The consumer price index today dropped .03%. It was the largest drop since May and followed a .01% increase from the last report.
The consumer price index is calculated by taking the price changes of numerous goods, weighting them by importance, and comparing the results to prior numbers.
Economists use the CPI as a bench mark inflation guide. Large rises in the CPI in a short period of time, can mean inflation. Large drops in the CPI in short periods of time, can mean deflation.
A more urgent topic is: the Fiscal Cliff. If you are like me, you have heard this phrase about $1,000 times. The completely different wave lengths of Speaker Boehner and President Obama continue to clash. Mr. President and other democrats are blaming the republicans for holding up the efforts. They would love to see the wealthy taxed more than the middle class. President Obama is focused on raising taxes, and Speaker Boehner is focused on bring spending cuts. If there isn’t a middle ground reached by January 1st, America will “fall off” of the fiscal cliff. This will automatic tax hikes and spending cuts of around 1.2 Trillion Dollars.
At Bernanke’s last Press Conference of 2012, the Fed Chairman made it clear that the Federal Reserve does not have the necessary tools to offset the fiscal cliff implications, if it were to take place.
A gentleman in the FOMC press conference on Wednesday asked Chairman Bernanke if the economy went off the fiscal cliff, would the Fed increase stimulus? Reiterating the Fed’s inadequacy to assist substantially, Bernanke also said that the Fed would “perhaps increase a bit” concerning stimulus.
“Fiscal Cliff” a term coined by Bernanke himself, is the main focus in the American economic arena.The fiscal cliff could be the reason small business and consumer confidence levels have fallen recently.
Bernanke also made it clear that it is “exceptionally urgent” that the White House comes to an agreement concerning the fiscal cliff.
White House officials will likely take their holiday vacation time in the coming days. It may not be enjoyed as usual because they will be back in the office before New Years trying to resolve the fiscal cliff matter.
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