Edwards: “Core Inflation In The US Would Be Just As Low As In The Eurozone If Measured On The Same Basis”

Despite Stronger U.S. Growth

Anyone with a pulse knows that Europe is stuck in a downturn worse than the Great Depression.

Most think that the U.S. has fared better … but that is debatable.

Mega-bank Société Générale’s strategist Albert Edwards notes:

“Core Inflation in the US would be just as low as in the eurozone if measured on the same basis, despite the US having enjoyed much stronger growth!”

EurozoneBy way of background, the U.S. government has long ignored energy and food prices when reporting on inflation.   As former Assistant Secretary of the Treasury and Assistant Editor for the Wall Street Journal, Paul Craig Roberts explains:

The inflation rate, especially “core inflation,” is another fiction.  “Core inflation” does not include food and energy, two of Americans’ biggest budget items.

And – in contrast to the U.S. – the European method of calculation  attempts to incorporate rural consumers into the sample (while the US maintains a survey strictly based on the urban population) and excludes owner-occupied housing from its scope (while the US calculates “rental-equivalent” costs for owner-occupied housing).

In any event, if calculated the same way, America’s crash in core inflation would be as obvious as Europe’s.

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  • Big Bear

    I don’t know what “core inflation” is defined to mean but I do know that my basic costs of living — food, soap, toilet paper and other household goods, clothing, shelter, health care — have been rising dramatically. So from where I live these number look like pure flim-flam.

  • jadan

    Inflation is assumed to be an indication of economic growth, but in this financialized economy isn’t devaluation confused with inflation? We are in a deflationary environment because of weakened demand and less money in the hands of consumers, in spite of all the “money printing” going on. Rising prices do not reflect increased demand bidding prices up; the price increase is a loss of value. If it weren’t for speculation on Wall Street and huge paper profits that suck out the value of the productive currency, prices would be falling. If you hold some cash in your hand and stare at it for a while, you will see subtle vapors rising from it as your money disintegrates at the molecular level.

    • Big Bear

      Yes I’m familiar with this jive, or flim-flam. “Economic growth” for who is the question — and the answer is the 1% and their most favored hirelings. Meanwhile in the real world where most of us live, “growth” is not what’s happening. Degradation of life and livelihood is. Talk about “low” inflation in America is, from where I live, lies, pure and simple. Lies.