Small amount of inflation is good because it encourages businesses and consumers to spend the money rather than saving it. I agree with this statement since consumption is key in an economy. Food and gas prices will increase and with around 9% unemployment rate this is not going to really help the people well being. Besides hiring rate is also low. People are more careful in what they spend therefore the overall growth is small. Food prices rose 0.4 % and gas prices rose 2.9% due to increase of the food prices thats why inflation jumped 3.9%. The US economy is still struggling.
Tuesday, November 1, 2011
Consumer Prices up 0.3% in September
Even though inflation wasn't that high prices for food and gas increase last month.
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Rising commodity prices have proven tricky for the fed to account for. Inflation, i would argue, is of less importance in our current situation. We have managed it relatively well. Unfortunately problems from the housing market still linger, and market confidence for both borrowers and lenders is shaky. The upcoming election should prove very interesting. We should obviously here a lot about job creation which is a very important pillar to the future of our economic success.
ReplyDeleteI agree with the article that we cannot conclude the economic situation is getting worse according to the 0.3% incresing. A small inflation in good for economy. In addition, the prices of other goods other than foods and gas have been flatten or fallen, such as clothes and rental price.
ReplyDeleteI've taken from this article that nothing has really changed in the past year as far as over all CPI. I haven't read anything recently, but I'm wondering how house prices have done during the same time frame.
ReplyDeleteIt makes sense that prices for food would increase more than prices for other things. Obviously, even when the economy is bad people continue to buy food. This means that there was not as large of a drop in quantity demanded of food relative to other items in the recession. I think it is interesting that rental costs increased less than they have been. In bad economic times, people would be more likely to rent than purchase something, so this smaller increase in rental prices could mean that some consumer confidence is returning, at least a little bit.
ReplyDeleteI agree the economy is still struggling but we need to look at what we can improve based upon these numbers. The problem is that the small amount of inflation we have isn't influential enough to make people spend. We need to increase inflation a little but it's hard because we need to over the long run. If we made inflation spike it would kill the little spending we have. But if we have it over the long run people will spend more now in the fear of higher prices in the future.
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