Thursday, July 31, 2003

One place deflation seems to have been temporarily licked is in industrial commodities. The Journal of Commerce and the Economic Cycle Research Institute report that their price index of 18 commodities (stuff like copper, textiles, rubber, plywood, oil -- you get the idea) is now growing at an annualized rate of 13.7%, up from a low in mid-May of -0.3%.

Jonathan Fuerbringer of the NYTimes then puts his finger on an amazingly important aspect to this data.
Anirvan Banerji, director of research at the Economic Cycle Research Institute, said, "This is suggesting there is real strength in the industrial economy." He added, "The ambiguity here is which industrial economy it is." Recent economic data indicate that the manufacturing pickup is outside the United States, especially in China.
So world commodity prices are going up, reflecting higher demand on the part of producers -- in China. This probably means more imports for the middle class rather than more jobs for the US working class.

0 Comments:

Post a Comment

<< Home