U.S. consumer prices fell in November at the fastest rate since 1932, the darkest days of the Great Depression, the Labor Department reported Tuesday

MarketWatch.com reported the following today:

“U.S. consumer prices fell in November at the fastest rate since 1932, the darkest days of the Great Depression, the Labor Department reported Tuesday, as prices for energy, commodities and airline fares plunged across the country.

The U.S. consumer price index fell by a seasonally adjusted 1.7%, the department reported, the biggest drop since the government began adjusting the CPI for seasonal factors in 1947.
But on a non-seasonally adjusted basis, the CPI fell by 1.9%, the biggest decline since January 1932, at the nadir of the Great Depression. Read MarketWatch First Take commentary.
“This is scary stuff,” said Mike Schenk, an economist for Credit Union National Association. “We are teetering on the brink of a massive downward spiral. Deflation is a threat.”
The seasonally adjusted core CPI was flat in November. Read the report.
Economists surveyed by MarketWatch were expecting the CPI to fall by 1.4%. They forecast that the core CPI would rise by 0.1%. See Economic Calendar.
Energy prices declined by a seasonally adjusted 17%, the most since February 1957. Gasoline prices plunged by 29.5% in November, the most since the government began keeping records in February 1967. Fuel oil prices dropped by 7.2%. Commodities prices declined by 4.1% in November.
The CPI data is one of the last pieces of the economic puzzle that the Federal Reserve will have to mull before its announcement about interest rates later Tuesday. The policy-making Federal Open Market Committee is almost universally expected to cut its target for overnight interest rates to 0.5% from 1%….”
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U.S. Wholesale inflation jumped at more than twice the expected rate, meaning prices have risen at the fastest pace in 27 years over the past 12 months

“NEW YORK (AP) — U.S. stocks headed for a sharply lower open Tuesday after a steeper-than-expected jump in wholesale inflation raised fresh concerns about the drag rising prices are having on the economy.

The Labor Department’s Producer Price Index showed inflation pressures faced by companies increased in July at more than double the expected rate, rising 1.2 percent. Wall Street forecast a 0.5 percent increase, according to Thomson/IFR.

The increase means prices have risen in the past 12 months at the fastest pace in 27 years and follows figures released last week showing consumers are also facing rising inflation.

A Commerce Department report on July housing starts, meanwhile, showed that construction of homes and apartments fell to the lowest level in more than 17 years. Starts fell to an annual rate of 965,000 units for July; the figure was higher than the rate of 950,000 units analysts had predicted on average but didn’t appear strong enough to quell investors’ worries about the sector.

The weakness in housing has not only imperiled home builders and suppliers but has left financial companies reeling over how to cope with soured mortgage debt.

Following the reports, Dow Jones industrial average futures fell 106, or 0.92 percent, to 11,393. Standard & Poor’s 500 index futures declined 12.50, or 0.97 percent, to 1,269.80, while Nasdaq 100 index futures fell 16.25, or 0.84 percent, to 1,927.25. Futures weakened after the reports.

Bond prices were down after the economic reports. While investors ordinarily seek the shelter of government debt when bad news arrives, inflation is just as bad for bonds as stocks because it can eat into the more modest returns Treasurys usually show. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.83 percent from 3.82 percent late Monday. The dollar was mixed against other major currencies, while gold prices fell.

The latest readings don’t reflect all of the pullback in oil seen since mid-July. Oil is down more than $30 a barrel since its July 11 peak of $147.27. Light, sweet crude fell 51 cents to $112.36 a barrel in premarket electronic trading on the New York Mercantile Exchange.

Retailers reported mixed quarterly results, adding to investors’ uncertainty about the economy.

Home Depot Inc. reported a 24 percent decline in its second-quarter earnings but topped Wall Street’s expectations. The nation’s largest home improvement retailer reiterated its forecast for the year amid a weak housing market.

Target Corp. said its second-quarter earnings fell 7.5 percent but topped Wall Street’s expectations despite continued weak sales amid a challenging economy.

Saks Inc. is reporting a wider-than-expected loss in the second quarter as its affluent shoppers cut back on apparel amid a slowing economy. The luxury goods retailer also issued a downbeat forecast for the year.”

U.S. and post World War I German republic share monetary policies, lets pray it does not lead to the same results…

Read a great new post about the US economy and monetary policy here, this is an excerpt:

“…We are reaching a point, however, where the economic issues facing our nation are becoming a grave moral concern. What happens when we run out of money? When foreign countries dump our currency? When the dollar completely tanks? When unemployment soars?

Ever heard of the Weimar Republic? That period of post World War I Germany where inflation had spiralled so far out of control that the German Mark, which had an exchange rate of 4.2 to the American Dollar in 1914 had reached an unfathomable low of 2 TRILLION marks to the dollar by 1923? People were bringing cash to the store by the wheelbarrow full to buy things like a loaf of bread. Nearly 1,800 government printing presses were running around the clock just to produce enough cash. (For more on this aspect of Weimar Germany, go here.)

What had precipitated this massive decline? A huge war debt, financed only partially by taxes. The bulk was paid for by loans, the sale of treasury bills, and an increased monetary supply.

Sound familiar?

We need to get this country’s spending under control. We are making ourselves vulnerable in so many ways. Economic crisis leads to real suffering – extreme poverty, starvation, loss of life…”