Wednesday, 15 April 2009

US economy begins to deflate?

The headline US inflation rate is now in negative territory. So has the US economy fallen into the dreaded deflationary pit?

Strip out energy prices and inflation is firmly in positive territory. Since the crisis began, it has hardly changed at all.


Flo said...

And what if oil prices go back up?

Man in a Shed said...

I understand that CPI in the US has a large amount of housing costs in it - rental etc.

That could explain the sudden drop perhaps, or do I have this wrong ?

Doesn't mean inflation's dead - as the humming printing presses over at the Feb would testify.

carol said...

You might want to check out

Official US inflation statistics significantly understate the real inflation rate. They've had substantial inflation for years.

My sister (who lives in Alabama) has described food prices rising to near UK levels. Compared to the UK, America had relatively low prices for decades. Except for housing, not any more!

Anonymous said...

Enjoy the deflation to get your house in order: because by end 2009, it will be hyperinflation time and you will probably be unemployed and getting whipped from all angles by the economy. Store up cash now and make plans. This baby has only begun.

Anonymous said...

My mother used to pay $1 for a head of broccoli: she saw last week a head for sale at $4! That's delfation for ya!?

Nick von Mises said...

Replace equivalent rent with Case Shiller and it's firmly negative. Mish has the charts.