BEA 4th Quarter GDP 1st Estimate 0.7% Q&A: Why Did GDPNow...

BEA 4th Quarter GDP 1st Estimate 0.7% Q&A: Why Did GDPNow Rise After Durable Goods? When are Construction Revisions Coming? Manufacturers have been struggling to pass on rising costs to customers as customers themselves tighten their economic belts. Firms hampered by sharp rises in the cost of gas and oil cut staff numbers in a bid to relieve squeezed profit margins, employers' body the CBI said. The total number of jobs lost in the manufacturing sector over the past year was 106,000, the CBI's quarterly industrial trends study revealed. 'Conditions for manufacturers are getting increasingly tough as costs continue their seemingly inexorable rise,' said the CBI's Ian McCafferty. 'Manufacturers are continuing to respond by cutting employment to curb the wage bill and boosting investment in efficiency-improving measures.' Medical expenses are also inelastic. If you need an operation to save your life you will get it regardless of what it costs. A falling US$ is mostly irrelevant to the equation. Prices simply can not rise unless beyond people's ability to pay unless further credit is extended. That is why those focusing on the supposedly inflationary effects of a falling pound or a falling US$ are wrong. That is also why the FED and the ECB are wrong to be worried about rising energy prices. There will be no passthru unless and until there is an overall increase in the ability for consumers to pay higher prices. I see little evidence of rising wages in either the UK or the US. Instead I see 14 consecutive rate hikes in the US that are now hurting both home prices and credit lending. A good portion of Greenspan's Conundrum as well as the Gilt yield Conundrum in the UK are wrapped up in those two points. Add in credit that is just beginning to tighten in the US, in conjunction with the lagging effects of those 14 hikes, and there are huge deflationary forces brewing in both the US and the UK. The content on this site is provided as general information only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). The author may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.