"'The pace of inflation has clearly moderated in recent months, and is expected to continue to ease in the months ahead,' wrote Jim Baird, chief investment strategist for Plante Moran Financial Advisors, in a research note."
With prices falling in October, Robert Brusca, chief economist with FAO Economics, hopes it is an indication of some demand pick-up. However, as of now, Americans still aren't buying as much due to wages and unemployment.
6 comments:
I think that this relates to Ari's other post about extending unemployment benefits. This will probably be a huge factor in ultimate vote about whether or not to extend unemployment benefits. Hopefully, American will start spending more in the coming months, especially with the holidays right around the corner. However, I think that if the economy continues to be relatively stagnant, the government will have no choice but to take some sort of action, whether it be stimulation or further regulations.
I agree with Sophia. With inflation going down, the only hope we can have is that spending will increase. I'm still unsure if this will happen though with unemployment still hanging around. I also agree with Sophia's comment that if the economy doesn't get better, the government will have to take more action in their own hands.
Inflation encourages spending as people try to buy while they can. The article. Prices and wages have not increased if inflation is standing still.
Hopefully Congress will take this into account as they debate unemployment benefits. That would help the economy (especially since this is spending season) according to Keynesian economics.
Maybe it's just me and the news coverage that I get, but I feel like there's less news about inflation going down then there was when it was on the rise. While this is good news for the economy, it just doesn't seem to garner as much interest in the news. Or maybe that's just because it's been a slow and steady fall, as opposed to an economic plummet as was witnessed in 2008. But on the other hand, maybe it is indicative of a broader trend in news, or of the prevalence of sensationalist media. It's harder to craft a story out of a calm decrease in inflation than a huge up or down-swing of any variety.
I agree with Anna. I feel like the biased news coverage on inflation skews the nation's views on the state of the economy.
On a different note, if these statistics are correct, I sincerely hope national buying, and the economy in general, *does begin to pick up. In relation to unemployment, if the government does decide to implement the $44 billion in unemployment benefits, that would most likely act counter-productively to the current decrease in inflation.
I think the public in general is just grown so used to the perception of our nation being in a poor economic state that everyone is less inclined to spend. We've grown a bad habit that NEEDS to stop if we are to get out of our recession. The only way the economy will recover is if people start buying again; whether that's from an increase in wages, an increase in job opportunities, or a decrease in taxes, I thoroughly believe that spending is the best way to rejuvenate the economy.
Relating to Anna's comment about the media, it seems to me that a lot of Americans will not know that inflation has halted and will still believe that inflation is on a dramatic rise. If the public knew that inflation has become more mild, then I believe Americans would spend more.
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