Consumer prices fall the most since the Depression
Filed under: Bargains, Budgets, Recession
It doesn't get much darker than the Great Depression. That's about how dark it looked Tuesday when the Labor Department reported that U.S. consumer prices fell in November at the fastest rate since 1932, the nadir of the Great Depression.
While this might be good news for consumers looking for deals, it's not good for the economy as prices plunged for energy, commodities and airline fares.
The U.S. consumer price index fell by a seasonally adjusted 1.7%, the biggest drop since the government began adjusting the CPI for seasonal factors in 1947. But on a non-seasonally adjusted basis, the CPI fell by 1.9%, the biggest decline since January 1932.
"This is scary stuff," Mike Schenk, an economist for Credit Union National Association, told Marketwatch. "We are teetering on the brink of a massive downward spiral. Deflation is a threat."
Observers are saying that the Fed's move to lower its benchmark rate to 0% today may be historic, but it's probably not likely to help matters.
Energy prices declined by a seasonally adjusted 17%, the most since February 1957, according to the report. Gas prices fell 29.5% in November, the most since the government began keeping records in February 1967, and fuel oil by 7.2%, and commodities fell by 4.1% in November.
Some prices did rise in November, such as medical care and food prices by 0.2% each.
Aaron Crowe is an unemployed journalist in the San Francisco Bay Area. Read about his job search at www.talesofanunemployeddad.blogspot.com
Reader Comments (Page 1 of 1)
12-17-2008 @ 2:17AM
Adam said...
Good. Things are too expensive anyway. Nobody seemed to be alarmist when income was not keeping up with expenses all of these years. Let the economy balance out a little.
Reply
12-17-2008 @ 5:54AM
brian said...
geeze seems noone stood around complaining when the prices where going through the roof and the retailers where making a mint but soon as everything starts dropping everyone starts complaining. i myself am looking for the bargain and rejoicing in the decline maybe i can afford something now...lol
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12-17-2008 @ 11:25PM
Josh said...
"Deflation is a threat"? To whom? Only to the government.
To everyday Americans, deflation is a boon - lower prices across the board means more value for our dollar. There is NO threat to the average American because of deflation.
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12-18-2008 @ 11:42AM
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12-26-2008 @ 10:57AM
settlaw said...
Deflation is a major threat - it is the difference between a recession and a depression. Deflation means NEGATIVE interest rates on loans, freezing credit all over. Who would loan money at negative interest, if the money is worth MORE tomorrow? This is dire news, indeed. Thank you George!
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