What's so awful about a lower cost of living?
Why do most of the media call good economic news bad?
Many of us assume economies must constantly grow, like a cancer cell, instead of take time off, like a healthy body. Hence, rather than welcome good news, most of the media label it bad. To give you the good, the bad, the ugly, we trim, blend, and append five 2008 articles -- four on new records -- from: (1) AlterNet on crazy society on Nov 9 by Bruce Levine; (2) MarketWatch on builders’ outlook on Nov 18 by Rex Nutting; (3) the AP on home prices on Nov 18 by Alan Zibel; (4) Bloomberg on producer deflation on Nov 18 by Shobhana Chandra; and (5) the AP on consumer deflation on Nov 19.
by Jeffery J. Smith, November 2008
Has American society gone insane?
George Orwell: "At any given moment there is an orthodoxy, a body of ideas which it is assumed that all right-thinking people will accept without question. ... Anyone who challenges the prevailing orthodoxy finds himself silenced with surprising effectiveness. A genuinely unfashionable opinion is almost never given a fair hearing, either in the popular press or in the highbrow periodicals."
Critical thinkers are not so desperate to adjust and be happy that they ignore adverse affects -- be they physical, psychological, spiritual, or societal. Critical thinkers listen to what others have to say while considering their motives, especially financial ones; and they discern how one's motivation may distort one's assumptions.
A critical thinker would point out that there have been societies less sane than America, yet its society is replete with schools that turn kids off to reading, for-profit prisons that need increasingly more inmates, a medical system that exploits illness rather than promotes health, a mass media that is dishonest about national security, trumped-up wars that deeply indebt government, et cetera.
JJS: Some business people do face their fate honestly.
Home builders index falls to record low 9 in November
US home builders have never been as anguished about their industry as they were in early November, with their monthly market index gauge plunging five points to a record low 9.
The home builders' index has been falling for nearly three and a half years after peaking at 72 during the height of the housing bubble. The index dates to 1985.
The index has been closely correlated with housing starts, a main driver of the economy. Starts are down 31% in the past year and are off 64% from the 2006 peak. In October, construction of new homes fell by 4.5%, the slowest construction pace on records going back to 1959.
JJS: If building is so needed, it’ll start up once sites become affordable again, so the next item should be presented as good news.
Median home prices fall around US in Q3
Nationally, sales fell by almost 8% in the third quarter compared with the same period a year ago. Sales of foreclosures and other distressed properties made up around 40% of transactions, bringing down the median price by 9% from a year ago to $200,500.
Among 152 metropolitan areas surveyed, 120 posted declines in median home sales prices compared with a year ago, a record high%age.
JJS: Since wages fall behind inflation, shouldn’t deflation be good news?
US Producer Prices Decline 2.8%, Most on Record
Prices paid to US producers plunged in October by the most on record as the faltering global economy caused demand for commodities to dry up. The drop in wholesale prices was led by a 13% decline in fuel costs, the biggest since 1986, and a 0.2 decrease in the cost of food. The overall 2.8% drop followed a 0.4% decline in September.
Prices paid to producers rose 5.2% from 2007 October, after an 8.7% gain in the 12 months ended in September.
Consumer prices drop record 1% in October
Consumer prices fell 1% in October, the biggest one-month decline on records that go back to 1947 February, 61 years ago.
As cash-stressed Americans buy less, they cut demand around the world for oil and other products, dropping the price of crude oil and other commodities. In the US energy prices fell by a record 8.6%, led by a record 14.2% drop in gasoline prices.
JJS: While we rejoice now, do recall the pain we felt when prices were going up to $2.00 per gallon.
Besides gasoline, there were price declines for clothing, new and used cars, and airline fares.
Food costs rose 0.3% in October, just half the increase of September, as dairy products and fruit showed declines. Food prices are still 6.1% above where they were a year ago.
Core consumer prices, which exclude food and energy, fell too, by 0.1% last month, the first drop in core prices in more than a quarter-century, since 1982 December as an effect of a severe recession.
Over the past 12 months, consumer prices have risen by 3.7%. That is substantially below the 17-year high of a 12-month price increase of 5.6% set this summer. Core prices are up 2.2% over the past 12 months.
The big drop in inflation meant workers got a break in their discretionary incomes although average weekly earnings, after adjusting for inflation, were still down by 0.9% from a year ago. However, that was smaller than the 2.5% decrease seen in the prior two months.
Jeffery J. Smith runs the Forum on Geonomics.
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