Friday, August 10, 2007

Analysts in Wonderland.

A Gallon of milk at the market across the street from me is, after the TN Sales Tax, $6.05 , Unless it has gone up again in the last few days. 2 years ago, people were complaining that it was over $3. Milk prices have always been different in different places, but in the last four years they have gone way, way, up. Also, when I started out working at the convenience store where I currently work, a small cup of coffee was 79 cents! A "Small" coffee nowadays is the size of what a medium used to be, and costs $1.39! And don't Even get me started on Gasoline! It was not "The Good Old Days" when gas was HALF the price it is now, it was 4 or 5 years ago! 69 cent candy bars are now 99 cents, and the list goes on and on...

Sounds a lot like that thing I learned about in Mrs. Glasper's 5th grade class, Inflation. However, according to most really super-smart, doctorate-wielding, professional financial analyst types, there is no inflation occurring. Or at least very, very little. Check it out, from today's headlines.
Core consumer inflation increased 0.1% for the fourth consecutive month in June, pushing the yearly gain down to 1.9% in the past year, the lowest inflation since early 2004, and just within the Federal Reserve's unofficial comfort zone of 1% to 2% for core inflation. Core inflation excludes volatile food and energy prices.
Did you get that last sentence? Core inflation excludes food and energy prices. That's your milk, coffee and gas, right there. What do people have to buy every single day? Clothes? Toys? Jewelry? Electronics? No... Food. And Energy. Those prices affect people every single day, yet they somehow don't count?

This has long puzzled me. I am no economic genius, but I don't see good things coming from our nation's finances being based on something other than reality. When prices are doubling within four years of "1 to 2 percent" inflation, something is badly out of whack. And when things are out of whack for too long, it is usually a catastrophe when they "Adjust" back to where they belong. Enron, anybody? Housing Bubble? Silicon Valley Meltdown?

Just filing this away so I can say "I told you so" someday.


Becky T. said...

I think something is up with that store and their milk suppliers...even the crazy expensive "organic" milk (don't get me started ranting about that) is only $4 here in Dallas...I would boycott the store at all costs!!!!

Anonymous said...

now. . . . if wages would just keep up. . . need I say more, oh national economists???? kathy