by Frank James
The good news is the economic slowdown caused prices in October to fall by the largest monthly percentage ever recorded. Consumers should be pretty pleased, right?
Not necessarily. Because the bad news is this could signal even more pressure on already strapped companies which will find their revenues falling, which likely means more layoffs and perhaps even less spending by cash-strapped consumers.
As the Associated Press reports:
The Consumer Price Index, the country's most closely watched inflation gauge, dropped 1 percent in October, the biggest monthly decline on records dating back to 1947, the government reported Wednesday. Over the past year, though, consumer prices are up 3.7 percent, which is faster than wage growth over the same period, putting a squeeze on household budgets.
Even with the monthly price reprieve, consumers are in no mood to go on a shopping spree. They have been cutting back sharply on spending because of the strains from job losses, shrinking nest eggs and falling home prices.
Comments
As oil prices rose from $60 to $140 per barrel, everyone was complaining about the "greedy" oil companies, now that oil prices have dropped from $140 back to below $60 per barrel, are these same people complimenting the "altruistic" oil companies?
Posted by: Terry | November 19, 2008 9:25 PM