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The CPI came out tamer than most had expected both at the core and non-core levels. The core CPI was up .2% month to month compared to expectations of .3% rise. Excluding food and energy, it was up .1% versus expectations of a .2% rise. The consumer discretionary sector is responding to this news in a positive fashion, at least much more so than it did a couple of days ago on the slightly better retail same store sales figures. The
Washed Outs will get their day in the sun, just wait. While the inflation statistics are what they are, it is far easier to cry foul with the number when the politics of objection enjoy a majority. We all have to buy food and gas on a regular basis and in an upcoming election year, such things make for a nice rallying cry. But putting aside the mob hysteria, the reality is that for most families, food and energy are about 20-25% of the overall budget, leaving 75% that may be enjoying more stable or even falling prices. Our CPI based inflation is remarkably subdued relative to other places in the world like China and Saudi Arabia, where it is running in the double digits. Part of the reason, to be sure, is that food and energy are a much smaller portion of the consumer's budget here in the states as compared to overseas. But our productivity may also be higher, which may explain our higher wages and why more companies aren't passing through more of their price increases. As is always the case, however, inflation is a backward looking indicator. While I don't see how it can't trickle up a bit going forward, I also don't think it will get nearly as high as it is in other areas of the world. And let's remember, gas prices have been going up for quite some time now. The ascent didn't just begin yesterday. Ultimately, we have one of the most competitive economies in the world. That means we have choices that some in other nations do not. We'll start using our minds to find other ways to get to work. My neighbor converted his VW about a year and a half ago to burn used kitchen grease that he picks up from local restaurants and fine dining establishments. Other than making his commute smell a little like popcorn, this engineer says it works fine. Over the last week, I've had to drive to Cleveland a couple of times, a commute that I don't have to make very often but I know many who do daily. Even though my work is only a few miles away, I can do everything for my job at home that I can at work by logging on remotely using networking equipment and software that comes down in price almost every year and gets easier and easier to set up and use. My friends who do drive to Cleveland daily will readily admit that it is not only a costly commute but often a waste of time relative to the benefits of a central working location. In an era where Green appears to sell well in corporate America, perhaps companies can start sponsoring work from home Fridays. Sure, some folks have to see customers, but do we really need all that face time with each other? It could be like casual days. Wear a tie only when it is needed, drive to work only when it is necessary. Heck, my neighbor could even cut back on visits to his favorite greasy spoons.