Der Fliegende Maus

2010 July 16
by Dave

CPI numbers are in. Awesome, the Consumer Price Index dropped for the third month in a row. The overall number fell by 0.1% and the core number only rose by 0.2%. It’s going to be a long summer folks. I don’t expect any help to be able to move through Congress until the new one is seated at the end of January. There is a slight chance of a long term unemployment extension making through if it is attached to nothing else but I wouldn’t count on it.

If it is not passed expect consumer sentiment to take a serious beating. We all know people that are unemployed right now. If their long term benefits end and really bad things start happening to people that we know who are no different from us except that they got laid off, then we will start pinching our pennies like mad. Even more so if deflation expectations become entrenched.

Why would I buy a car now if I know it will be cheaper next year and that if I get laid off I will only get 26 weeks of benefits even thought the average unemployment duration is sitting at approximately 35 weeks right now. So that leaves everyone expecting lower prices and an average of 3 months with no income if they loose their jobs.

Sorry for two posts in the same week crying in my tea over the economic outlook. It’s kind of hard to think about much else right now. Woo Hoo!

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