{"id":473,"date":"2010-08-17T10:43:00","date_gmt":"2010-08-17T14:43:00","guid":{"rendered":"http:\/\/www.intuitiveinvestor.com\/web\/?p=473"},"modified":"2018-08-17T15:44:42","modified_gmt":"2018-08-17T19:44:42","slug":"producer-prices-up-is-a-good-thing","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/08\/17\/producer-prices-up-is-a-good-thing\/","title":{"rendered":"Producer prices up is a good thing"},"content":{"rendered":"

Analysis:<\/strong> Such is the nature of panic that when minor news is slightly negative there can be a massive response.\u00a0 One of the sources of panic of late has been a fear of deflation setting in.\u00a0 I have discussed the evils of deflation on the blog before but here is a short refresher.<\/span><\/p>\n

If consumers consistently expect prices to go down on all goods they don’t have an incentive to spend money NOW.\u00a0 Instead, they wait until sometime in the future to spend their money when prices are assured to be lower.\u00a0 This is deflation.\u00a0 A little inflation is good for an economy because in the back of buyers’ minds is the idea that if they wait to make a purchase it will just cost them more money in the future.\u00a0 Deflation has crippled Japan’s economy for almost 20 years.\u00a0 Japanese consumers have entrenched in their spending behavior a belief that waiting to buy something will result in a lower price.\u00a0 So economic pundits and investors have been looking for such signs in the U.S. economy.<\/span><\/p>\n

That’s why today’s Department of Labor news of producer prices being up 0.2% in July as compared to June was such a welcome piece of news.\u00a0 You see, this was the first increase since March.\u00a0 Consequently, traders (not investors) who have feared deflation are piling back into equities.\u00a0 So that infinitesimal 0.2% increase is worth billions of dollars in equity price increases.\u00a0 Silly, isn’t it?<\/span><\/p>\n

Importance grade:<\/strong> 8; deflation is<\/span> a bad thing.\u00a0 Fears of that bad thing have now been mitigated…a good thing.<\/span><\/p>\n

Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Analysis: Such is the nature of panic that when minor news is slightly negative there can be a massive response.\u00a0 One of the sources of panic of late has been a fear of deflation setting in.\u00a0 I have discussed the evils of deflation on the blog before but here is a short refresher. If consumers […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-473","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/473","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=473"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/473\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=473"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=473"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=473"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}