The AP Reports on Consumer Prices

Boring sounding, right?

Well, if you are concerned with the economy, it stops being boring once you hit a specific line in the article.

Selected quotes from the article:

Prices fell 2.1 percent over the past 12 months, the biggest annual decline since a similar drop in the period ending in January 1950. Most of the past year's decline reflects energy prices falling 28.1 percent since peaking in July
2008.

Well that doesn't sound so bad, the high energy prices inhibited any chance of a recovery.

Some economists have expressed concerns that the economy could be headed toward a dangerous period of falling prices, something the U.S. has not experienced since the Great Depression of the 1930s.

Okay, that isn't positive sounding. Deflation has been a worry of mine for some time now.

Wal-Mart Stores Inc. on Thursday reported its first-ever drop in same-store sales for its overall U.S. business for the quarter. The world's largest retailer said a big factor was price deflation, primarily in grocery products like dairy.

If Wal-Mart is taking a hit, things are bad. They are the last redoubt of the consumer being squeezed for cash. Meanwhile, desperate efforts to prop up dairy prices are occurring in Wisconsin, as input costs are far outstripping returns. Are our dairy producers the canary in the coal mine?

The longest recession since World War II has kept prices in check as wage pressures disappeared because of heavy job layoffs. Companies have been unable to boost prices because of weak demand.

Now this is really not good, as we are a service driven economy with 80% of it being the service industry. With a good chunk of the spending vanishing due to debt, unemployment, and depressed wages, the main fuel for the engine of the economy is in short supply. We don't have manufacturing to pull us out of this one, or an influx of new workers like women after WWII.

The gist of the article is that falling prices have reigned in inflation and how great a job the Fed has done. Me, I'm concerned, as I've been watching for deflation as a sign of another Great Depression. Time will tell if these are warning signs or just bumps in the road. Better buckle your seat belts!