Buried deeply within Bloomberg’s recap of November’s various and sundry economic statistics, presented with the usual obfuscations and reassurances of stability in the face of unfolding financial catastrophe is one number that somehow manages to reflect what no other US government statistic does: reveals the truth.Just to be certain it isn’t ever noticed, you’ll find it nestled in the 23rd paragraph of the article, precisely when the reader’s eyes have completely glazed over from statistics fatigue.The number in question is the “wholesale price index.”
I won’t make you wait: it’s 3.2%.For one month.On an annualized basis, that is (without compounding) 38.4%.It is the highest increase in 34 years, and if you remember the inflation that we endured in the mid 1970s, you know that this does not bode well for next year’s consumer prices.
What’s unique about this double-digit inflation statistic is that every other government economic statistic has been reconfigured in recent years to reflect a sunnier picture than would have been revealed by the accurate statistics, as they had always been reported.Unlike, say the unemployment statistics, which now do not consider those whose unemployment insurance has expired - and, God knows how many hundreds of thousands there are of those right now, even if Sec. Chow insists we have only 4.6% unemployment (wanna buy a lovely bridge in Brooklyn?)
So why is this number trustworthy?Well, unlike the Consumer Price Index, which supposedly tells us what the inflation rate is, it doesn’t exclude the causal aspects of real-world inflation: food and energy.The average American’s monthly expenses are dramatically affected by those two expenses more than any other single regular expense.The other excluded element is housing, which in rents is expressed by the published annual inflation rate itself (in cities with rent control), but has become very significant with the preponderance of ARMs, but that, too goes un-included.
However, the wholesale price index must include the costs of fuel and food, because they fall within the manufacturer’s costs.So be prepared, because the wholesale price increases of November (and, no doubt, December…) will be coming to a store near you in 2008.And you never will have heard a word about it on the TV news.
Michael Fox is a writer and economist based in Los Angeles. He has been a corporate controller, professor, and small business entrepreneur. After a life-altering accident, he spent five years learning more about medicine and the healthcare (more...)
The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
The purpose of my column is to empower, not make you cower! It is vital to buy locally grown produce, buy American made when possible, and do your share to make costs go down and wages go up. It can't happen if we keep importing all our goods and firing skilled workers.
This report reflects the coming price squeeze, we already know the depression is on its way. Now it's up to us to be proactive. But get thee out of that dark corner!
-Michael Fox
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Michael Fox (62 articles, 0 quicklinks, 4 diaries, 47 comments) on Sunday, Dec 16, 2007 at 3:16:57 PM
We're reminded by the hawks that inflation is low because the cost of most things haven't changed that much.. TV's cost less, PC's cost less, hell,..even the price of the pant's and shoes I'm wearing haven't changed that much in the past 5 years. Here's the problem. I buy a TV once every 10 years.. I buy a new PC once every 5 years.. my boots are 20 years old.. I haven't bought pants in 2 years!! But the things I buy every day have increased 4 fold in the same time frame.. and I buy them daily, weekly, and monthly. My taxes increased from $1100 to $4900, my grocery bill has doubled..and it cost me 4 times more for gas and electric than it did 8 years ago. Sure.. they tell us inflation is 3.4% or whatever.. but at the end of the month I'm dreaming of the summer months so I can get caught up on energy bills and maybe afford to take the kids to a matinee. We're supposed to be impressed that the US employed 40,000 additional people in the service sector this past month..but they don't tell us that the number 1 job in the US is a sales or service associate and the number 2 job is a cashier. Do the hawks realize it would take a cashier a 90 hour workweek to cover a mortgage, insurance, taxes, energy and food bill?
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Bob A. (0 articles, 0 quicklinks, 0 diaries, 18 comments) on Sunday, Dec 16, 2007 at 4:33:05 PM
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