Us Facing New Deflation Fears

[Ash4781]

http://www.thisismoney.co.uk/markets/article.html?in_article_id=504865&in_page_id=3&position=moretopstories (may not work)

[[ quote]

The 'core' measure of consumer prices, which excludes food and energy, rose by just 0.9%, the smallest annual increase since 1966. The record low was 0.7% in 1961. The figures mean that core CPIis below the levels of late 2003 and early 2004 when the Federal Reserve was fretting about the danger of outright deflation. However, the risks of a sustained period of falling prices appear to be far more acute today. Paul Ashworth of Capital economics said: 'Under those circumstances, and with the unemployment rate so close to 10%, it is entirely understandable that the Fed wants to stick with its commitment to leave rates at near-zero for an "extended period".'

I missed the US inflation numbers yesterday but shocked that it's it's so different to the UK numbers.

[drrayjo]

And....Jobless Claims Increase again

Wall Street Journal - 19 minutes ago

By SARAH N. LYNCH And TOM BARKLEY In a troubling sign for the US labor market, the number of workers filing new claims for unemployment benefits unexpectedly surged last week to wipe out most of the recent declines.

The Labor Department said in its weekly report Thursday that initial claims for jobless benefits rose by 25,000 to 471,000 in the week ended May 15. Economists who were surveyed by Dow Jones Newswires had predicted claims would fall by 4,000.

The previous week's level was revised upward as well, to 446,000 from 444,000.

The Labor Department's report on Thursday showed that the four-week moving average, which aims to smooth volatility in the data to help paint a better picture of the underlying trend, increased for the week ended May 15. The four-week moving average went up by 3,000 to 453,500 from the previous week's unrevised average of 450,500.

http://online.wsj.com/article/SB10001424052748703559004575256112299027150.html?mod=WSJ_hps_LEFTWhatsNews

[shindigger]

DOW Down 180 points on opening.

[scepticus]

I missed the US inflation numbers yesterday but shocked that it's it's so different to the UK numbers.

the difference in inflation is in proportion to the strength of the pound vs dollar.

[Ash4781]

the difference in inflation is in proportion to the strength of the pound vs dollar.

I don't really understand fx but I've checked some debt curves and the US / UK appear similar . http://www.yieldcurve.com/marketyieldcurve.asp

So is the strength related to the risk?

Is this is a reason why US is worried about the Euro weakening ?

[Sour Mash]

This will give the Fed the green light to keep the printing presses spinning. Just how much US inflation can China import before their economy goes completely out of control, I wonder? If I was them, I'd be dumping their bonds and buying assets.

[plummet expert]

I don't really understand fx but I've checked some debt curves and the US / UK appear similar . http://www.yieldcurve.com/marketyieldcurve.asp

So is the strength related to the risk?

Is this is a reason why US is worried about the Euro weakening ?

The US is worried on two counts. First, the Eurozone could be in financial meltdown, no bail out will stop it and it could cause all markets to fall; second, if the Euro falls and continues falling v USD, Eurozone exports will become cheaper for Americans to buy whilst their own exports will be more expensive to us and curtail their trade with the Eurozone.

I think they massage theri inflation figures like we do and really there is plenty of printed money inflation in the wings waiting to take off. It's about the velocity of money and that will suddenly accelerate one day when you all thought it was a deflation.

[sharpe]

http://www.thisismoney.co.uk/markets/article.html?in_article_id=504865&in_page_id=3&position=moretopstories (may not work)

[[ quote]

The 'core' measure of consumer prices, which excludes food and energy, rose by just 0.9%, the smallest annual increase since 1966. The record low was 0.7% in 1961. The figures mean that core CPIis below the levels of late 2003 and early 2004 when the Federal Reserve was fretting about the danger of outright deflation. However, the risks of a sustained period of falling prices appear to be far more acute today. Paul Ashworth of Capital economics said: 'Under those circumstances, and with the unemployment rate so close to 10%, it is entirely understandable that the Fed wants to stick with its commitment to leave rates at near-zero for an "extended period".'

I missed the US inflation numbers yesterday but shocked that it's it's so different to the UK numbers.

So if one excludes things going up in value then we have deflations.

How about including food and energy and shivering in the wake of the double digit horror.

My experience of food inflation is well into double digits - somethings triple digit. That food and energy are not "core" tells you all you need to know about that measure.