Discussion

By Kurt M. Sanger on Mar 21, 2011

If we spend more income on food and gas, we have less money to spend on discretionary goods, so its natural for the price of discretionary products to fall as less people can afford them and their supply (discretionary items) goes up. It seams that the Feds logic on computing inflation by measuring the price of discretionary goods is inverted.

By Joe Webb on Mar 21, 2011

The technology is a different twist to it though. We know technology costs tend to come down and have so for decades. So even though it is discretionary and might have downward pressure from that, the cost/benefit ratio, and the raw costs of technology is quite another matter. Some of your comment is proven, however, by some of the details in the CPI report. Meals eaten out of the home are not keeping up with inflation. How can this be? We know that many restaurants are only having slight increases, but many of their other costs are changing to account for the increases they are seeing in raw food costs. Staffing can change, for example, or they may start promoting different more profitable meals. This is what we see with the rise in PPI being almost double the rate that the CPI is; restaurants can't pass prices on to their full extent in fear of losing traffic. We have to remember that the CPI just measures prices, and not how the prices got to be the way they are. Every product has a story, it's not just supply and demand, and also involves things beyond monetary policy, though the latter is a primary driver for most price changes at this time.

By Thad McIlroy on Mar 28, 2011

Excellent point about ad:tech. It's always been a top-notch show. I encourage your readers to check it out by attending: they'll see that it would be an great show to exhibit at in New York in November.