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Worrisome Stagflation Becomes More Real All the Time
U.S. Federal Reserve Chairman Ben S. Bernanke didn’t use the “S” word – stagflation – but he might as well have.
On Friday, the U.S. central bank chief said that the financial crisis that has hammered the U.S. market is combining with rising inflation to eviscerate American economy. Together, the two forces are making it extremely difficult for the Fed to restore economic stability in the U.S. market.
Bernanke apparently welcomed the recent drop-off in the prices of oil and other key commodities – and says that inflationary pressures will moderate over the next year and a half, but also cautioned that the…
25Aug2008 | Money Morning | Comments Off | ContinuedFed Holds Rates Steady in Face of Upside Inflation Risk
Citing the risk of high inflation, the U.S. Federal Reserve voted to hold the Federal Funds rate steady at 2.0% yesterday (Wednesday).
“Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased,” the accompanying Federal Open Market Committee (FOMC) statement read.
The statement did not allude to any future rate hikes at the next FOMC meetings scheduled for August or September. It was a very balanced statement overall, acknowledging the dual threats of stagnation and inflation currently facing the U.S. economy.
“It is more or less a neutral…
26Jun2008 | Money Morning | Comments Off | ContinuedHow to Survive Stagflation – With a Profit in Your Pocket
Increasingly in recent weeks commentators have begun speculating about the dreaded “S-wordâ€- stagflation- and whether or not such a protracted period featuring both high prices and high unemployment would blight the U.S. economy.
The stagflation debate arose anew on Friday when a worse-than-expected employment report and a record single-day surge in crude oil prices made economists once again consider the possibility that the U.S. economy could drop into a recession even as inflationary pressures spiraled higher.
For economists, this is viewed as the ultimate “worst-case†scenario. The probability is probably low. Nevertheless, it’s a real-enough possibility that investors should prepare for…
10Jun2008 | Money Morning | 1 comment | ContinuedSpecial Report: Six Ways to Profit From the One-Two Punch of Soaring Oil Prices and Zooming Inflation
Oil prices have resumed their northward climb. And inflation has returned to the American lexicon for the first time in decades.
For U.S. consumers, there’s no way to dodge the financial fallout of that economic one-two punch.
But for U.S investors willing to make some shrewd moves now, Money Morning can show you six ways to offset that high-priced pain with some profit plays that will continue to rise in value as oil prices and inflationary pressures continue to escalate.
Let’s first understand the battlefield we’re going to use for our profit-generating counterattack.
Escalating Energy and a Diving Dollar
Crude oil for July delivery traded as…
9Jun2008 | Money Morning | Comments Off | ContinuedConsumer Sentiment at Lowest Level Since Stagflation Era
Mirroring the stagflation of the early 1980s, consumer sentiment hit its lowest level since that time period this month as short-term inflation continues to ramp up.
The Reuters/University of Michigan preliminary index of consumer sentiment dropped to 59.5 in May from 62.6 in April. The index is at its lowest level since June 1980. Consumer confidence was at 85.6 as recently as 2007.
“The consumer is getting extremely grumpy,” Brian Bethune, director of financial economics at Global Insight Inc., who had forecast a decline in the confidence index to 59.6, told Bloomberg News. “The economy is flirting with a recession. The only…
19May2008 | Money Morning | Comments Off | Continued
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