Producer Price Index Falling

[one...two...tree 2,762]

Sure is good we’ve got FOMC members worried about inflation:

The Producer Price Index for Finished Goods fell 0.5 percent in June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This decrease followed declines of 0.3 percent in May and 0.1 percent in April

. At the earlier stages of processing, prices received by producers of intermediate goods moved down 0.9 percent in June and the crude goods index dropped 2.4 percent.

When prices are falling, it makes little sense to invest and it’s difficult for people to repay outstanding loans. The good news is that we’re seeing a slight amelioration in the new jobless claims numbers. Still, it’s bad for the Fed to be undershooting its inflation targets when the price level is already below trend. If the price level were above-trend and we were overshooting the target, the Fed would tighten and there’d be no controversy.

http://yglesias.thinkprogress.org/

[mendeleev 67]

I forget ... how do you spell

liquidity trap?