CPI Update

A quick note to update my previous posting: The Consumer Price Index for October was lower than expected, showing a full 1 percent decline from September (on both a seasonally adjusted and unadjusted basis). Analysts are interpreting this relatively steep decline as a sign of worse-than-expected economic weakness. In terms of the chart included with my last posting, however, all it did was bring the index back to the top of the red trend channel, so it isn't (yet) indicating that the steep rise in inflation of the past four-plus years is over. Any further such declines, though, might raise the possibility that a deflationary trend is developing, which would tend to suggest that the current economic downturn could turn into something worse than a recession.