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Notes to myself, possibly of interest to others.
-- Bill Northlich

Monday, November 22, 2010

Rosenberg: Disinflation. That is, Deflation.

The intensity and broad-based nature of the disinflation momentum in the U.S. is quite striking and, I believe, will ultimately prove to be a vital source of support for the bond market.  Just take a look at these sectors that are either deflating or disinflating:
  • New car prices dipped 0.2% MoM last month, the first decline since April. Used car prices were down 0.9%, the second falloff in a row and the first back-to-back decline since the depths of despair in March-April 2009.
  • Despite the surge in food costs, grocery chains only managed to raise prices 0.1% last month.
  • Higher cotton prices have yet to filter through — apparel prices at the retail level fell 0.4% and are down in each of the past three months.
  • Appliance prices deflated 1.2% in October, the second decline in as many months; furniture prices are down five months in a row. Clearly, the housing market has yet to stabilize or these items would still not be falling in price.
  • Hotels saw a 1.3% price slide — negative now for three months in a row. Electronics prices dropped 0.1% in October and have deflated for four months running.
  • Recreational services prices were off 0.3% and down for two months in a row.
  • After deflating for just the second time ever in September, education prices were flat in October. The three-month trend, at -0.5% at an annual rate, is the lowest this metric has ever been — for most of the past decade, the price trend here was locked in a 6-8% band, and now it is negative. Goes to show how desperate the colleges are to draw in cash-strapped students.
  • Toy prices slid 0.5% and have fallen now in seven of the past eight months.
  • Personal care products slipped 0.3%, the second decline in a row.
  • Despite higher fuel costs, airfares have been held to less than a 0.2% advance in each of the past two months.
  • Jewellery prices fell 0.7% in October and are down in three of the past five months.
  • The price of sporting goods was flat after three months of decline. Ditto for reading materials.
---ibid

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