Running off to an EPI event to share my take on Bob Kuttner’s great new book, Debtor’s Prison (I’ll post comments later), but first, check out the tanking rate of inflation, as per the BLS this AM. The index has actually declined over the past two months, and prices are up only 1.1% over the past year. As the figure reveals, with the exception of February, yr-over-yr price growth in overall inflation has mostly been decelerating since late last year.
Falling energy costs drove the slide over the last few months–core inflation, which exlcudes volitile food and energy, has been declerating more slowly. Also, gas prices have reversed course over the last week or so.
But the message here is that the underlying economy remains considerably weaker than you’d know about if you just tracked the stock market and corporate profits. Low inflation at a time like this also slows down the deleverging process regarding household debt, since higher prices erode nominal debt burdens. At any rate, I’m sure the Fed is watching and I suspect and hope that if this continues, they’ll push out their plans for unwinding their monetary stimulus.