At 2.06% September's Annual Inflation rate came in at almost exactly half of the 4.15% Annual rate that existed only two months earlier in July. But does that mean that all of our inflation worries are over, the FED’s tightening has worked and all is right with the world? Not Hardly! I certainly wish we were reentering the days of low inflation, low interest rates and a recovering economy. But that is not the case this month. What we have is a simple rebound effect from… believe it or not… Hurricane Katrina. It is hard to believe but the one year anniversary of Hurricane Katrina has passed. With it’s passing we have the spike in prices that it caused passing too. The interesting … [Read more...]
Are Prices really in “Free Fall” ?
Falling Prices: A recent article in MoneyNews from NewsMax.com states “Consumer Prices in Free Fall- Consumer prices have not been this low since 1949”. The article went on to say “That's the conclusion of the US Labor Department, which reported Thursday that, thanks to lower gas prices, the Consumer Price Index fell by 0.6% in November.” First of all the index actually declined by .8%, it was .6% on a “Seasonally adjusted basis” and secondly nowhere in the report released by the Bureau of Labor Statistics (part of the US Labor Department) did they come to any conclusions about anything let alone “free falling” prices. What they did state is that the majority of the decline was … [Read more...]
Hurricane Katrina: The Economics of Disaster
The Economics of Disaster: Are Hurricanes Inflationary or Deflationary? Insurance companies have estimated the damage from hurricane Katrina at $25 Billion Dollars. But the economic effect is much greater than that. That is just the loss of property. Another consideration is the loss of revenue while things are being rebuilt. What about the loss of jobs from the companies who won’t be rebuilding because they didn’t have insurance? According to the “Financial Times” current estimates of “total economic losses” are closer to $100 Billion. Those numbers are so large that it is almost impossible for us to get our minds around it. If you stacked 100 billion one dollar bills on top of each … [Read more...]
