40% Of US Workers Now Earn Less Than 1968 Minimum Wage

Are American workers paid enough?  That is a topic that is endlessly debated all across this great land of ours.  Unfortunately, what pretty much everyone can agree on is that American workers are not making as much as they used to after you account for inflation.  Back in 1968, the minimum wage in the United States was $1.60 an hour.

That sounds very small, but after you account for inflation a very different picture emerges.  Using the inflation calculator that the Bureau of Labor Statistics provides, $1.60 in 1968 is equivalent to $10.74 today.

And of course the official government inflation numbers have been heavily manipulated to make inflation look much lower than it actually is, so the number for today should actually be substantially higher than $10.74, but for purposes of this article we will use $10.74.

If you were to work a full-time job at $10.74 an hour for a full year (with two weeks off for vacation), you would make about $21,480 for the year.

That isn't a lot of money, but according to the Social Security Administration, 40.28% of all workers make less than $20,000 a year in America today. So that means that more than 40 percent of all U.S. workers actually make less than what a full-time minimum wage worker made back in 1968.  That is how far we have fallen. Read more >>

No Food Inflation? Take a 2nd Look

One of the great mysteries of the whole easing era — the past five years of unprecedented intervention and activism orchestrated by Fed Chairman Ben Bernanke — is that it hasn't led to rampant inflation...at least not yet.

While economists routinely strip out food and fuel when they look at pricing data to derive what they call a "core" figure, even the all-in figure has been eerily benign lately. The March consumer price index, or CPI, just released this morning, showed a 0.2% drop. But within the data, food prices remained flat, while the prior report showed a 1.6% increase in the food index over the past 12 months.

This "paltry" increase in food prices got Nick Colas, chief market strategist at ConvergEx Group, thinking. What if the items in the government's basket were different than what real consumers actually buy? As Colas explains in the attached video, so-called "shopping cart inflation" is anything but benign. "The things that people most commonly shop for are increasing in price much more quickly than that CPI basket inflation number we're used to seeing," says Colas, singling out the spike in staples such as lettuce (+24%) and apples (+11%) in a recent note to clients.

Part of the problem, he says, is due to the drought last summer. While that might seem like old news at this point, Colas says it will "have a very long shadow" on food prices this year, as the ripple effect from costlier corn and grains makes its way through animal feed and on to meat prices. All in, Colas sees the food component rising 3% to 4% this year, but warns that what people eat will have a big impact on how much they spend. Read more >>

The High Price Of Understated Inflation

Since the process of adjustment began in the early 1980s, the officially-reported CPI-U number has diverged ever further from the underlying figure calculated on the traditional methodology. Fig. 4.2 gives an approximate idea of quite how distorted US inflation data seems to have become over three decades. Instead of the 3.2% number reported for 2011, for example real inflation was probably at least 7%. Worse still, the official numbers probably understate the sharp pick-up in inflation which America has been experiencing. A realistic appreciation of the inflationary threat would be almost certain to have forced very significant changes in monetary policy.

Taken in aggregate, the extent to which the loss of dollar purchasing power has been understated is almost certainly enormous. Between 1985 and 2011, official data shows that the dollar lost 53% of its value, but the decrease in purchasing power might stand at more like 75% on the basis of underlying data stripped of hedonics, substitution and geometric weighting.

The ramifications of understated inflation are huge. First, of course, and since pay deals often relate to reported CPI, wage rises for millions of Americans have been much smaller than they otherwise would have been. Small wonder, then, that millions of Americans feel much poorer than official figures tell them is the case. By the same token, those Americans in receipt of index-related pensions and benefits, too, have seen the real value of their incomes decline as a result of the severe (and cumulative) understatement of inflation. Read more >>

Food Inflation To Surge

We have been very active in our discussions of the impact of the pending rise in food prices around the world (from central bank largesse to weather-related chaos).

As Goldman notes, food inflation has been one of the most significant sources of headline inflation variation in emerging markets (EM) over the past few years. Since June, international prices for agricultural commodities have risen almost 30%, increasing the risk of fresh, food-related increases to EM headline inflation.

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We, like Goldman, expect EM headline inflation to start to reflect the relevant pressures more broadly in the October prints at the latest. While the effects, for now, are expected to be less extreme than the 2010-2011 episode, the timing as the US enters its fiscal-cliff-prone malaise, could mean a further round of easing will reignite this critical inflationary concern. Read more >>

Mass slaughter of millions of farm animals worldwide set to push food prices up 14%

The mass slaughter of millions of farm animals across the world is expected to push food prices to their highest ever levels. As well as hitting consumers' pockets, the predicted 14% jump in food prices will also dash the Bank of England's hopes of pushing inflation down to 2% by next year.

Farmers across the world have begun a mass slaughter of their pig and cattle herds because they cannot afford the cost of feed, which has soared following the worst US drought in living memory, according to a report published on Wednesday. Experts at investment bank Rabobank warn that the mass "herd liquidation" will contribute to a 14% jump in the price of the average basket of food by next summer.

On Tuesday, the Office of National Statistics (ONS) said lower food prices had help bring inflation down to 2.5% in August. That brings it closer to the Bank's 2% target and should help consumers who have seen their spending power shrink as wages fail to match inflation. The Bank expects inflation to ease below the 2% target by early next year, but that could be scuppered by rising food, oil and commodity prices. Read more >>

US to Experience Stagflation Worse Than 1970s: Jim Rogers

Image via WikipediaThe U.S. economy is likely to experience a period of stagflation worse than the 1970s, which would cause bond yields to spike, commodity bull Jim Rogers told CNBC on Friday in Singapore. Rogers said governments were lying about the inflation problem and the recent rally in Treasurys was a bubble.

"As the inflation numbers get worse and as governments print more money and as governments have to issue many, many more bonds - somewhere along the line we get to the point when (bond prices) go down."

Between 1974 and 1978 average inflation in the U.S. was at 8 percent, while unemployment hit a peak of 9 percent in May 1975. Currently, unemployment is at 9.1 percent while CPI is at 3.8 percent.

Rogers believes inflation will get much worse this time because, he said, in the 1970s only the Fed was printing money, whereas now many global central banks have been easing monetary policy. More...

Food inflation is far worse in grocery stores than restaurants

Image by Getty Images via @daylifeAccording to the latest government figures, the consumer price index for food at home increased by 60 basis points year-over-year to 6% versus the 10 basis point gain in food away from home CPI inflation to 2.7%.

Food inflation is now the most important household expense, according to Wal-Mart's (WMT) commentary during its earnings call last month. Food prices, according to the Bureau of Labor Statistics, continue to accelerate higher. The charts below illustrate food cost trends and food cost trends versus core inflation. It's worth noting that the spread between food at home inflation and core inflation widened month-over-month while the spread between food away from home and core inflation narrowed. More...

India, Indonesia, China And Wider Asia Buy Physical Gold And Silver On Dip As Stagflation Threatens

Stagflation or low economic growth, high unemployment and rising inflation is a clear and present danger to the UK, EU and U.S. economies and other economies internationally.

This is especially the case in the UK where house prices have begun to fall again and may be set for sharp falls. Internationally, we are seeing significant debt deflation where the value of goods and assets bought with debt are falling (cars, property etc) while the value of finite, essential goods such as food and energy are rising.

Safe haven and inflation hedging diversification into gold is likely to continue as inflation is deepening and there is a distinct whiff of stagflation in the air. More...

Gold Buying in China Jumps as Inflation Flares

Image via WikipediaGold purchases in China, the world’s largest producer, climbed to 200 metric tons in the first two months of 2011 as faster inflation boosted consumer demand, according to UBS AG, which said the price may gain to $1,500.

“China is the big buyer,” Peter Hickson, global commodities strategist at Switzerland’s largest bank, said by phone yesterday, without giving a comparable figure for 2010. The estimate for the two-month period compares with full-year consumer demand from China of 579.5 tons for last year, according to the World Gold Council, a producer-funded group.

Bullion, which rallied 30 percent last year, surged to a record yesterday as uprisings in the Middle East, quickening inflation and currency debasement boosted global demand. China’s consumer prices rose 4.9 percent in January from a year earlier, exceeding policy makers’ 4 percent ceiling for a fourth month. Read more...

Inflationary forces are gathering in the UK, Europe and U. S. with input inflation rising strongly

By notayesmanseconomics
I have been reporting since last summer about the rise in commodity and crude oil prices and their potential impact on world inflation. Some countries are already suffering from the effects of this with Chinese consumer inflation for example having risen to 5.1% and retail price inflation in the UK is at 4.7%. I reported back on the 5th of January that overall Euro zone inflation had risen above target to 2.2% with Greece the outlier with her consumer price inflation now running at 5.2% although in her case the rise is partly attributable to a rise in consumer taxes such as Value Added Tax.So the impact of the commodity price rises has begun to feed into measures of inflation.

What is currently causing this?

I wrote yesterday about the recent rises in commodity prices as measured by the Commodity Research Bureau spot index which rose again on the day by 1.39 to 537.91. The main contributors to the rise were the livestock and foodstuff components both of which rose by more than 1%. Indeed with their being riots in one or two parts of the world at this time over food prices I took a closer look at the foodstuffs component of the index. The rally started on November 29th of last year when the index closed at 400 whereas last night it closed at 468.66 for a rise of 17% in just over a month.Heady stuff indeed. There were problems with food prices back in 2008 but the foodstuffs index used hit only hit a peak of 449 back then which we now have comfortably passed.

The foodstuffs index has the following constituents: Butter, Cocoa, Corn, Hogs, Lard, Soybean Oil, Steers, Sugar and two measures of wheat prices. Read more...

Australia Inflation - Tomatoes soared 20%, bananas, grapes & sweet potatoes up 10%

Tomato prices soared 20 percent in the past week and bananas, grapes and sweet potatoes are up 10 percent, said Maurice Sorace, owner of Sylvania Best Fresh, who gets about a third of his fruit and vegetables from flood-ravaged Queensland state. “Prices will be higher in the next week” as the deluge drowns more crops and clogs roads, he said.

The crisis may force the RBA to accept higher inflation in coming months as the floods spur food and commodity costs and slow growth in a disaster zone the size of Egypt. A gauge of inflation in the bond market showed the expected rate surpassing the RBA’s target as the damage, along with future rebuilding in a country already near full employment, risked stoking prices. More...

Inflation major reason Chinese citizens losing faith in government

Image by Getty Images via @daylifeInflation in China is on track to rise. According to the National Bureau of Statistics (NBS), the consumer price index (CPI) rose 3.2% in the first 11 months of this year. In November alone, the CPI rose 5.1% year-on-year and 2% month-on-month. And the CPI increase was mainly propelled by price hikes for foodstuffs. In November, food prices rose 11.7% year-on-year. The Blue Paper says food price hikes seriously affect living standards, especially for low-income families.

A December 15 survey by the research arm of the People's Bank of China (PBoC), the country's central bank, also reached a similar conclusion.

A questionnaire given to 20,000 bank depositors in 50 cities found their satisfaction with consumer goods-prices in the last quarter of this year had dropped to the lowest level since the last quarter of 1999. About 74% of the respondents thought prices were "unbearably high". This is 16 percentage points higher than in the third quarter. Only 25% of the respondents said the current price level was "acceptable", and most respondents expected inflation to intensify.

While the Blue Paper and the PBoC survey fail to mention it explicitly, it is apparent that dissatisfaction with inflation is a major reason for people's waning confidence in their government. At the annual session of the National People's Congress (NPC) in early March, Premier Wen Jiabao set this year's target of keeping inflation under 3%. It seems certain this will be "mission impossible", as CPI was expected to go up even more for December. More...

Food prices rise sharply - and there's more to come

For the first time since 2008, inflation is hitting consumers in the stomach.

Grocery prices grew by more than 1 1/2 times the overall rate of inflation this year, outpaced only by costs of transportation and medical care, according to numbers released Wednesday by the U.S. Bureau of Labor Statistics.

Economists predict that this is only the beginning. Fueled by the higher costs of wheat, sugar, corn, soybeans and energy, shoppers could see as much as a 4 percent increase at the supermarket checkout next year.

"I noticed just this month that my grocery bill for the same old stuff - cereal, eggs, milk, orange juice, peanut butter, bread - spiked $25," said Sue Perry, deputy editor of ShopSmart magazine, a nonprofit publication from Consumer Reports. "It was a bit of sticker shock." More...

Inflation Is Already Here

Image by Getty Images via @daylifeIan Cooper
This is just too stupid not to comment on.

Federal Reserve Chairman Ben Bernanke just said: "We're not in the business of trying to create inflation, our purpose is to provide additional stimulus to help the economy recover and to avoid potentially additional disinflation, which I think we all agree could also be worrisome."

How does this guy still have a job?

First, the Fed is in the business of creating inflation. It's their goal. Their target is always set around +2% every year.

Second, Bernanke is trying to convince us that inflation is well below the 2% target.

Third, he's not even looking at the right numbers. The only way inflation isn't a worry is if he's looking at core CPI numbers, which exclude volatile food and energy.

Something big is happening in the markets. And yet "official" numbers are telling us everything is fine — leading me to believe there's a huge disconnect between CPI and the world the rest of us live in.

Honestly, Bernanke's insanity would be laughable, were it not so economically destructive. It's absurd that he would argue inflation is under control when the cost of everything has spiked...

Inflation has arrived

And for Ben to not see that, I'm worried. It all reminds me of 2007, when he saw "little chance" of the subprime housing mortgage problem spreading to the general economy...

Just take a look at these commodity prices and tell me — with a straight face — that inflation isn't here:

* Gold is at all-time highs above $1,400.
* Silver is at a 30-year high.
* Cotton is running, with prices being passed on to consumers.
* Sugar is at 30-year highs, and we're likely to see food prices increase because of it.
* Oil is running well above $85.
* Grain markets are exploding: December wheat, last checked, was just under $7.30. Corn was at $5.88 per bushel, and soybeans are rocketing well above $12.80 a bushel.

In the last year alone, palladium and cotton have doubled. Corn, silver, and wheat are up close to 60%.

In the months since Bernanke told us QE1 would not jeopardize the stability of prices, the price of oats is up 40%.

Orange juice is up 45%... rice is up 50%... coffee is up 60%... copper is up 70% More...

A Quick Glance At Real World Inflation

The Casey Report provides a useful glance at the real inflation currently ravaging items that are actually purchased by Americans, not those captured by the Fed's BLS statistics: "On average, our basic food costs have increased by an incredible 48% over the last year (measured by wheat, corn, oats, and canola prices). From the price at the pump to heating your stove, energy costs are up 23% on average (heating oil, gasoline, natural gas). A little protein at dinner is now 39% higher (beef and pork), and your morning cup of coffee with a little sugar has risen by 36% since last October." Of course, the ongoing deflation in items purchases requiring leverage will continue to skew the CPI so far south to make all those who bought 5 Year TIPS yesterday at negative yields end up losing money on the transaction. More...

Highest Consumer Price Increase in a Year

A busy month for car dealerships lifted retail sales for the first time in three months while more expensive food and gas boosted consumer prices by the most in nearly a year.

Retail sales rose 0.4 percent last month, buoyed by auto and gasoline station purchases. Most retailers reported declines for the month. Excluding autos, sales climbed 0.2 percent, the Commerce Department said Friday.

Consumer prices rose 0.3 percent in July, the Labor Department said. That's the largest increase since last August to the Consumer Price Index, the government's most closely watched inflation measure. Energy prices jumped for the first time in five months.

Excluding volatile food and energy prices, the so-called "core" index increased 0.1 percent in July. The cost of housing, clothes, and used cars and trucks all rose. Over the past year, consumer prices rose 1.2 percent. That's up slightly from last month's 1.1 percent pace but still a mild increase.

Broad declines in retail sales have economists concerned that spending will slow further in the second half of this year. Households are saving more and spending less as they struggle with high unemployment and lackluster job growth. More...

U.S. Food Inflation Spiraling Out of Control

FORT LEE, N.J., April 22 /PRNewswire/ -- The National Inflation Association today issued the following food inflation alert to its http://inflation.us members:

The Bureau of Labor Statistics (BLS) today released their Producer Price Index (PPI) report for March 2010 and the latest numbers are shocking. Food prices for the month rose by 2.4%, its sixth consecutive monthly increase and the largest jump in over 26 years. NIA believes that a major breakout in food inflation could be imminent, similar to what is currently being experienced in India.

Some of the startling food price increases on a year-over-year basis include, fresh and dry vegetables up 56.1%, fresh fruits and melons up 28.8%, eggs for fresh use up 33.6%, pork up 19.1%, beef and veal up 10.7% and dairy products up 9.7%. On October 30th, 2009, NIA predicted that inflation would appear next in food and agriculture, but we never anticipated that it would spiral so far out of control this quickly.

The PPI foreshadows price increases that will later occur in the retail sector. With U-6 unemployment rising last month to 16.9%, many retailers are currently reluctant to pass along rising prices to consumers, but they will soon be forced to do so if they want to avoid reporting huge losses to shareholders.

Food stamp usage in the U.S. has now increased for 14 consecutive months. There are now 39.4 million Americans on food stamps, up 22.4% from one year ago. The U.S. government is now paying out more to Americans in benefits than it collects in taxes. As food inflation continues to surge, our country will soon have no choice but to cut back on food stamps and other entitlement programs.

Most financial experts in the mainstream media are proclaiming that the recession is over and inflation is not a problem in the U.S. Unfortunately, they fail to realize that rising food and gasoline prices accounted for 58% of February's year-over-year 3.85% rise in retail sales. NIA believes price inflation is beginning to accelerate in many areas of the economy besides food and energy, and all increases in U.S. retail sales this year will be entirely due to inflation.

To receive NIA's latest updates about inflation and the economy, sign-up for the free NIA newsletter at: http://inflation.us

About us:

The National Inflation Association is an organization that is dedicated to preparing Americans for hyperinflation. The NIA offers free membership at http://www.inflation.us and provides its members with articles about the economy and inflation, news stories, important charts not shown by the mainstream media; YouTube videos featuring Jim Rogers, Marc Faber, Ron Paul, Peter Schiff, and others; and profiles of gold, silver, and agriculture companies that we believe could prosper in an inflationary environment.

CONTACT: Gerard Adams, 1-888-99-NIA US (1888-996-4287), editor@inflation.us

SOURCE National Inflation Association

Pew: 92% of Americans give economy Negative Rating

Pew Research Center for the People & the Press

Americans are united in the belief that the economy is in bad shape (92% give it a negative rating), and for many the repercussions are hitting close to home. Fully 70% of Americans say they have faced one or more job or financial-related problems in the past year, up from 59% in February 2009. Jobs have become difficult to find in local communities for 85% of Americans. A majority now says that someone in their household has been without a job or looking for work (54%); just 39% said this in February 2009. Only a quarter reports receiving a pay raise or a better job in the past year (24%), while almost an equal number say they have been laid off or lost a job (21%). Read more

View more Daily Numbers
Go to PewResearch.org homepage

Consumer sentiment drops in April

MarketWatch
As economic worries persist, U.S. consumer sentiment dropped in early April, according to media reports on Friday of the Reuters/University of Michigan index.

The consumer sentiment index fell to 69.5 in April from 73.6 in March. Economists surveyed by MarketWatch had been expecting the sentiment index to hit 75 in April. The index hit a 28-year low of 55.3 in November 2008.

While the economy has been picking up, consumers remain worried about jobs and their personal finances.

Elsewhere Friday, fresh data from the Commerce Department showed that new construction of U.S. housing units revealed an upward trend in place since the beginning of the year. Starts rose 1.6% in March to a seasonally adjusted 626,000 annualized units, stronger than the 610,000 pace expected by economists surveyed by MarketWatch. Read more about housing starts.

According to a Reuters report, the reading on current economic conditions fell to 80.7 in April from 82.4 in March. The consumer expectations reading fell to 62.3 from 67.9, according to Reuters. Also according to Reuters, the one-year inflation expectation index rose to 2.9% from 2.7%.

Consumer prices up 2.3% from last year

money.cnn.com
Consumer prices in March rose at a faster pace on an annual basis amid higher utility costs, the government reported Wednesday.

The Consumer Price Index, the government's key measure of inflation, rose 2.3% over the past 12 months, driven by a 41% climb in gasoline costs during the period. In February, prices climbed 2.1% from the previous year.

The core CPI, which economists eye closely because it strips out volatile food and energy prices, was up 1.1% from a year earlier. In February, it inched 1.3% higher year over year.

March: Overall prices inched up 0.1% in the month, as rising costs for electricity were offset by declines in gasoline prices. The increase was in line with the 0.1% gain projected by economists. Prices did not budge in February.

Core CPI for the month of March was unchanged, compared to a 0.1% increase in February. Economists had forecast a 0.1% bump up.

"The rate of inflation was very low this month and still somewhat below the historical average," said Andres Carbacho-Burgos, an economist for Moody's Economy.com.

Historically, CPI stood between an annual rate of 2.4% to 2.5% and core CPI ran from 1.7% to 1.8% annually, he added.

The run-up in March CPI was driven in part by a 2.1% increase in electricity costs, which was offset slightly by a dip in home gas prices. Overall food prices edged up 0.2% during the month.

According to Carbacho-Burgos, the "abnormal" run-up in electricity prices could be related to "some unseasonable variation" in the price of coal, a key component in electricity creation, due to February's volatile weather.

Prices for new and used cars and trucks, airline fares and medical care costs were higher, with medical costs rising for the third straight month. Conversely, the costs for housing and clothing fell. more...

Faber and Mish: We're Doomed and Washington Can't Do Anything About It

Tech Ticker

Washington is patting itself on the back for having orchestrated an amazing economic recovery. But Washington lawmakers are a delusional bunch of boneheads, say Marc Faber and Mike "Mish" Shedlock, editor of the Gloom, Boom, and Doom Report and investment advisor at SitkaPacific Capital Management, respectively.

The economy is NOT recovering, they say, and the U.S. faces a depressing "eventuality" of either crushing deflation (Shedlock) or runaway inflation (Faber). The timing and type of this eventuality is uncertain, say the gurus, but they are certain it's too late for America to change course.

"It's beyond repair -- it's too late," to avert fiscal disaster, Faber declares.

Mish agrees: "The day of reckoning has arrived. The question is how long it takes to play out."

This grim outlook doesn't mean you're helpless. Faber recommends individuals prepare for doomsday by buying gold, owning assets abroad and buying property outside of major cities.