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