The consumer-price index rose 0.3 percent in December, the biggest gain in six months, as fuel and rents climbed, figures from the Labor Department showed today in Washington. Claims for jobless benefits dropped last week to the lowest level since November, the Bloomberg Consumer Comfort Index (COMFCOMF)’s monthly expectations gauge improved to a five-month high and manufacturing picked up in January, other reports showed.
The expansion “is gaining speed and breadth at the same time, which makes it more sustainable,” said Joe Carson, director of global economic research at AllianceBernstein LP/USA in New York. “We’re now seeing consumption, housing and investment all moving in the same direction, along with exports. That’s a very favorable backdrop.”
Apparently, having to spend more on your rent is good for the economy, as is an increase in the amount of money you spend to get to and from your job, school, etc.
Never mind the fact that these increases in prices are not included in the CPI calculation because they are “too volatile”. And never mind the fact that inflation reduces consumers’ real income (i.e. the amount of goods and services that they can buy with their nominal income). This is BAD for the economy, not good. But don’t try to tell that to someone with a PhD, especially if you are a graduate student.
Claims for jobless benefits dropped because many unemployed workers are no longer eligible to claim these benefits. Employment isn’t rising, it’s falling no matter what the BLS’s statistics say.
Companies are starting to gain pricing power as rising employment, stocks and home values help boost household wealth and spending. A pickup in inflation toward the Federal Reserve’s 2 percent goal and faster growth mean the central bank’s unprecedented stimulus is paying off, which would allow policy makers to keep reducing the pace of monthly asset purchases.
“Modest, stable inflation is good for the economy,” said David Berson, chief economist for Nationwide Insurance in Columbus, Ohio. “This is exactly what we want to see.”
Still, the wealth that’s building up on Wall Street is not “trickling down” to the struggling masses on Main Street. Pushing up equity and home prices is mostly benefiting the wealthiest of Americans . The Fed’s own Survey of Consumer Finances in 2010, the last year for which data are available, explains why. It shows that the Top-10% of US-income earners had financial assets totaling $550,800, or 20-times the holdings ($27,550) of the other 90 percent . The Top-10% of the wealthiest Americans own 80% of the shares listed on the NYSE and Nasdaq, while the median equity holdings of the rest of the population was only $17,700, hardly enough to make a difference in one’s lifetime. That’s because half of the US-citizenry owns no equities at all and can’t participate in the Fed’s easy money give-away.
The Fed has increased the monetary base by $1.02 trillion every year since 2009:
Shakespeare was wrong. The lawyers aren’t the problem.
First, we kill all the PhD economists…