WASHINGTON, Jan. 16, 2008
Inflation Hits 17-Year High
Prices For Food And Energy Rise By Largest Amount Since 1990
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(AP/PHOTODISC/CBS)
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The Labor Department reported that consumer prices rose by 4.1 percent for all of 2007, up sharply from a 2.5 percent increase in 2006. Both energy and food prices jumped by the largest amount since 1990.
Prices were also up sharply for health care, housing and education. However, these gains were offset somewhat by falling prices for clothing, new cars and computers.
Workers' wages failed to keep up with the higher inflation. Average weekly earnings, after adjusting for inflation, dropped by 0.9 percent in 2007, the fourth decline in the past five years. The lagging wage gains are cited as a chief reason many workers have growing anxiety about their economic futures.
Core inflation, which excludes both energy and food, rose 2.4 percent last year, slightly lower than the 2.6 percent increase of 2006. It is the performance of core inflation that the Fed closely monitors.
Analysts said the slight drop in core inflation for 2007 plus various reports showing the economy is in the grips of a serious slowdown will convince the central bank that a key interest rate it controls should be reduced by a bold half-point when Fed officials next meet on Jan. 30-31.
"Price pressures may be a little greater than the Fed would like but with the economy hitting the skids, inflation is not so high to stand in the way of aggressive action," predicted Joel Naroff, chief economist at Naroff Economic Advisers.
Providing further evidence of a slowing economy, the Fed reported that output at the nation's factories was flat in December, the worst showing since an outright decline of 0.5 percent in October. Economists said that poor reading confirmed their view that the manufacturing sector has slipped into a recession.
In a separate report, the Fed said its latest survey of economic conditions around the country showed the economy was losing momentum heading into 2008 although seven of the 12 Fed regions did report slight increases in activity.
The mounting signs of economic weakness have greatly raised concerns that the economy could be slipping into a recession. Unemployment jumped from 4.7 percent in November to 5 percent in December, the biggest one-month increase since the aftermath of the 2001 terrorist attacks. Many of the nation's biggest financial institutions have been reporting billions of dollars in losses, reflecting the meltdown in the subprime mortgage market that was triggered by a two-year long slump in housing.
The December weakness in industrial production reflected flat output at U.S. factories. For the year, output at auto plants fell by 4.1 percent as Detroit continues to struggle with falling demand in the face of soaring gasoline prices. Industries connected to the troubled housing sector including wood products and furniture also suffered big declines for the year.
"We believe that today's report confirms that manufacturing is in a recession," said Daniel Meckstroth, chief economist for the Manufacturers Alliance/MAPI. "General growth in exports and a few bright spots in aerospace, high tech and medical equipment cannot mitigate weak consumer spending and increasingly slow and cautious business investment activity."
For December, the Consumer Price Index rose by 0.3 percent, slower than the 0.8 percent jump in November, as food costs were flat for the month and energy prices rose by 0.9 percent after an even bigger 5.7 percent jump in November. Outside of food and energy, core inflation rose a more moderate 0.2 percent in December.
The rising risk of a recession has prompted politicians to consider stimulus packages to give the economy a jump-start to either prevent a recession or at least mitigate its fallout. President Bush has said he may unveil a plan around his Jan. 28 State of the Union address. Democrats in Congress and presidential candidates in both parties are putting forward their own plans.
The 4.1 percent increase in overall prices last year was the biggest since a 6.1 percent jump in prices in 1990.
Overall energy costs rose by 17.4 percent this past year while food costs rose by 4.9 percent. Both were the biggest increases since 1990. Gasoline prices were up 29.6 percent, the biggest increase since they soared by 30.1 percent in 1999.
© MVIII The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
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See all 42 Comments--------------------------------------------------------------------------------
Posted by veteran71 at 10:13 PM : Jan 16, 2008
+ report abuse
LOL Well according to some in the Race for President can not figure this all out.. Well those in the Republican Party anyway. They want to just keep on with the same Borrow and Spend we''ve lived through in the Bush Administration. They always PROMISE to get things straightened out but never do.
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HAHAHAHAHAHAHAH
there is no such thing as inflation!!!
la la la la la la
Lies, lies, lies.
My sugar daddy Bush told me so.
Prices For Food And Energy Rise By Largest Amount Since 1990
WELCOME TO THE BUSH BUBBLE, WHAT''S CHENEY UP TO?
BTW, KARL ROVE WAS GIVING THE GOP A LECTURE ON HOW TO BEAT THE DEMS IN THE COMING ELECTION.
HE EVEN HAD THE GULL TO TELL PEOPLE THEY CAN FIX THE ECONOMY.
IS THAT THE FUNNYEST P H U K ER IN THE WORLD.
WHEN ROVE STARTs WEARING HIS BOZO CLOWN SUIT IN PUBLIC THEN HE''LL GET MY RESPECT!
Prices For Food And Energy Rise By Largest Amount Since 1990
WELCOME TO THE BUSH BUBBLE, WHAT''S CHENEY UP?
Posted by takebackus
Lol, no coincidence, junior is playing the same game daddy had played.
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Posted by mcv57 at 06:39 PM : Jan 16, 2008
+ report abuse
And junior isn''t smart enough to play his own game so he has to use his daddy''s past presidency to model his by.
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Posted by joesrc1 at 06:58 PM : Jan 16, 2008
+ report abuse
Honey, the dang cow is dry! Our Commander in Chief is hiding the real cow from you until he can skip town. All that''s left is BUSHIT!!!
Posted by joesrc1 at 06:58 PM : Jan 16, 2008
Have you seen the price of milk and honey these days?
Posted by takebackus
Lol, no coincidence, junior is playing the same game daddy had played.
1. Making less with the service jobs that replaced our lost manufacturing jobs.
2. Paying more for essentials like Gas, food, heat, power, health care, education, etc.
3. Loosing homes through foreclosure from shady mortgages, job loss or catastrophic health care costs.
4. Loosing Pensions from employers going chapter 11.
With all of the above increasingly happening in America, our government is worried that the American masses may cause a recession because we are SPENDING LESS!!!
Posted by ianlou,
Excellent Point. The only reason the Bush administration has not made this a priority is because the middle class cannot afford to make political contributions to the GOP.
They have granted a monopoly to big businesses that shop your jobs overseas to the cheapest bidder while charging you more for the cheaper product.
Posted by libsluvsuvs at 04:33 PM : Jan 16, 2008
Habeas Corpus
Posted by libsluvsuvs at 04:33 PM : Jan 16, 2008
Privacy
By the way, who was president 17 years ago? Oh yea, George HW Bush. Just a coincidence?
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