Tuesday, October 18, 2005


Economy Gripped By Forces Of Inflation/Deflation

The New York Times looks at price inflation. "Wholesale prices surged at a faster pace than consumer prices last month, the government reported today, indicating that businesses are not passing on the full brunt of the energy price spike to customers."

"Prices rose even faster for raw materials (up 10.2 percent) and goods that are in intermediate stages of production (up 2.5 percent) than they did for finished goods. 'That suggests that we are getting some inflationary pressures building in the pipeline,' said Nariman Behravesh, chief economist at Global Insight. 'Those are the numbers that are likely to show up in' consumer prices."

"So far, businesses have not passed along the entire increase in their costs to each other and consumers. Economists have struggled to fully explain why that may be happening and whether it can continue for much longer."

"'What is giving us protection is all the global competition that we have,' said Anthony Chan, an economist at J.P. Morgan. 'That is preventing companies from passing on most of the costs. Even through productivity has been slowing down, it's still fairly significant.'"

As one involved in manufactureing, this is frightening.

When our Government allowed itself to be forced into Free Trade that was the begining of the end. It should have been FAIR TRADE!
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