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The Labor Department reported a 1.0% drop in the Consumer Price Index, the largest since Feb of 1947. It means that the average consumer price of goods purchased by a household fell. How does it affect us? Well, experts are saying it won't really affect the economy since the focus is still on growth.. anyone have any ideas on how it may affect us directly or individually?
Started by Anonymous (permalink)
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Dionysios Kattis said at 7:06pm Nov 19, 2008
All you have to do is look at the prices of what you buy to know that we are, and have been, experiencing massive inflation for a few years now. However, with a combination of the credit crisis and the ever-increasing defaults, we've entered a phase of deflation. It isn't fully reflected in key areas like food yet, but it's happening.
Whit Norris said at 3:17am Nov 20, 2008
I'd imagine that much of the drop in the CPI is do to the decline in oil prices. Not positive that oil is factored directly in the CPI, but so much of the US economy uses oil that any drop will have an effect on prices of many, many consumer goods and services.
Dionysios Kattis said at 6:30pm Nov 20, 2008
It should have something to do with the decline in oil prices. With prolonged deflation, I feel it will hurt the economy by making debts harder to pay off and creditors more reluctant to extend credit.
Alan Wong said at 8:50pm Nov 20, 2008
I would cash out my stocks and put them in a liquid savings account and/or CDs. Keeping money in the stock market at this time is just ridiculous
Dionysios Kattis said at 9:28pm Nov 20, 2008
Yeah, I see your point Alan. Although, I feel that if the money you are investing won't be needed in the near future (a few years), I would keep the money in stocks. Otherwise, I'd cash out like you suggested.
Crystal Williams said at 7:23am Nov 21, 2008
I think the drop in CPI is directly related to the fact that we as a country have been living way beyond our means for a long time and have not been saving for any type of financial crisis. In addition, we import ridiculous amounts of foreign assets that depreciate quickly and then go out and replace them with more foreign (wasting) assets (cars, clothing, etc.) - yet we export more our ourselves, not our products...our financial assets (stocks, bonds, etc.). So in essence foreigners own trillions of dollars more of us than we do them. Approximately 60 percent of what America exports is itself! Warren Buffet has talked about this very issue countless times in speeches at colleges. This, which has helped drive down the dollar, along with a drop in personal savings and living beyond our means has pushed us into desperate times.