U.S. Inflation and Unemployment

August 14, 2009

Consumer prices fell 2.1% in the year to July, the greatest on-year price drop since the year to January 1950 and a 7.8 percentage point increase from a 5.6% rise in the year to July 2008.  U.S. core CPI inflation, which excludes volatile food and energy, slowed to a 12-month pace of 1.5% from 2.5% in the year to July 2009 and half as much as the 2.9% advance in the year to September 2006.  The unemployment rate has meanwhile risen to 9.4% in July from 5.8% a year earlier and 4.5% in September 2006.  5.86 million net jobs were destroyed over the past year, and 6.66 million jobs have disappeared since the recession began, which is a drop of almost 5%.  Against such a backdrop, the Fed continues to err on the side of promoting economic growth.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.



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