OECD annual inflation continues rising to 2.9% in April 2011 The Organisation for Economic Co-operation and Development (OECD) released the April inflation numbers for its member countries today. Although we have known the U.S. inflation numbers for a couple of weeks now it is interesting to see how they compare to other developed countries around the world. Some of the biggest gainers were the United Kingdom (to 4.5% in April, up from 4.0% in March) and the United States (to 3.2%, up from 2.7%). Inflation also accelerated in Germany (to 2.4% up from 2.1%), Italy (to 2.6%, up from 2.5%), France (to 2.1%, up from 2.0%) and Japan (to 0.3%, after four consecutive months at 0.0%). Average … [Read more...]
Raw Materials Price Inflation Skyrockets– Manufacturing Collapses
According to the May report of the Richmond FED-- the index of manufacturing activity fell 16 points from a positive level of 10 in April to a declining (negative level) of -6 in May thus indicating that manufacturing actually contracted during the time period. During this same time the cost of raw goods required to manufacture goods increased dramatically. Inflation was the monthly equivalent of an average annual rate of 6.12% in May the highest monthly reading since December 1993 up 27% from April's equivalent of 4.81%. As I've said many times 5% annual inflation will stifle the economy 6% is pretty devastating. Manufacturing activity in negative territory is a sign of a recession … [Read more...]
Soros Sells Gold- No Longer Fears Deflation???
When I think of using gold for asset protection I think of it for protection against inflation. But obviously, according to the WSJ, I am all wrong (or maybe not). According to a Wall Street Journal article, billionaire George Soros sold his $800 million stake in precious metals in the first quarter of 2011 saying that he "no longer fears deflation". What? With inflation climbing, I can see why he no longer fears deflation... but why would he buy gold to hedge against deflation, in the first place? … [Read more...]
Does the Consumer Price Index (CPI) Include Taxes?
Question: I have heard over the years that the CPI does not include taxes as one of its components. In other words, an increase or decrease in a tax rate is not considered a change in consumer prices/costs. Is this true? If so, how is this omission justified? Thank you, James Schmidt … [Read more...]
Agflation- What is it?
Agflation, is a relatively new term coined by analysts at Merrill Lynch in 2007. Back then rising demand for agricultural products started driving up prices. Agflation is simply a combining of the words agriculture as in "agricultural commodities" and the word inflation. Inflation is commonly used to mean an increase in prices (although it originally meant an increase in the money supply which eventually resulted in an increase in prices). So agflation is simply an increase in the prices of agricultural products. But agflation is not the result of an increase in the money supply like typical inflation, but rather it is simply a result of supply and demand factors. In 2000, the world wide … [Read more...]
How to Calculate the Social Security Cost of Living Adjustment
How Does The Government Calculate the Cost of Living Adjustment (COLA) on your retirement benefits like Social Security? I recently received the following question from Jerry: What formula does the government uses to figure out COLA based on inflation for retired people each year? That is a great question! Social Security benefits are indexed for inflation to protect beneficiaries from the loss of purchasing power due to inflation. The government uses a complex averaging system to take the average CPI index for the 3rd quarter of the previous year versus the average CPI index for the current year and calculate the inflation rate based on that. Cost of Living adjustments are … [Read more...]
Market News
Check out the latest news on the economy in this video: … [Read more...]
Annual Inflation Eases In OECD Countries- November 2010
The following article from the Organization for Economic Development (OECD), shows a comparison of the inflation rates of several of the major countries. From it, we can see how the U.S. compares. Typically U.S. energy prices are lower than Euro areas and currently energy prices are rising faster there than in the U.S. as well (as we can see from the first chart). Overall inflation is also higher in other OECD countries than in the United States. The average for all OECD countries for all items is 1.8% while the inflation rate for the US was only 1.1%. It takes a few weeks longer for the OECD to compile the data so even though the November numbers were released in mid-December the … [Read more...]
U.S. Tax Burden Good News?
The Organisation for Economic Co-operation and Development (OECD) released its revenue statistics today and it contained some good news for residents of the United States. Well, maybe not "Good News" but "Less Bad" news. It seems that the tax burden in the United States is not as bad as it is in the majority of the other developed countries in the world. The OECD statistics show that as a percentage of GDP Denmark has the highest tax burden with the Danish government absorbing almost half of their GDP (48.2%). Sweden was a close second at 46.4%. Other European countries … [Read more...]
Education Inflation Way Above Consumer Price Index
Every year the College Board surveys 3,500 colleges across the country to determine college cost increases and trends. Then in October it releases its "Trends in College Pricing" report. Here are highlights from its latest report: In-State tuition up 7.9% Out-of State Tuition up 6% Private University Tuition up 4.5% … [Read more...]
