The lead story in National Association of Manufacturers (NAM) Economy Daily is about inflation reaching a 17-year high. The government says consumer prices rose 0.8% in July, twice what economists expected and that brings the inflation rate to 5.6% for the last 12 months which is a 17-year high.
What's driving inflation? The cost of energy is up more than 29% from last year and food prices at up 6% overall.
The Wall Street Journal believes slower inflation may already be on the way because of a combination of factors:
- recent drop in oil prices and other commodities;
- strengthening of the U.S. dollar which lowers the price of imports; and,
- continued weakness in the U.S. economy, which suggests the Federal Reserve policy makers are unlikely to raise interest rates.
While there maybe signs of relief on the horizon, elected officials need to be careful about increasing taxes, putting more government mandates on employers and people, and must push forward to provide more domestic energy at the lowest possible rates.
Don C. Brunell, President (DonB@awb.org)
