Tuesday, July 14, 2009

PPI shows significant inflation

This morning the BLS released it's Producer Price index for June, which was 1.8 percent higher than in May. That's the largest monthly increase in quite a while.

The PPI for residential construction also increased modestly May-June, although it is still lower than it was in most of 2008 and early 2009. Higher residential construction prices (even if they are lower relative to the overall CPI or the overall PPI) likely mean that housing prices are higher. Maybe the biggest problem in our economy is that housing prices are low relative to the mortgage debt they collateralize.

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