::Boggle::

Post #341,218 by Another Scott 4/2/11 7:25:49 PM Reply	::Boggle:: Um, you guys know better than this. Or should. What was the inflation and unemployment rates at the start of that chart in 1973? 6.2% and 4.8% What was it in 1974? 11.0% and 5.5% What happened in those two years? The oil embargo during the 1973 Arab-Israeli war. So, we had nearly full employment and fairly high inflation, then a quadrupling of oil prices (~$3 to ~$12 a barrel) in less than 2 years. Unemployment went up, and inflation increased from a fairly high level to an higher level. Unemployment increased because of the recession. What happened in 1979? The Iranian Revolution and the Iraq-Iran war and another near tripling of oil prices (~$14/bbl to ~$40/bbl) - http://en.wikipedia....logy-june2007.gif . This doesn't contradict anything I posted. Has oil tripled or quadrupled in the last 2 years? Not exactly. Oil is down substantially from its peak ($145.31 on 7/3/2008) but up substantially from its recent low ($30.28 on 12/23/2008) - http://tonto.eia.doe...?n=PET&s=RWTC&f=D (What happened between July and December 2008? The world economy imploded.) At the moment oil's at $104.34 (on 3/30/2011) - lower than it was less than 3 years ago. If oil's tripling since December 2008 were driving US inflation, then the 12-month CPI would be a lot higher than 2.1% - http://www.bls.gov/n...lease/cpi.nr0.htm . (The 12-month CPI in July 2008 was 5.6%.) Things are different now compared to the 1970s. Are we at nearly full employment? No. Do employees have strong labor contracts with automatic cost-of-living increases that will feed price shocks back into inflationary expectations? No. Is US Capacity Utilization around 85% as it was in September 1973? No. Is it above 81% as it was in December 1980? No. It's 77% - a very low level. http://www.data360.o...p_Id=51&count=all The lessons from the 1970s tell us that we don't have to worry about inflation now. The economy is too weak for inflation to take hold. HTH. Cheers, Scott.
Post #341,219 by beepster 4/2/11 7:35:58 PM Reply	You are missing alot of things because this isn't just about oil any more. Back in the 70s...we made things. Now we BUY things. And where to we buy them from? And what is happening in the economies of those places from which we buy them? And what happened to one of the main country's infrastructure that supports many of those economies? And what are wages doing in those countries from which we buy those things? It isn't just our economy any more...because we don't MAKE what we use. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #341,220 by Another Scott 4/2/11 8:17:19 PM Reply	You're waving your hands and changing the subject. Show me some graphs and numbers and maybe we'll talk. All you've done thus far is point to excerpts of an interview with a CEO as proof that inflation is coming to the USA. When confronted with evidence that you're wrong, you make categorical statements without evidence and introduce side issues like the supposed decline in US manufacturing - http://en.wikipedia....tes#Manufacturing . By some measures, US manufacturing is still very strong: "The U.S. produces approximately 21% of the world's manufacturing output, a number which has remained unchanged for the last 40 years." Show me that I'm wrong. Maybe take a look at this and get back to me - http://www.google.co...yvuIdVTlA&cad=rja (especially pages 19 - 23 and Figure 13). Stock and Watson say US inflation is likely to continue to trend downward until employment picks up substantially. How are they wrong, too? Thanks. Cheers, Scott.
Post #341,226 by beepster 4/3/11 1:32:31 AM Reply	Re: You're waving your hands and changing the subject. http://www.newsdaily...a-economy-prices/ The PPI, which measures prices received by farms, factories and refineries, jumped 1.6 percent last month, the largest increase since June 2009, the Labor Department said. The gain was more than double economists' expectations. "You are seeing inflation on the goods side, you don't see it on the service side. This is a service economy and inflation will be driven more by wages and to this point wages are reasonable," said Levitt. "But on Main Street, you will certainly feel the shock whether it is at the gas pump or the supermarket. So...do you think anyone truly cares if PWC can hold its client rate steady or boeing can keep the price of jets in slight decline in the face of gas prices that will likely remain $3.50 plus and large scale increases in food pricing? Keep pointing at "core" inflation and plugging your ears and "la la la"ing while main street screams uncle. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #341,230 by Another Scott 4/3/11 9:33:15 AM Reply	The 12 month CPI numbers weren't core.... Monthly inflation numbers are noisy. The numbers the last 2 years have been especially noisy. That's why I cited the 12-month numbers in my post above - http://iwt.mikevital....iwt?postid=44358 . 2.1% CPI inflation over 12 months isn't anything to be upset about - especially with very high unemployment. But if you want to worry about that, and cherry-pick monthly numbers to support your case, feel free. Consumers don't pay PPI increases, businesses do. Personal Consumption Expenditures are 70% of GDP - http://www.bea.gov/s.../0311_gdpecon.pdf PCE includes services. PCE and CPI use slightly different formulas, so their changes aren't identical. http://www.bea.gov/s...r/1107_cpipce.pdf HTH. I think I'm done. Cheers, Scott.

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