The threat today is not inflation, deflation is ", had launched the European Commission President, José Luis Barroso, last weekend at the G20 summit in Washington on the financial crisis. The removal of consumer prices in the United States seems to give reason. According to the latest statistics released yesterday by the Department of Employment, in Washington, consumer prices fell by 1% in October compared to September, the largest monthly decline since the index in 1947, producer prices displayed down 2.8%. However, excluding food and energy, the decline in the price index for consumption does not exceed 0.1%. On a year, inflation across the Atlantic still amounted to 3.7% last month, against 4.9% in September.
"We are entering an environment where prices start to fall. Deflation is spreading across the economy, "said, however, David Resler, Chief Economist of Nomura in New York. The decline in consumer prices in October is essentially linked to the fall in energy prices (- 8.6%), the highest since 1957, and particularly fuel (- 14%). Food prices rose by 0.3% (+0.6% in September). But those of clothing, automotive and aviation are declining.
These figures follow those of retail sales in October, down 2.8%. Faced with this depresses consumers, Wal-Mart, the world of distribution, has announced a drop in prices between Thanksgiving and Christmas.
The heavily indebted households
Economists, however, are divided. While Nouriel Roubini (New York University) sees in these deflationary forces the main concern for U.S. authorities, David Wyss (Standard & Poor's) believes that it is a "good news" for the Federal Reserve, which having more to worry about inflationary risks can focus on recession. Especially since the Fed yesterday revised sharply downwards its forecast builds on a 2009 GDP between - 0.2% + 1.1%.
The announcement in a separate report, a further decline of 4.5% in housing starts in October reinforces concerns about a deflationary sustainable which could lead to a decline in production and investment and higher rates indebtedness of households, already very high.
Faced with these threats, a group of business leaders gathered in the framework of the ECO Council of the Wall Street Journal on Monday in Washington, recommended that the team of Barack Obama the urgent adoption of a plan to revive 300 billion dollars at least. But facing opposition from Republicans, it is unlikely that Congress could adopt this new package until January.
"We are entering an environment where prices start to fall. Deflation is spreading across the economy, "said, however, David Resler, Chief Economist of Nomura in New York. The decline in consumer prices in October is essentially linked to the fall in energy prices (- 8.6%), the highest since 1957, and particularly fuel (- 14%). Food prices rose by 0.3% (+0.6% in September). But those of clothing, automotive and aviation are declining.
These figures follow those of retail sales in October, down 2.8%. Faced with this depresses consumers, Wal-Mart, the world of distribution, has announced a drop in prices between Thanksgiving and Christmas.
The heavily indebted households
Economists, however, are divided. While Nouriel Roubini (New York University) sees in these deflationary forces the main concern for U.S. authorities, David Wyss (Standard & Poor's) believes that it is a "good news" for the Federal Reserve, which having more to worry about inflationary risks can focus on recession. Especially since the Fed yesterday revised sharply downwards its forecast builds on a 2009 GDP between - 0.2% + 1.1%.
The announcement in a separate report, a further decline of 4.5% in housing starts in October reinforces concerns about a deflationary sustainable which could lead to a decline in production and investment and higher rates indebtedness of households, already very high.
Faced with these threats, a group of business leaders gathered in the framework of the ECO Council of the Wall Street Journal on Monday in Washington, recommended that the team of Barack Obama the urgent adoption of a plan to revive 300 billion dollars at least. But facing opposition from Republicans, it is unlikely that Congress could adopt this new package until January.
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