Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : The Big Picture - Economics and Investing -- Ignore unavailable to you. Want to Upgrade?

To: bob yahnke who wrote (499)	12/5/1997 11:05:00 AM
From: Sid Turtlman	Read Replies (4) \| Respond to of 686

Bob: Your post #424 points out that the economy is strong and inflation is rising. The figures out today back that up. But there are cross currents. The price of services has been going up. Wage costs are starting to head up at a more rapid pace, especially in skilled professions like engineers, computer people, etc. But commodity prices are very weak, and manufacturers uniformly report that they can't raise prices without losing market share. The key is foreign competition or lack thereof--you are not going to go to Malaysia to get your hair cut or see a doctor, no matter how cheap those services may be there. But you might well buy a Japanese car if the weak yen lets them knock a few thousand off the price. I think where you come out on the inflation/deflation impact is whether you consume more goods or services. The way the trend would be more clearly deflationary would be if we get a worldwide recession or depression. This could come from a combination of weakness in Asian demand, squeezed corporate profits which cuts spending from that source, and a negative wealth effect from lower stock prices caused by the lousy profits. That is my scenario, and I think it will happen starting next year sometime, but I can't say it is clearly under way as yet.