Government cost inflation costs $4T

[Widdekind]

From c.2000 onwards, the price-level of government purchases (CPI for "G" in GDP) inflated above the price-level of personal consumption (CPI for "C" in GDP). By 2010, the price-level for government was 20% higher than for persons. In the absence of that relative rise in government prices, the same government purchases would have cost up to 20% less each year (10% less each year on average), for a decade. The total extra cost, from that decade of increasingly inflated government prices, was nearly $4T, of nearly $40T total government purchases (2005 dollars). Inexpertly, public reports of fraud, missing money, and other "inefficiencies", during the War on Terror, could plausibly account, for the inflated government price-levels, and extra costs.

 

[waltky]

Granny says, "Dat's right - gas prices is goin' up an' things ain't gettin' any cheaper...

US producer inflation accelerates
un, Apr 13, 2014 - US producer prices recorded their largest increase in nine months last month, but that jump will probably not ignite inflation pressures as the nation’s economic growth remains moderate.

The US Department of Labor said on Friday that its seasonally adjusted producer price index (PPI) for final demand increased 0.5 percent last month, after slipping 0.1 percent in February. The increase last month, which was the largest since June last year, reflected a surge in the prices of food and trade services. “Will inflation accelerate? Probably, but not rapidly,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “Growing demand should stabilize prices, but the economy is not strong enough to cause inflation to pick up very much.” Economists had expected prices received by the nation’s farms, factories and refineries to gain only 0.1 percent last month. Some were puzzled by the increase.

Gus Faucher, a senior economist at PNC Financial Services in Pittsburgh, said harsh weather during the winter could have distorted producer prices. “But there is also the possibility that inflation may be picking up, as firms raise prices given the recent limited acceleration in wage growth and stronger demand,” Faucher said. A survey on Tuesday last week showed a significant increase in the share of small businesses raising their prices this month. Fewer reduced prices last month. US government data on Thursday showed an unexpectedly big rise in the price of imported goods last month.

Last month, prices at the factory gate excluding volatile food and energy costs rose 0.6 percent, the biggest gain in three years. The so-called core PPI for final demand had declined 0.2 percent in February. A broader gauge of core producer prices — final demand less foods, energy, and trade services — rose 0.3 percent after ticking up 0.1 percent. US demand could strengthen further with a separate report on Friday showing US consumer sentiment hitting a nine-month high early this month. The consumer sentiment index from Thomson Reuters/University of Michigan rose to 82.6 this month, the highest since July, from 80 in March.

The upbeat household sentiment fit in with other reports such as employment and automobile sales that have suggested the economy was regaining some momentum after a weather-induced lull early this year. Last month, food prices jumped 1.1 percent, the largest increase since May last year, after rising 0.6 percent in February. Food prices were pushed up by a surge in the cost of pork, which saw its largest rise since August 2008. Sausage, deli meat and boxed meat prices rose by the most since August 1980. Services for final demand spiked 0.7 percent, the largest gain since January 2010, after falling 0.3 percent in February.

US producer inflation accelerates - Taipei Times