bleep], Sarah Palin wasn’t completely ready for prime time in 2008.

But this is 2010, baby, and if you take her for granted, she’s going to kick you in the crotch, knee you in the face, and karate chop you to the ground—intellectually speaking, of course. She wouldn’t hurt a fly.

She’d shoot a moose in Reno just to watch him die. But she wouldn’t hurt a fly.

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