Economic Troubles Getting Worse

In these economically strapped times, the only bright spot has been the stock market. Despite a bad situation, the markets kept going up. Until lately. The markets have been down all week, the final straw being the nuclear disaster in Japan. But if we look around, surely we can find brighter news?

Unfortunately, no.

First, the Producer Price Index (PPI) jumped 1.6% in February... the largest jump since back in 2009, in the middle of that li'l ol' financial crisis, ya'll. This jump was fueled by a 3.9% increase in food prices, the largest monthly increase in 30 years. The Feds say this doesn't matter because the Core Index, which doesn't include food and energy costs, increased by a more modest 0.2%... and we really don't pay those increased food and fuel prices anyway, right?
http://blogs.wsj.com/marketbeat/2011/03/16/great-inflation-debate-ppi-rises-sharply-cpi-tomorrow/

The February PPI rose a stronger-than-expected 1.6% in February, the biggest jump since June 2009. On an annualized basis, the PPI is now clocking in at 5.6%.

But the fabled core, which excludes food and energy prices, rose just 0.2% and the core measure is up only 1.8% over the past year. In other words, food and energy prices – which people tend to notice – are the main drivers of wholesale price gains.

The Federal Reserve prefers the core reading.

I bet they do. The Consumer Price Index (CPI) is due out today, but don't expect a major jump... it uses the core inflation value. And who cares about food and energy? If inflation WITHOUT those is low, then we don't have to worry about inflation, right?

But wait, there's more.


You see, one good measure of the economy is housing. Earlier this year we heard how housing was poised on the verge of recovery. Yeah, right. This month, new housing construction plummeted 22.5%, with no indication that it will be picking up any time soon.
http://www.google.com/hostednews/afp/article/ALeqM5jsv5K1IXJjzX4vwciBa0UZFJpD2g?docId=CNG.e2d1536e4041ed907cea5acb3d01b7a9.b1

Construction of new homes in the United States plunged in February to near record lows and building permits hit bottom, official data showed Wednesday in a dismal report on the ailing housing market.

Housing starts fell to an annual rate of 479,000, down 22.5 percent from January, the Commerce Department said.

That number was the lowest since April 2009, when the economy was still mired in the worst recession since the 1930s Great Depression.

In April 2009, housing starts were a rate of 477,000, the weakest pace since tracking of the data began in 1959. Economists at the time had estimated that it was the slowest pace in new housing construction since the 1940s.

Housing activity was not expected to pick up any time soon, according to the new data.

And with politicians panicking at normal corrections for overvalued assets (re: home prices), and reacting by substituting political control for the normal free market process, the chances of reversing this into a true recovery drop considerably.

Folks, this isn't rocket science. The bottom line is that we are in a deep hole, and things aren't getting better. And the more that the government tries to intervene to "save" us, the worse things will get. Centralized control doesn't work... didn't the fall of the Soviet Union teach us ANYTHING?