News Column

Inflation Sticks Out: The Cohen Column

May 20, 2014

Isaac Cohen -- HispanicBusiness.com

Last week's reports that consumer prices in the U.S. increased slightly in April were viewed positively.

The Labor Department informed the consumer price index increased 0.3 percent in April, or 2 percent from last year.

Other indicators were also moving in the same direction. Also in April, there was an increase of 0.6 percent in producer prices and a decrease in the number of first time unemployment insurance claims.

Together with vigorous job creation in April, all these indicators confirmed that the U.S. economy has pulled out from the winter slowdown of this year's first quarter.

True, no firm conclusion should be drawn from one month's figures.

However, what can be said is that U.S. economic performance contrasts with the specter of deflation, which has returned to Europe, or to the last 15 years of the deflationary vicious circle from which the Japanese economy appears to have recently begun to recover.

These indicators also raise questions if they signal that inflation in the U.S. is moving back toward the 2 percent objective.

For instance, in a recent op-ed column in The Wall Street Journal, Harvard professor Martin Feldstein said the Federal Reserve should start explaining how it will prevent or reverse inflation, if it threatens to exceed the 2 percent objective.

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Isaac Cohen is an international analyst and consultant, a commentator on economic and financial issues for CNN en Espaņol TV and radio, and a former director, UNECLAC Washington Office.



Source: HispanicBusiness.com (c) 2014. All rights reserved.


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