Author: Mark Holder
Covestor Model: Opportunistic Arbitrage
Great post at the Business Insider regarding all the deflation going on. With everybody sweating the soaring prices for energy and food, nobody seems to notice the deflation in housing and transportation. Not to mention that labor costs have been kept relatively flat.
Just because you’re paying more at the pump doesn’t mean that you’re paying more for every item.
The post has some great charts and there is nothing greater then viewing the real numbers and comparing them over the last 20 years. Even the new vehicles prices have risen the last couple of years, but they are still lower than 2003. If an item has jumped off the 2008 lows, does it really count as inflation? And that’s the crux of the inflation numbers now being reported. Don’t compare them to the last couple years. Compare them to 2006-07.
Maybe the most interesting chart is the household furnishings one. That category is below the lows after the dot com bust.
Check out the site for the other declining categories. Inflation isn’t as rampant as most think. With housing, transportation, and natural gas plunging, its hard to understand the big inflation fear. Besides, if the government would every decide to quit burning our food via ethanol the food inflation might just disappear.
Sources:
“Inflation? Just look at the prices right around you ” Matt Busigin, Business Insider, 5/20/11 https://www.businessinsider.com/inflation-just-look-at-all-the-deflation-all-around-you-2011-5?r=US&IR=T
“Consumer Price Index for All Urban Consumers: Household furnishings and operations” Economic Research, Federal Reserve Bank of St. Louis, 5/13/11 http://research.stlouisfed.org/fred2/series/CUSR0000SAH3
