Just released – the August Consumer Price Index (CPI) indicated an 5.3% inflationary increase over last year (up .3%) and the index (less food and fuel) increased 4% (up .1%). While pundits labeled this “tame” it is hardly a surprise for anyone who goes shopping – as prices do continue to rise, as compared to last year. The report does, however, beg the issue of how the Fed will respond to the money they continue to pump into the economy, and how Congress will react to spending bills that are on the floor. Looking at all the issues combined, one really has to ask: if inflation continues to rise (albeit slowly) – are headed towards a period of “stagflation” like we had in the mid-1970’s?
It seems that deflation, inflation, (and now “stagnation”) have replaced innovation, automation, and globalization as the pundit’s retail commentary menu du jour. Our current