“Alas, consumers cannot choose to pay the “core” price at the grocery store or gas station. They feel the increase in food and energy prices in reduced purchasing power whether or not the Fed cares about those prices. Wall Street may see a “wealth effect” from rising stock prices, but average Americans see a slower increase in real wages. If companies cannot pass along price increases, their margins will also shrink, which means lower corporate profits and thus less cash to hire new workers and reduce the unemployment rate.” Read more.
“Deja Deflation Fear”
Review and Outlook
Wall Street Journal, February 18, 2011.
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