Updates

EPI Update: Inflation Moderates in April -- May 15, 2012

The increase in the AIER Everyday Price Index (EPI) has moderated to 0.5 percent in April (roughly 6 percent on an annualized basis) from 1.9 percent in March. During the 12 months ending in April, the index increased 2.8 percent, as compared with 9.3 percent over the same period last year. All numbers are before seasonal adjustments and so reflect prices as actually experienced by the public.

The increase in the AIER Everyday Price Index (EPI) has accelerated to 1.9 percent in March (roughly 22.8 percent on an annualized basis), from 1.1 percent in February. During the 12 months ending in March, the index increased 4.1 percent, as compared with 7.9 percent over the same period last year. All numbers are before seasonal adjustments and so reflect prices as experienced by the public.

The Everyday Price Index increased 1.3 percent in January 2012 and another 1.1 percent in February. During 12 months ending in February, it increased 4.9 percent. This is somewhat slower than the increase over the same time last year. During 12 months ending in February 2011, the EPI increased 6 percent. All numbers are before seasonal adjustments.

head-shot-polina-vlasenko The data released by the Bureau of Labor Statistics last Friday show that in November the economy added 120,000 jobs and the unemployment rate fell to 8.6 percent from 9 percent. This is yet another sign that the U.S. economy is continuing to expand. AIER’s analysis of business-cycle conditions has been forecasting this for the past few months. Contrary to claims by other commentators, our analysis did not show any evidence of a double-dip recession. The data are proving us right.

GDP Update -- October 28, 2011

head-shot-steve-cunningham The U.S. Bureau of Economic Analysis (BEA) released its first estimate of third-quarter GDP growth. The economy expanded at an annualized rate of 2.5 percent. Certainly, considerable headwinds remain, but the recovery is intact.

It pays to keep a clear head and stick to the actual data. For several months now, while panic has reigned in the streets and markets, we have been saying that the U.S. economy is sound and that there was little chance of a recession any time soon. Our proprietary business-cycle indicators have consistently painted a picture of slow but continuing growth.

We have the most interesting impromptu conversations in the hallways of AIER. I bumped into David Michaels, our chief financial officer, earlier this week. Not too surprising, he looks at Standard and Poor's downgrade of the U.S. debt like the finance guy he is. He asked, "With corporate debt, the rating is about risk of default. How can a country like the U.S. default when it can print all the money it needs? Unlike a corporation, the U.S. simply cannot run out of money. But printing the money could cause inflation."

head-shot-steve-cunningham The U.S. House voted 269-161 to pass a $2.4 trillion debt ceiling increase yesterday, and the Senate is almost certain to follow today. The deficit deal proposed by President Barack Obama and congressional leaders will avoid default by the federal government. Early yesterday, U.S. and foreign stock markets rallied in celebration. Quickly, though, reality set in, and the markets posted losses. It remains an open question whether the deal is enough to avoid a downgrade of the nation’s debt rating from AAA to AA by Standard and Poor’s, Moody’s, and others.

The U.S. Credit Rating -- July 22, 2011

head-shot-steve-cunningham Moody’s and Standard and Poor’s have announced that they have put the United States on their watch lists for failing to control spending and debt. According to the credit rating agencies, the current and projected debt levels are unsustainable over the next 10 years, and will ultimately lead to default. In other words, the U.S. may be the next Greece.

If we do not immediately put a plan in place to rein in our excesses, our debt rating will drop from AAA to AA, with catastrophic effects.

Updates

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