Wholesale Prices In Fastest Rise Since '81

1.2 Percent Increase In July Was More Than Twice What Economists Expected

(AP)  Wholesale inflation surged in July, leaving U.S. prices for the past year rising at the fastest pace in 27 years, according to government data released Tuesday.

The Labor Department reported that wholesale prices shot up 1.2 percent in July, pushed higher by rising costs for energy, motor vehicles and other products. The increase was more than twice the 0.5 percent gain that economists expected.

Core prices, which exclude food and energy, rose 0.7 percent. That increase was the biggest since November 2006 and more than triple the 0.2 percent rise in core prices that had been expected.

In other economic news, the Commerce Department reported that housing construction fell in July to the lowest pace in more than 17 years. Builders broke ground on 965,000 housing units at a seasonally adjusted annual rate last month - the weakest showing since March 1991 - as the housing industry continues to struggle with falling sales and rising mortgage foreclosures.

The bad news on wholesale prices followed a report last week that consumer prices shot up by 0.8 percent in July, leaving consumer inflation rising at the fastest pace in 27 years.

The July price pressures reflected in part the big surge in energy costs during the month that pushed crude oil prices to a record of $147.27 per barrel and sent gasoline pump prices to an all-time high of $4.11 per gallon.

Crude oil prices have fallen by more than $30 per barrel since then, raising hopes that the surge in inflation will soon abate.

However, the price spikes in a number of areas seen in July raised concerns that the prolonged surge in energy prices was beginning to show up more broadly throughout the economy.

Such a development would put the Federal Reserve in a severe bind. The central bank would like to keep interest rates low to give a boost to the badly-lagging economy, but Fed officials may feel pressured to start raising rates in an effort to make sure inflation does not get out of control.

For July, wholesale energy prices jumped by 3.1 percent following a 6 percent gain in June. That increase reflected big jumps in the price of natural gas, home heating oil and liquefied petroleum gas, which offset a 0.2 percent dip in gasoline costs.

Food prices rose by 0.3 percent in July after a 1.5 percent surge in June. Beef prices jumped by 7.4 percent, the biggest increase in nearly four years. Milk prices shot up by 5 percent, the biggest gain in a year, while soft drink prices rose by 2.4 percent, the largest increase in four years.

Excluding energy and food, the 0.7 percent rise in core inflation reflected big gains in the prices of passenger cars and light trucks, pharmaceutical preparations and plastic products.

[payasyougo]

Inflation is running quite high in the US with the Feds not wanting to do the job of tackling it for fear of hammering the stock market. This is a major mishandling on the Feds part.

In the U.K., where a housing problem mirrors the U.S., the growth rate and consumer spending cycles also mirror that of the U.S. but the U.K did not have a stimulous package! That says that the stimulous package really had no effect when you subtract what would have been a normal cycle. It was smoke and mirrors only.

[gop_forever]

The Viet Nam war was originally a war of independance first from the French, then the Japanese, then the French again, and finally from the Americans.

[whitemale08]

Nixon had no choice other than put the gold on the market, hoping the rise in its value, and the devaluation of the dollar would help pay off the debt. Before he did it, he got OPEC to agree to accept only dollars for their oil, and that is the only reason the dollar has had any value up until now, and a McSame administration will insure its collapse by widening military conflict, allowing war profiteers to again steal what little is left.


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Posted by brianbwb at 10:40 AM : Aug 20, 2008--

I concede this point to you and even will admit that Lyndon B. Johnson is to blame too because he started the war in Vietnam.

I do believe in so-called "conspiracy theories" because I don''t buy anything the media tells me. However I believe things are conspired out of the human nature of "greed".

That''s why I say the Anglo-Dutch system and in particular the evil bankers of Europe have made it their goal to transform the United States into a "debtor" nation.

The best way to do that is to plunge it into unneccessary wars. If you look at the war in Vietnam, the so-called Cold War weapons debt and the 2 Iraq War off-budget debt then can connect the dots.

This gives the motive for both the assasinations of John F. Kennedy, Abraham Lincoln, impeachments of Andrew Jackson, and Bill Clinton all who wanted to keep the country out of debt.

[labrat9999]

By the way, you would think we all the years of experience Maverick McSame has in office he would have remembered this stuff since he was in office at the time...funny...and it happened again?? Wonder why? Perhaps because he got off scott-free regarding the Keating Five Scandal? Wonder how that happened? Perhaps the GOP was in the control of the Senate and Cogress?

[labrat9999]

For you youngster that don''t remember 1981 was the S&L Savings debacle and 1989 was John McCain and the Keating Five scandal. Interesting how quickly the news media forgets or perhaps they have selective memory?!? But here is a refresher course..Sound familiar?

The savings and loan crisis of the 1980s and 1990s (commonly referred to as the S&L crisis) was the failure of 747 savings and loan associations (S&Ls) in the United States. The ultimate cost of the crisis is estimated to have totaled around USD$160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government -- that is, the U.S. taxpayer, either directly or through charges on their savings and loan accounts-- [1], which contributed to the large budget deficits of the early 1990s. The resulting taxpayer bailout ended up being even larger than it would have been because moral hazard and adverse-selection incentives compounded the system%u2019s losses. [2]

The concomitant slowdown in the finance industry and the real estate market may have been a contributing cause of the 1990-1991 economic recession. Between 1986 and 1991, the number of new homes constructed per year dropped from 1.8 million to 1 million, the lowest rate since World War II.

[brianbwb-2009]

Posted by whitemale08

While your post is correct in it''s conclusion, i think that the blame goes back even farther.

Because of the obscene mark up war profiteering that was the central motivation of the Vietnam war, the government was forced to ask the fed for more currency, because those $25k toilet seats were adding up, there wasn''t enough currency on the ground to keep the US economy stable, add to this the automakers relocating en masse to slave labor countries, destroying Detroit, and causing a ripple effect that washed across the nation.

The fed obliged, but in true "trickle down" style, put the currency into the hands of banks, who immediately used it to play the foreign exchange market. Two countries, France and Singapore, decided to cash in their greenbacks for the gold it was supposed to represent, the problem was the US didn''t have enough to cash them out, we were virtually bankrupt.

Nixon had no choice other than put the gold on the market, hoping the rise in its value, and the devaluation of the dollar would help pay off the debt. Before he did it, he got OPEC to agree to accept only dollars for their oil, and that is the only reason the dollar has had any value up until now, and a McSame administration will insure its collapse by widening military conflict, allowing war profiteers to again steal what little is left.

[concorde5]

WDRussell....Good Point! I never thought of it that way before.

[wdrussell1]

Ever notice the stories?
When it is the worst(whatever), in X number of years.
It always goes back to when we had another republican president.

[jmurrieta1]

Those business geniuses in the Fascist Party, aka the Republican (not) Party really know how to arrange things!

Only 8 years from a budget surplus to a 50% increase in the national debt, high unemployment, inflation (i.e., stagflation), and all because the Fascists want to make a few billionaires richer.

And the suckwad Repugs in Congress are as spineless, cowardly a bunch as could be imagined, afraid even to stand up for their "sacred values" to the Cheney-Rove hatchet men.

Why don''t all you Repugs move to China and ruin their economy? You''re done enough damage here! And you''d love the police state there!

[andor3]

"If prices are rising faster than any time since 1981, that sure makes me curious what was going on in 1981??"

Why those were the start of the Reagan years! not a coincidence. Start unwinding all that Reagan and his whacked-out pro-business buddies did and you will have a healthy country and economy again.

[nskduke2]

whitemale08 knows what he is talking about, I tip my hat off to him.He really has done his research.He can back up his comments with strong proof,thats the kind of person we need to see more of

[shippg]

If prices are rising faster than any time since 1981, that sure makes me curious what was going on in 1981?? At least we know we survived it!

[whitemale08]

Your out to lunch. get a life. What the hello do you think is increasing prices, the Iraq war. You are an idiot wimp LIBERAL. All you wimps want to do is silence everyone who does''''nt agree with you, move to europe if you don''''t like it here.



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Posted by gunfighter51 at 09:18 PM : Aug 19, 2008--

No, you leave the country idiot, you''re an economic iliterat who knows nothing about fiat currency and how it works and what causes inflation.

All you can do is call me and others like me names because you have no solutions because you don''t know what you''re talking about.

This is why Republicans believe that "defecits don''t matter" because it suckers idiots like you who think they don''t.

Well buddy "defecits do matter" because that''s what causes inflation.

So do us all a big big favor and leave the country and leave the rest of us the hell alone. We''re tired of your stupidity!!!!!

[drivelphobe]

These economic cycles predictably continue to recur and those who save and invest are going to be fine. The frivolous spenders and non-savers will fall behind as they should. This is good news for those who are financially stable. The rest can get on the government dole. All aboard the gravy train!

[whitemale08]

It all comes back to a lack of oil independence.

Way to go LIBERALS! GO Nancy GO!


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Posted by gunfighter51 at 04:27 PM : Aug 19, 2008--

It''s idiot Republicans like you that have to be silenced.

You cannot solve hyper-inflationary problem by "adding supply" to a product like oil!

Stop printing "dollars" and you will see prices go down for everything including oil.

But instead "Republican Suicide Bombers" like you insist on the "middle class" to pay for these failed wars in Iraq instead of "raising taxes" on your rich junkyard pals on Wall Street like Rush Limbaugh and Sean Hannity who suckered you into war!!!

Inflation is the "tax of choice" on the middle class for Republicans because you can disguise inflation.

[jmurrieta1]

Nice work, Bushits! You''re doing a heck of a job.

[lochlan-2009]

We all know double digit inflation has started on its way. Economists, that the media use for their stories, must be failed stock traders since the markets no exactly where the different aspect of the economy are going and reflect it in the markets usually before the news companies even talk about which bill passed. Of course, the media will never tell you how these bills and reports will effect anything.

[nskduke2]

I actually like Greenspan, I have done my research about him and who he was.Overall he is not a bad guy,the guy had some good ideas.

[nskduke2]

Economists are just speculators, just like weather forecasters that predict the weather.Sometimes their right and sometimes their wrong,but predicting is can be critical.

[whitemale08]

...that''s because the illegal Federal Reserve System has ran out of ways to lie to the American people.

Back in the late 70''s and early 80''s our economic superheroes Jimmy Carter and Fed Chair Paul Volcker took the political heat to raise interest rates

and raise "taxes on the rich" to shore up the "dollar" which had been destroyed by the Republican Nixon/Ford administrations when they took the "dollar" off gold.

Well today our economic super-dummies Bush and Greenspan destroyed all of those hard-earned gains in strength for the "dollar" and squandered it in artificially low interest rates at 2% and gave "tax cuts to the rich" with no one to pay for the failed War in Iraq.

So now Republican Treasury Secretary Hank the Snake Paulson and "helicopter Ben" Bernanke are going beyond the "dollar" destruction of Nixon/Ford and Milton Friedman, 3 "debt" enthusiasts, and finishing off what''s left of the economy with a multi-trillion bail-out of Wall Street.

If "helicopter Ben" couldn''t use "dirty Fed tricks" in his numbers for example: eudonics (hyped-up added value of a product given away as a feature like DVD players in your car) then inflation would be 3 times as much under Jimmy Carter.

It''s a shame and it''s time for a CHANGE!