Lee, the deflationists themselves need to wonder how can the inflation problem be even worse in one of the area's that might be up for the award of 'ground zero' for the housing bust? We should be seeing signs of a deflationary collapse everywhere else 2.5 years into the housing bust yet it only shows up in rents in a few of the most overbuilt submarkets and in the extra speed and power of all your techno gadgets. Still waiting for those lower airline prices too<g>
'Ouch! South Florida's inflation rate outpacing nation
By Harriet Johnson Brackey | South Florida Sun-Sentinel
12:12 AM EDT, May 15, 2008
The nation's official inflation rate in April rose a slight 0.2 percent, but in South Florida, it sure doesn't feel that way.
Consumer prices — for gas, food and other products — are soaring at the fastest pace in the nation, according to figures released Wednesday by the Bureau of Labor Statistics (BLS). But wages here haven't kept pace with inflation. That combination is putting pressure on local consumers.
The Miami- Fort Lauderdale metropolitan area topped all other cities, with a 4.9 percent annual inflation rate through April. The national rate was 3.9 percent.
One factor pushing inflation ahead is obvious. "It's the gas, the gas," said Fedner Tort, a taxi driver at Fort Lauderdale-Hollywood International Airport. Tort says he no longer goes to Miami often, even though he's found some bargain prices there on food for his three kids. "It's too much for gas," he said, so he shops closer to his home in Pompano Beach.
Tips: Tracking prices across S. Fla., plus how you can save
The Department of Labor reported that gasoline prices nationally actually went up 5.6 percent from March to April. But the figure was "seasonally adjusted," a term economists use to describe changes they make in statistical reports to smooth out some trends that happen every year. The seasonal adjustment in April was so large that it turned the gasoline price figure from a 5.6 percent increase to a 2 percent seasonally adjusted decline.
"It's not the real thing. And that doesn't help the budget of the consumer, either," said economist Antonio Villamil, head of the Washington Economics Group in Coral Gables.
At the pump, South Floridians have seen prices skyrocket in recent weeks, with regular gas topping $4 per gallon at some Broward and Palm Beach County stations.
"If you go to the gas station, it's 21 or 22 cents higher than last month," said Stuart Schweitzer, global markets strategist for JPMorgan Private Bank. "I don't think there's any way to escape that gasoline prices are trending sharply higher and further increases are probably in the pipeline, given the rise in crude oil prices."
Wall Street chose to look at the inflation report another way. There was a sharp rally in stocks for most of the day Wednesday because traders had expected a higher rate of price increases. Their focus was on a core inflation rate that excludes food and energy. The rally fizzled in the final hour of trading. The Dow Jones Industrial Average closed up 66.20 points at 12,898.38.
Food, however, is a cost consumers can't wipe out of their budgets. In April, the price of food jumped at the highest rate in 18 years.
"And they say we're not in a recession. Well, you can forget that," said Nancy Biglin, of Deerfield Beach, after a shopping trip to a Winn-Dixie. She recently noticed on a grocery store receipt that she had paid $2.75 for a single tomato. She asked the store manager if it was correct, and it was, so she returned it. "Who can afford that?" Biglin said.
There's another reason South Florida consumers are feeling the burden of rising prices: Incomes here aren't keeping pace with inflation.
According to the federal statistics, last year South Florida's consumer prices rose 5.8 percent, but the median hourly wage in Broward County rose only 3.2 percent. It rose only 4.6 percent in Palm Beach County, and 4.2 percent in Miami-Dade County.
Inflation has been outpacing local wages for four years, with only one exception. The growth in wages in the Miami area was larger than local inflation in 2006.
The Bureau of Labor Statistics does not yet have figures on local wages for 2008. But the trend is the same nationwide. In April, the Labor Department said average weekly earnings fell 0.5 percent when adjusted for inflation.
"Paychecks simply aren't going as far as they were even a year ago," says economist Jared Bernstein of the Economic Policy Institute. In addition, he points out that much of the nation's income is going to those at the top of the pay scale. "Many working families know they are working harder, longer, and smarter, but in many cases they are having trouble staying afloat and certainly having difficulty moving ahead," he said.
What Bernstein calls the middle-class squeeze is rippling throughout the economy, other economists say.
"If you look at the real economy, this is a consumer-lead economic downturn," Villamil said. He noted that people feel poorer because home values are dropping, credit card debt is high and mortgages are difficult to obtain. "So on top of that you add the cost of food and energy and you're talking about a continued squeeze on consumer spending," he said.
Wednesday's economic news included the local area inflation report, which is issued 10 times a year. The Miami-Fort Lauderdale metro area's 4.9 percent annual inflation rate means that prices in South Florida increased 1 percent in March and April. The Bureau of Labor Statistics does not measure inflation in Palm Beach County, but trends there are similar to the rest of South Florida.
The only other metro area to top 4 percent annual inflation was Chicago, where the rate was 4.2 percent. The lowest rate was 2.4 percent in Detroit.
South Florida has been tops in inflation often in the past two years, although the current pace is a little slower than in January and February. The South Florida annual inflation rate then was 5.3 percent.
Harriet Johnson Brackey can be reached at hjbrackey@sun-sentinel.com or 954-356-4614.' |
