New consumer price and housing start data for November were released today, and if you can think of those two economic indicators in geographic terms you would say they both “went (way down) South.” I have to point out the Bloomberg piece I am linking is technically incorrect in saying the cost of living dropped 1.7 percent last month. It actually was the consumer price index which sank to a level not seen since the Great Depression. The difference in the two terms explained by the U.S. Department of Labor notes:
“A cost-of-living index measures differences in the price of goods and services, and allows for substitutions to other items as prices change. A consumer price index measures a price change for a constant market basket of goods and services from one period to the next within the same city (or in the Nation). The CPIs are not true cost-of-living indexes and should not be used for place-to-place comparisons.”
Okay, so much for the economics lesson today. The linked article does quite fluently explain the general gist of things, which are certainly less than rosy.
Even if you don’t pay attention to such trends as I am forced to do, you must have seen the correlation. Remember when gasoline was $4 a gallon and milk was somewhat close to that? I may be wrong about milk prices because I don’t drink milk very often. But you see my point. Oil prices high = Higher consumer prices. Oil prices low = Lower consumer prices. And when the equilibrium goes out of whack, timing is everything. Or so someone once said.
What is probably the most disheartening facet of this whole economic funk is that it unlikely to end next year as some elected officials have predicted. A piece on CBS’ “60 Minutes” Sunday pointed out that a couple of so-called “exotic” mortgages are primed to reset which could extend the mortgage crisis for years.
If all of that information isn’t enough to make you want to take to bed for a decade, Scott Pelley’s news story also said similar shenanigans have taken place in the commercial real estate market as happened in the residential market. So not only will we have an extended mortgage crisis for years we face the same with the commercial real estate market.
That is to say, quite crudely, we’re f**ked.