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Deflation Turns Mainstream

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"We are in the throes of a construction depression. ... We have catastrophic unemployment," says Steve Schoemehl, business manager of International Brotherhood of Electrical Workers Local 1. That's from USA Today. And it illustrates how deflationary pressures are finally entering the mainstream consciousness despite hysterical warnings about a hyperinflationary collapse. (We may indeed one day face excessive inflation, but that is many years away.)

In the next paragraph, USA Today notes, "Such outright wage declines hint at deflation — a generalized drop in wages and prices. The last time that happened in the United States: 1931-33, when prices fell at an average annual rate of more than 8%."

The Consumer Price Index, released this morning, provides a couple of stark data points illustrating the ongoing slide into a structural deflationary debt unwind. First, all items continues to come in with negative readings, down .1% for June after falling .2% in May and .1% in April. More ominous, however, particularly as it relates to future consumption, is the decline in Real Average Weekly Earnings, down 0.2% in June.

Deflation is real, and it's here.
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