Regis Philbin
Sep 19th, 2006, 07:28 PM
Ugh! I can't take it anymore! First it was the high gas prices were killing the economy, taking money away from consumers that they could spend on things besides gasoline. Now, the prices have declined too fast and consumers may have too much extra money to spend. :rolleyes:
I want to whack the next drive-by talking head "expert" I see on TV complaining about gas prices... :redmad:
http://www.usatoday.com/money/economy/fed/rates/2006-09-18-gas-fed_x.htm?POE=NEWISVA
Gas price decline may spur inflation
Updated 9/18/2006 10:10 PM ET
By Barbara Hagenbaugh, USA TODAY
WASHINGTON — The recent sharp decline in gasoline prices may help consumers. But it also may stoke inflationary fires, perhaps forcing the Federal Reserve to raise interest rates again later this year, some economists, such as those at Merrill Lynch and the Bank of Tokyo-Mitsubishi, say.
The argument: If consumers spend the cash in their wallets left over from filling their gas tanks, the economy may speed up and businesses will have greater power to raise prices. That could lead to higher inflation — not lower, as some may expect — and renewed action from the Fed.
"It's going to put a lot of money back into consumers' pockets, money they can spend in the shops and the malls," Bank of Tokyo-Mitsubishi chief financial economist Christopher Rupkey says. "The inflation pressures will intensify."
But Wachovia economist Jason Schenker says the drop in gasoline prices will have little impact on consumers because it is coming after the busy summer driving season. With winter approaching, heating costs are more important now, and the outlook for those are unclear, he says.
NO CHANGE LIKELY: Rates not expected to go up this week
Federal Reserve policymakers are widely expected to leave their target for short-term interest rates, which influence borrowing costs across the economy, unchanged when they meet Wednesday.
After raising rates 17 times from June 2004 to June 2006, Fed Chairman Ben Bernanke and his colleagues last month voted to leave rates unchanged. Although inflation measures have been elevated recently, Bernanke and others have argued that slowing growth should relieve price pressures.
But an energy price decline may pump up the economy in the months ahead, warns Rupkey and others. Rupkey says the Fed may raise rates as early as October.
In large part because of a steep drop in oil costs, gasoline prices have fallen more than 15% in the last month.
I want to whack the next drive-by talking head "expert" I see on TV complaining about gas prices... :redmad:
http://www.usatoday.com/money/economy/fed/rates/2006-09-18-gas-fed_x.htm?POE=NEWISVA
Gas price decline may spur inflation
Updated 9/18/2006 10:10 PM ET
By Barbara Hagenbaugh, USA TODAY
WASHINGTON — The recent sharp decline in gasoline prices may help consumers. But it also may stoke inflationary fires, perhaps forcing the Federal Reserve to raise interest rates again later this year, some economists, such as those at Merrill Lynch and the Bank of Tokyo-Mitsubishi, say.
The argument: If consumers spend the cash in their wallets left over from filling their gas tanks, the economy may speed up and businesses will have greater power to raise prices. That could lead to higher inflation — not lower, as some may expect — and renewed action from the Fed.
"It's going to put a lot of money back into consumers' pockets, money they can spend in the shops and the malls," Bank of Tokyo-Mitsubishi chief financial economist Christopher Rupkey says. "The inflation pressures will intensify."
But Wachovia economist Jason Schenker says the drop in gasoline prices will have little impact on consumers because it is coming after the busy summer driving season. With winter approaching, heating costs are more important now, and the outlook for those are unclear, he says.
NO CHANGE LIKELY: Rates not expected to go up this week
Federal Reserve policymakers are widely expected to leave their target for short-term interest rates, which influence borrowing costs across the economy, unchanged when they meet Wednesday.
After raising rates 17 times from June 2004 to June 2006, Fed Chairman Ben Bernanke and his colleagues last month voted to leave rates unchanged. Although inflation measures have been elevated recently, Bernanke and others have argued that slowing growth should relieve price pressures.
But an energy price decline may pump up the economy in the months ahead, warns Rupkey and others. Rupkey says the Fed may raise rates as early as October.
In large part because of a steep drop in oil costs, gasoline prices have fallen more than 15% in the last month.