Wednesday, July 15, 2009

Enter Inflation; Stage Left

The Producer Price Index for Finished Goods rose 1.8 percent for June, the Labor Department reports. Is that significant? It's a big step up from 0.2 percent in May and a 0.3 percent increase in April. It's also double what was expected.

But it's not enough to qualify as "inflation" to Bernard Baumohl of the Economic Outlook Group. "We're experiencing deflation still," Baumohl tells The New York Times.

While the White House says they aren't pursuing per se pro-inflation policies, many suspect that is not the case. That said, watch in the coming days for these numbers to be vaguely alluded to as "Rays of Hope" or described in some similar manner by the administration.

And if directly challenged, Joe Biden will likely respond with "... we underestimated the effect of ...," while Obama simply explains "... we inherited from the previous administration ..."


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