Inflation Hits 25 Year High
Saturday October 15, 2005
Nationally, consumer prices jumped 1.2 percent last month - and 4.7 percent over the 12 month period ending in September - the Labor Department announced on Friday. This is the largest month-to-month increase since the Reagan years (1.5 percent, March 1980) and the biggest annual rise since the Bush-the-elder years (5.0 percent, May 1991). The prime culprit: increased gasoline prices, fueled by Hurricanes Katrina and Rita. The Washington Post reports that energy prices rose 12 percent last month -- the largest monthly increase since data collection began in 1957.
Gasoline prices jumped a record 17.9 percent.
There was more bad economic news last week: industrial production hit its lowest level in 23 years; import prices rose 2.3 percent in September, the biggest increase since October 1990; and inflation-adjusted average weekly earnings for production workers fell 1.2 percent, the steepest drop in almost a decade. Under-reported data: CEO confidence hit a four-year low (lowest since 9-11).
The picture was more acute for urban wage earners and clerical workers who saw their consumer price index (CPI) increase 1.5 percent -- the highest in 32 years. In August 1973, this metric rose 2.0 percent at the height of the oil crisis. Last week, Labor reported that nonfarm payroll employment was down 35,000 in September and the unemployment rate rose to 5.1 percent.
No wonder, then, that consumer confidence hit a 13-year low. Unless you're an economist: they thought consumer confidence was going to jump, not decline. Preliminary data for October show the index at 75.4; it has averaged 88.2 since inception in 1978 and was averaging 92.3 percent before August.
According to Reuters, Federal Reserve reported that industrial production dropped 1.3 percent last month, the largest decline since January 1982.
A Hit on the Treasury
The federal government must now adjust Social Security checks in January, increasing the budget deficit. The 4.1 percent cost-of-living adjustment (COLA), for 48 million Americans receiving SS checks, is the largest annual increase since 1991 (which was 5.4 percent) and 50% more than last year's increase (2.7 percent). An economist at Economy.com said: "It is going to be a tough winter for many seniors. Not only will they face higher Medicare premiums but record gasoline prices and higher home heating bills as well." About one-quarter of the boost will be needed to pay for increases in monthly Medicare premiums.
Millions of others on the federal payroll -- such as military, Foreign Service and civilian federal retirees -- will also receive a cost-of-living adjustment. How will Congress react to the unplanned expenditures of hurricane relief and CPI increases?
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CPI, Economy, Politics
There was more bad economic news last week: industrial production hit its lowest level in 23 years; import prices rose 2.3 percent in September, the biggest increase since October 1990; and inflation-adjusted average weekly earnings for production workers fell 1.2 percent, the steepest drop in almost a decade. Under-reported data: CEO confidence hit a four-year low (lowest since 9-11).
The picture was more acute for urban wage earners and clerical workers who saw their consumer price index (CPI) increase 1.5 percent -- the highest in 32 years. In August 1973, this metric rose 2.0 percent at the height of the oil crisis. Last week, Labor reported that nonfarm payroll employment was down 35,000 in September and the unemployment rate rose to 5.1 percent.
No wonder, then, that consumer confidence hit a 13-year low. Unless you're an economist: they thought consumer confidence was going to jump, not decline. Preliminary data for October show the index at 75.4; it has averaged 88.2 since inception in 1978 and was averaging 92.3 percent before August.
According to Reuters, Federal Reserve reported that industrial production dropped 1.3 percent last month, the largest decline since January 1982.
A Hit on the Treasury
The federal government must now adjust Social Security checks in January, increasing the budget deficit. The 4.1 percent cost-of-living adjustment (COLA), for 48 million Americans receiving SS checks, is the largest annual increase since 1991 (which was 5.4 percent) and 50% more than last year's increase (2.7 percent). An economist at Economy.com said: "It is going to be a tough winter for many seniors. Not only will they face higher Medicare premiums but record gasoline prices and higher home heating bills as well." About one-quarter of the boost will be needed to pay for increases in monthly Medicare premiums.
Millions of others on the federal payroll -- such as military, Foreign Service and civilian federal retirees -- will also receive a cost-of-living adjustment. How will Congress react to the unplanned expenditures of hurricane relief and CPI increases?
Technorati Tags and Profile
CPI, Economy, Politics
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