[Rhodes22-list] Economics - More Good News - Except the foundation

[Brad Haslett]

Ed,

Manufacturing inflation is measured by the Producer Price Index, which
dropped 0.2% in June.  I know that is hard to believe if you're in the boat
business buying paint and tackle, but there are always niches who get hit
and others that go unscathed. This is a gross oversimplification, but the
PPI looks at the prices charged for finished goods.  One of the reasons the
PPI has remained steady while input costs have increased is that
manufacturing efficiency has increased as well.  For small businesses like
Stan's, you can't very well change your manufacturing methods and you can't
make up the difference on volume.  I don't make these numbers up, the BLS
does, and there are plenty of smart people on Wall Street to keep them
honest.  Now where is this market going?  I don't have a crystal ball but it
has been a nice, long, sweet run.  Nothing lasts forever.

Brad

On 7/17/07, Tootle <ekroposki at charter.net> wrote:
>
>
>
> Brad:
>
> Apparently what is not showing up in the inflation is the devaluation of
> the
> dollar in the international exchange rates.
>
> Your inflation rate is derived from the U. S. Dollar and changes inside
> the
> U. S.  What Stan is finding that some of his hardware and line came from
> overseas?  If he wants the same blocks on new or recycled Rhodes as he
> used
> to use they cost twice as much to him if the company is still in business
> and still makes the same product.  For some unknown reason, this is not
> showing up in inflation?  Believe me, it is there.
>
> The answer must be in the design of the inflation rate.  As you point out
> it
> is done by government bureaucracy and it must have been designed to save
> face for ...?
>
> Another product whose price has gone thru the roof is paint.  It is oil
> based, even the water clean up versions.  While the costs of a gallon of
> the
> best product have gone up 100% in the last five years, it does not show up
> in the inflation rate.
>
> Believe me, there is something wrong with the inflation rate.
>
> Ask Captain Rummy if the costs of reroofing have changed in the last
> couple
> of years?
>
> Maybe production costs are not having the impact in the numbers because so
> little is made in the U.S. anymore?
>
> Ed K
> Greenville, SC, USA
> attachment:
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