Consumer prices flat, industrial production dips

AP ^ | 05/15/09 | MARTIN CRUTSINGER

[TigerLikesRooster]

Consumer prices flat, industrial production dips

By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, Ap Economics Writer 4 mins ago

WASHINGTON – Consumer prices were flat in April, while industrial production fell by the smallest amount in six months — further evidence that the recession's grip is slowly easing.

The disappearance of inflation has been a product of the country's deep recession as surging job layoffs dampen wage pressures and weak consumer demand keeps a lid on price increases. Some economists are worried about a dangerous bout of falling prices, but most say that possibility remains remote because the Federal Reserve has responded with force to combat the current downturn.

The Labor Department said Friday its Consumer Price Index was flat last month after dipping 0.1 percent in March, meeting economists' expectations. The docile inflation performance reflected a second monthly drop in energy costs and a third straight decline in food prices.

[TigerLikesRooster]

Ping!

[MNlurker]

I’ll expect the market to rally up 100 points as a result of this...

[lentulusgracchus]

[Article]

Consumer prices flat.....

Bull.

[TigerLikesRooster]

Yes, ‘better than expected’ thingy.

[tcrlaf]

ALL of the Forward looking Economic indicators in America are dropping, if not Collapsing.

Steel is a 9-12 mos. ahead economic indicator, and Mittal is shuttering mills.

16 of the world’s 21 “Supercape” monster container ships are currently sitting empty off of Singapore, unleased.

Rail Car Loadings are down 20% or more, and DROPPING.

It’s going to get worse, before it gets a LOT worse.
The sheeple voted for “CHANGE!”, and are getting everything they voted for.

[tcrlaf]

AGREED...
It’s bull.

Just yesterday was an article on FR stating that food prices have gone up 3.9% in the last month.

INFLATION is starting to rear it’s ugly head.

[TigerLikesRooster]

We are having a little Indian Summer before full Kondratiev winter.

[Erik Latranyi]

Steel is a 9-12 mos. ahead economic indicator, and Mittal is shuttering mills.

As someone in the metals industry, you are correct. The last few months were fueled by a surplus inventory of metal held by the service centers. The mills were cutting back.

Now that the inventory is mostly depleted, new metal supplies are forecast at 6-8 weeks delivery....minimum. That is not a position taken prior to a rebound.

The mills and service centers have an incredibly negative forecast as no rebound in autos or construction is on the horizon....these are the two largest consumers of metal in our country and both are tied to financing that has not opened up since last October.

[Leisler]

Throw in the coming inflation, such that industries that require multi year forecasts on prices, won’t know what to charge on present contracts. Further they won’t be able to get insurance on those costs. That’s gone.

With UAW Obama and his ‘brain’ trust making contracts void, plus inflation, plus overt and covert taxes....

....it’s grim.

Jim Rodgers is buying foodstuff because he thinks food production margins are thin, and if a percentage of farmers don’t get finance, or can not buy or finance fertilizer, then food production could fall below what is needed to supply people.

Paying more won’t help because you need to eat today, and more food next year won’t help you with hunger in a month.

So there will be a bidding war for shot supply. Those very poor in third world, near cashless countries will be starving.

[AreaMan]

In other news: America Has Industrial Production

[lentulusgracchus]

What was really confusing was this article .... have a look and see if it makes sense to you. I'm still shaking my head and trying to dislodge the cobwebs.

---

Five Things for Thursday, May 14
Kevin Depew May 14, 2009 11:20 am
Minyanville.com

~~~~~~~~~~~~~~~

<snip>

2) Real Rates and Nominal Prices

Kevin -

I read yesterday's Five Things, here is my question: Why are my real life experiences with product prices indicating inflation if all these companies have no pricing power and inflation is low?

I'm not just talking about food, which is suffering its own inflation through the use of smaller packages sold for the same price as the older larger package.

For example, I went to Lowe's (LOW) yesterday. Looking around the store and checking prices, I saw multiple examples of higher prices. For example, I had bought a 26 foot 300lb commercial extension ladder 10 months ago for $380. This was not a sale price. That same ladder is now $460.

I could go on and on but either real prices are going up or the amount of the product is smaller for the same price.

So how can there be deflation when all of us are seeing inflation?

Minyan MT

MMT -

Inflation is an increase in the money supply. When the effects of that increase are rising nominal prices then the real value of money is eroded. We have had inflation for decades now, which necessarily sows the seeds for deflation, and which can only occur after prior inflation.

Deflation occurs when the money supply EVEN IF INCREASED fails to exceed the demand to hold dollars at the prevailing price level. Following nominal price levels alone will never yield an accurate view of whether we are experiencing deflation. As noted in the article, the money supply has increased dramatically, but the velocity of transactions has continued to decline because people are using those increased dollars to destroy debt, or simply saving them.

Again, following nominal prices alone is at best misleading, and at worst irrelevant to understanding REAL deflationary effects. Prices are merely one symptom of inflation and deflation, not in and of themselves predictors of or indicators of them.

In order to understand deflation it is necessary to tear yourself away from price levels and focus on 1) declining asset values, 2) availability of AND DEMAND FOR credit, 3) real liquidity and 4) debt destruction and balance sheet repair.

But it is really much simpler than all of that. Why does nominal price not matter? Think about it this way: does any producer anywhere really want the price of what they make to remain the same forever? Perhaps, if living in a vacuum. But in the real world, it is hoped that the real value of the goods they produce will increase. But this can happen regardless of nominal price levels! It can happen through productivity increases or even through changes in the psychology of consumers. It can happen as well via changes in real interest rates and the value of the currency that is being used as a medium of exchange.

Because we live in a world where the central bank has been constantly increasing the supply of money in the economy, we have been conditioned to view nominal price changes (which have been mostly up for many things) as real indicators of profitability and value. The reality is that nominal prices are nothing of the sort.

Link: http://www.minyanville.com/articles/nasdaq-LOW-Credit-spx-rates-demand/index/a/22667

We seem to be in a novel situation in which monetary policy has been unable to run down deflation (until now, anyway), so that we are experiencing asset deflation, but nevertheless numbers of (food/goods) market players have sufficient market power to impose price increases anyway.

So what the heck is that? Deflation or inflation?

It sounds like a new paradigm, in which the variable U always goes down, but the constant I always goes up. (That is similar to the con man's inequation, by the way.)

[Vaduz]

A president with no leadership skills=no industrial production,no jobs,no money don’t like the change obama you suck.