-January 18, 2010
This article talks about several indicators suggesting that the US is going to take longer than expected for a strong recovery to happen. The first indictor was that CPI in December, rose .1% which was less than expected. Most analysts were expecting at least a .2% increase. Another big indicator that shows that our economy will be slow to recover is the surge in energy prices. The department of labor said that energy prices surged 18.2% in 2009; this is the largest increase since 1979. Gasoline prices took a 53.5% increase which make it the one the largest increases ever seen. Weekly earnings also took a turn for the worse as they fell 1.6% in 2009, after rising 3.1% in 2008. This article shows that the basic costs of living are going up while the the average weekly income is decreasing. This is an obvious problem that the department of labor believes will slow our recovery.
I think one of the main "indicators" that the author overlooks is that the US economy grew by 2.2% in the third quarter after 4 quarters of contraction, and presumably by some similar or higher amount in the 4th quarter. We were still in the recession for the 1st quarter of 09 and saw some recovery start during the second quarter. I think we are seeing strong growth, its just that the numbers over the past year reflect half of a recession and half of a recovery. The author said something else that threw me off. He said that core CPI and CPI both grew by .1% and the core CPI excludes energy and food prices. Energy prices rose some 18%(stated in the article), so wouldn't regular CPI be substantially higher if it included energy prices growth?
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