Inflation and Recession

Quote of the day:
“General Motors is preparing to shift half of its $3 billion budget to online advertising over the next three years.”
--Advertising Age

A major focus of economic coverage on the news over the last few weeks has been are we in a recession or not, and has inflation jumped?

What is rather ridiculous about endlessly waiting for official tipping points is that they come late if they come at all, because no official wants to be accused of being negative about the economy. Also, while reporters are spending all their time quizzing economists they don’t simply look for themselves.

Have you been grocery shopping lately? Duh. Have you bought gas lately? Double duh. Have you applied for credit recently? Duh, duh, duh.

The price of wheat and other grains have gone way up, causing price jumps or product shrinkage, and causing a squeeze on restaurant owners. The price of oil is near its all-time high, so the prices of the myriad of petroleum-based products are marching upward. And all who use transportation are affected.

Yes, I know that gas and food are not included in the official CPI. But we use more of these things than anything else. This is inflation that whacks us every day.

Housing prices have declined significantly over the last two years, crimping the plans of those counting on short-term equity growth. Financial institutions are facing fast-growing loan losses, and those who took the most risk are in trouble.

Credit has become difficult to get, especially for smaller businesses. This slows business growth.

Thus it’s clear that inflation and recession are both with us.

Interesting thing, though. The parking lots at Fashion Valley and Mission Center are full. There are waits to get into bustling restaurants. And this morning JP Morgan makes a more-generous offer to buy Bear Stearns.

Maybe things aren’t that bad.