The annual inflation rate in the US will be above 10% by the end of the year. Almost all the signs are pointing that way.
The AP writes "The Labor Department reported that wholesale prices shot up 1.2 percent in July, pushed higher by rising costs for energy, motor vehicles and other products. The increase was more than twice the 0.5 percent gain that economists expected."
What does that mean?
There is growing evidence that the number of mortgage defaults in rising rapidly and moving from the sub-prime to prime markets. Although oil prices are down to $112 a barrel, gas is likely to stay above $3.50. That may seem tame compared to $4, but the difference is actually negligible to people who have to drive a great deal.
The use of home equity loans as a source of capital has all but gone away. Too may homes are worth less than their primary mortgages.
It is almost certain that wages will not rise by the double digits this year or next. Businesses are too wounded by a slowing economy.
The bite that basic expenses take from the consumer’s pay check gets bigger every month.
Douglas A. McIntyre
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