Economic Collapse and Inflation #4
Submitted by William MacFarlane on Sat, 02/23/2008 - 05:20.
I was reading an article from the SFgate economy section, about inflation, and the author, Martin Crutsinger, explains several different factors on why inflation is increasing. The rise in inflation was seen in January, where the price in gas, healthcare, and food rose. Specifically, crude-oil prices rose to $100.01.
Crutsinger writes "The Fed has cut interest rates aggressively in the belief that fighting off a threatened recession is more important than worrying about inflationary pressures." Even if the Fed is trying to fight off a threatened recession, inflation still plays a part in the recession. Deflation, inflation, and stagflation is what makes a recession happen. The Fed should work on decreasing inflation. Instead of looking at the future (threatened recession), they should look at what is happening now (inflation, and possible stagflation). If anyone was wondering stagflation is persistent inflation combined with stagnant consumer demand and relatively high unemployment.
Further into the article Crutsinger mentions that Core Inflation, which excludes energy and food, rose by 0.3 percent, the largest jump in seven months. That increase reflects rising prices in education, medical care, clothing, tobacco and airline fares. With this increase, core prices have risen over the past 12 months by 2.5 percent, which happens to be over the Fed's comfort zone which is 1 to 2 percent gains in the underlying inflation rate.
With the increase of inflation, the housing market remains in a steep downturn. Construction of new homes and apartments went up a slight 0.8 percent resulting in an annual rate of 1.012 million units. Applications for building permits fell by 3 percent for an annual rate of 1.048 million units.
"'Clearly the housing recession continues with no end in sight,' said Bernard Baumohl, managing director of the Economic Outlook Group, a private forecasting firm."
Some economists believe growth in this quarter will turn negative, fulfilling the true definition of a recession. I guess we'll just wait and see.
Sweet:
Sweet: http://www.economy.com/freelunch/default.asp
Will, I really like how
Will,
I really like how many facts and stats you provide in all of your posts. I think this gives the reader a good idea of what’s going on, as well as some real, solid information. I also like your writing style. I think that you really know how to engage your reader. Your writing makes me want to continue reading posts by you.
As far as what I’m wondering, you really have covered a lot. How about international events? What about looking up things about inflation in other countries. I think you could also then compare it to what’s happening in the U.S. This might lead you in a new direction with a new viewpoint on the issues.
Considering improvement, I really think you are finding your style and are doing well. I think for future editing you can work on refining your stats per post and also make things flow a little better. In my mind, your topic is something of specific interest. Not everyone will want to read about that. I do however, think you are doing a good job of making it something everyone might want to read.
Post new comment