Consumer Prices in U.S. Decline 1%, Most on Record

Consumer Prices in U.S. Decline 1%, Most on Record (Update2)
By Bob Willis - - Nov. 19 (Bloomberg)

HIGHLIGHTS

The Cost of Living: in the U.S. fell by the most on record as fuel costs plummeted and retailers used discounts for cars and clothing to entice consumers hobbled by job losses and sinking home values.

• Consumer Prices Plunged: Down 1 percent last month, more than forecast and the most since records began in 1947, after being unchanged the prior month, the Labor Department said in Washington. Excluding food and energy, so-called core prices unexpectedly fell for the first time since 1982.
  
• David Resler, Chief economist at Nomura Securities International Inc: ``We are moving into an environment where prices are falling across the board,'' he said, in an interview with Bloomberg Television. ``That is going to continue. Deflation is spreading across the economy.''
• Housing Starts: fell 4.5 percent in October to an annual rate of 791,000, the lowest level since the Commerce Department began keeping the data in 1959.
• Price Rollbacks: Eduardo Castro-Wright,`Wal-Mart's U.S. stores chief, stated,`You'll see a lot of rollbacks,'' at a Morgan Stanley conference in New York. Rollbacks refer to price reductions the retailer scatters throughout grocery, pharmacy and other departments to spur sales.

COMMENTS

Deflation: is showing up in the numbers for the first time in decades. It is spreading and the remedies will be different than an inflationary recession. The growing number of bankruptcies seem to indicate to survivors change is in the air.

To Big to Fail: Is a fine line to walk and difficult to reward with taxpayers money. Where do you draw the line. From Banks, Insurance companies, Auto Makers, maybe we should ask , Who shouldn't we bail out? The list might be shorter.

Bargains: There will be plenty, but wait if you can. The pricing cycle is still in the first year of a multi year downturn. Preservation of capital and access to credit will continue to be critical during this World Wide Down turn. Your focus should be more on survival at the moment not opportunity. New rules and regulations yet to be developed will make it difficult for you to choose intelligently. Patients will be rewarded.

Jim

U.S. Unemployment Rate Climbs to 14-Year High of 6.5% (Update2)

U.S. Unemployment Rate Climbs to 14-Year High of 6.5% (Update2)

By Bob Willis and Rich Miller

HIGHLIGHTS

Nov. 7 (Bloomberg) --

The U.S. unemployment rate rose to the highest level since 1994.

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• Jobless Rate Rose: to 6.5 percent in October from 6.1 percent the previous month, the Labor Department reported today in Washington.
  
• Employers Fired: 240,000 workers after a loss of 284,000 in September, the biggest two-month slide since 2001.
• 25-Year High: The total number of unemployed Americans jumped to 10.08 million last month, the highest level in a quarter-century, today’s report showed.
  
• Nariman Behravesh, chief economist at IHS Global Insight: “We’re heading for a deep recession -- banish the word mild from your vocabulary -- it’s big, it’s bad and it’s broad-based,” said in Lexington, Massachusetts.
  
• Goldman’s Forecast: Goldman Sachs Group Inc. analysts downgraded their projections for the economy after today’s report, foreseeing the biggest contraction since 1982 in the fourth quarter. Goldman also projects that the unemployment rate will soar to 8.5 percent by the end of next year.
  
• Faltering Economy: and imploding financial markets helped push Obama ahead of Republican rival John McCain, a senator from Arizona, particularly in hard-fought states like Ohio and Florida where unemployment rates have jumped.

COMMENTS

Presidency: "It's the economy, stupid." prove again to be the winning theme for the the Democratic party. Time will tell how effective the new team will be. But there are no magic bullets to this Global Financial Bubble that has been building over the past 20 plus years. It will take a number of years to repair and rebuild the economy.

Bottom Up: Getting money and jobs into the hands of the middle and working class will be the challenge. Solutions that foster growth and opportunity at the grassroots level will help turn this economy around.

Paradigm Shift: Free market behavior will now be shifting to control and regulate. Let us hope that wise policies will be constructed and the pendulum will not swing to far over to the extreme of the other side.


Near Term: More of the same; higher unemployment along with lower stock market & International Commodity Prices. Why? because buying power and access to credit at the consumer level is continuing to drain out of the US and Global populations resulting in increasing bankruptcies. Cash will continue to be King. As has been said before in this blog, we are in a deflationary downturn. Meaning remedies to problems faced in the past will require a different strategy in order to archive success by both Government and Business.

James Monachino