US Consumer Price Index has Largest Fall

Consumer price index: “program produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services.”The October CPI fell 1%, which is the greatest ever recorded.* The asterisk being that the CPI actually fell more than 1% and for a longer period, but this was before the government came up with the statistic in 1947.

So what is the CPI and why the heck do I care? As the NY Times put it “a key measure of how much Americans spend on groceries, clothing, entertainment and other goods and services.”

This is the cost of living in the United States. You might think this is a good thing because it means we are paying less for our daily items now. Food, clothing, fuel, you name it. It would be a good thing if this was a one time thing, but what this means is that all of our products are cheaper now. Our businesses are not getting as much money for the same amount of products. A major part of this was the fuel prices dropping consistently on a daily basis, but not alone.

The problem lies in the fact that there is less money for the businesses which will mean less jobs to pay for. Expect more major cuts from all sectors. You must remember something though…there will always be a job for anyone who wants to work, for a long time.

We still have a long ways to go before a second great depression. Between December 1929 and March 1933, the CPI fell over 30%! So until then you negative betties, shut up.

Percent CPI Change 1929-1933

YEAR	JAN	FEB	MAR	APR	MAY	JUN	JUL	AUG	SEP	OCT	NOV	DEC
1929	0.0	0.0	-0.6	-0.6	0.6	0.6	1.2	0.0	0.0	0.0	0.0	-0.6
1930	-0.6	-0.6	-0.6	0.6	-0.6	-0.6	-1.2	-0.6	0.6	-0.6	-0.6	-1.8
1931	-1.2	-1.3	-0.6	-0.6	-1.3	-1.3	0.0	0.0	-0.7	-0.7	-1.3	-0.7
1932	-2.1	-1.4	-0.7	-0.7	-1.4	-0.7	0.0	-0.7	-0.7	-0.7	-0.8	-0.8
1933	-1.5	-1.6	-0.8	0.0	0.0	0.8	3.1	0.8	0.0	0.0	0.0	0.0

Blog Links
Bureau of Labor Statistics: http://www.bls.gov/cpi/home.htm
NY Times: http://www.nytimes.com/2008/11/20/business/economy/20econ.html

Table source: the Bureau of Labor Statistics (www.bls.gov)