Inflation Rate

Wholesale prices rose again in February as another hefty increase in energy costs. You know the cost of living is going up fast every time you go to fill up your car. Putting $5 or $10 in at a time barely lasts a day now. And then when you go to buy groceries, you're tapped out. Is there any wonder people are having their homes foreclosed? People have to get to work and eat. Those are priorities that are higher than living in a 3-4,000 sq. ft. home!



If a 900 sq. ft. apartment is all that works, then that's what it must be! Meanwhile, get all those things that you're not using out of the storage units and have a garage sale. Enough with with the stuff!



Wholesale prices just shot up at the fastest pace in 15 months! The Labor Department reported Tuesday that its producer price index was up 0.3% last month, following an even bigger 1% jump in January. Outside of food and energy, the rise in inflation was a troubling 0.5% jump. That was the biggest increase for core inflation since a rise of 0.9% in November 2006.



We're talking about an annualized inflation rate of over 6%



When inflation is increasing like this the Federal government is usually increasing rates to cool things down; however, their hands are tied trying to fight off massive debt burden, rising unemployment, a falling stock market, and so as a result the Fed REDUCED rates by 75 basis points Tuesday after having just done an emergency 25 basis point drop Sunday evening.



An AMAZING admission of trouble- 100 points in less than 48 hours!



Guess what that means? More inflation and GOLD PRICES keep on rising. Can you say $1,500 an ounce? Those that are holding gold coins or billion sure do!



For the past 12 months, wholesale prices have risen 6.4%; excluding food and energy, inflation is up 2.6%, the biggest 12-month change for core inflation since the period ending last October. The big February increase raises concerns that relentless increases in energy costs over the past two years are beginning to spread to other areas of the economy



If inflation starts to be a problem, the Fed could be caught in the grips of a stagflation scenario. And, the overall figure will be even worse next month given that energy prices have been soaring. Crude oil prices hit records last week above $111 a barrel. For the moment, Fed officials have said they view the threat of a recession as the bigger problem.



The stimulus package (the checks are in the mail) will add billions more to the problem in the next few months as well.



So, we move from one problem to the next. The next president is inheriting a far bigger mess from Bush than he did from Clinton- and that might be Clinton (the female one). What a tit-for-tat that would be. :-)