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Macomb, IL – So much shame, so little time.
The recent report of price changes this Spring sparked a predictable cry of warning against deflation instead of looking at key indicators, pointing out anomalies, and putting into context U.S. prices and wages.
Dangers from deflation are exaggerated, if the facts are examined.
True, the Consumer Price Index showed a 2.2% jump between April 2009 and April 2010 - relatively low.
That's not bad news. That's good for consumers already pinching pennies.
But a relatively few line items showed falling prices. Housing was down 0.6% over that 12-month period; apparel down 0.9%; and utility (piped) gas down 2.9%.
But wait.
Utility (piped) gas was up in Illinois, Indiana and Wisconsin - a lot: 17.9%.
Furthermore, fuel prices in April were up considerably from a year ago: 38% higher in the country (41% in Illinois, Indiana and Wisconsin).
And other items showed dramatic price hikes: Transportation up 13% in the Midwest; non-durable goods less food and beverages up 11% in the Midwest; energy up 20% in the Midwest; and non-durable goods less food up 10% in the Midwest.
But most of the financial press stressed prices that didn't go up.
Writing for Thomson-Reuters, Agnes Crane said, "The lowest annual rise in the core Consumer Price Index in more than 40 years could also put deflation fears - recently forgotten - back in investors' minds."
("Investors? What about consumers? Taxpayers? And workers? University of California professor G. William Domhoff in a study, "Power in America: Wealth, Income, and Power," updated in April, wrote, "The top 10% [of the U.S. population] have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate.")
Crane seemed to sniff, "Deflation is a particular concern for debtor nations like America, since it increases the real value of borrowings. That means mortgages and other debt would feel even more crushing for consumers still shaken by the housing crash."
(The housing crash is part of why housing costs fell 0.6% -- not terrible for homebuyers or tenants struggling to shelter their families.)
Almost harrumphing, Crane added, "Rising wages - often one of the most powerful drivers of inflation - aren't an issue for now. The U.S. unemployment rate is still 9.9%."
(Huh? Is she celebrating stagnant pay and joblessness for 15.2 million Americans - or 26.3 million people when the Bureau of Labor Statistics adds the jobless, those forced to work part-time when they want full-time employment, and those who are so discouraged they've stopped looking?)
Specifically, the most recent Labor department report on weekly earnings of wage and salary workers (for the first quarter of this year) shows an increase of 2.2%.
Exactly. That's the same amount consumer prices went up between April 2009 and April 2010.
So workers stayed even - and Big Business and their apologists are issuing warnings!
Maybe such out-of-touch Wall Street types can take some comfort in a breakdown of wages: Women still earned just 78.8% of what men earn; African-American men earn 73.1% of what white men earn; Hispanic workers earned 71.7% of what white men earned; and young workers (age 16 to 24 years old) earned 60.4% of workers 25 and older.
This economy is shameful.
And that's a fact.
Bill Knight is a freelance writer who teaches at Western Illinois University