Thursday, May 26, 2016

Inflation in the USA

Dakota Thompson
Mr. Reuter
Econ 1A
5/24/16
Inflation in the USA

In January, the spending of consumers around the country increased significantly. Because of the harsh winter temperatures, there was an obvious need for heat in homes, along with other things like foods and household necessities because people didn’t want to go out as much. The Department of Commerce said spending rose 0.1% in December, also know that consumer spending accounts for ⅔  of the country’s economic activity. U.S. central bank tries keeping inflation either at or below 2%. PCE (Personal Consumption Expenditures) are the measurements in price changes for services and goods. PCE increased about 1.3% in the twelve months leading to January. That’s the biggest increase since October in 2014 and 0.7% of this occurred during December. Prices went up 0.3% and that’s without energy and food. Because of the increased consumer spending and rising inflation the Federal Reserve rose the benchmark interest rate in December that year. That’s the first time it’d been raised within the previous 10 years beforehand. Below the graph shows the inflation rates in 2015 and 2016, and with interest rates rising there’s a very small chance for a jump in growth of the economy for America.
One of the main causes for the increase of consumer spending was a rise in income across America (around 0.5%). June had the 2nd largest increase and add a another 0.3% to December. Also, a few states minimum wages have been going up, about 0.2% in December. Average salaries increased about 0.6%. Since minimum wage is increasing around the country there’s going to be a crooked value of money in America.


Works Cited

"Current US Inflation Rates: 2006-2016." US Inflation Calculator. 2008. Web. 03 Mar. 2016.

Reuters. "US Consumer Spending Rises; Inflation Stirring." CNBC. 2016. Web. 03 Mar. 2016.

19 comments:

  1. Reading this post makes me question what would happen to the inflation rate if minimum wage gets increased to $15 an hour across the whole country. If the minimum wage goes up will the standard of living just increase as well? The inflation rate is something that needs to be addressed because if we don’t do something soon about it our country could be in a lot of trouble. Very well written post.

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  2. If minimum wage increases, I would think inflation would too, so what would that say for America. Spending will increase more and more each year as the days get colder/warmer and people feel the need to have to have more things to buy. So if more and more people are willing to buy, inflation will also go up. I agree that inflation is a big problem, and people need to find a way to fix it. Good Post!

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  3. I agree that people tend to not want to go out as much in the winter but I wouldn’t think it would have a major economical effect. Due to increases in demand, it makes sense that companies would think to increase prices. The increase in prices in December could also be due to Christmas and the fact that companies tend to try to increase their revenue in months with important holidays. Overall, this is really well written!

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  4. It liked the way you thoroughly explained the increase in consumer spending and why. It definitely makes sense that spending would rise in the winter time because of all the goods people need to stock up on. It was very interesting to find out that 1.3% increase was the most since 0.7% in 2014. It makes perfect sense though that because the consumer spending and inflation were increasing the interest rates would rise as well, sort of a way to even things out. The graph was very helpful in giving a visual of what the paper was projecting. Also with all these changes including rising minimum wages the balance of money in the US could get a little unbalanced.

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  5. Inflation is an important part of economies worldwide. As a country becomes more advance, it's money and goods should both increase in value equally. This allows the relation between the US and other countries economics to reflect the value of the nation and it's importance and successes.

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  6. I liked that you included a lot of data and a graph to support your blog post. Inflation is definitely an important part of economies worldwide. I do have a question though: What is your argument? Granted, you did have a lot of facts, but those facts did not really support an argument. You could have used them for example to explain the monetary and fiscal policy that could be taken in order to fix the decreased consumer spending. Overall however, your economics terminology was valid. Nice job!

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  7. This is an interesting take on how seasonal changes may impact consumer habits. As Gabe said, the graphs do a nice job explaining some of the points you made. I think it would also be interesting to trace consumer habits in the other seasons. For instance, do consumers spend less during the summer months in order to save for later in the year? This is just another issue that could be observed. Overall, nice job bringing a new topic into discussion.

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  8. Since inflation is clearly becoming an issue in this country also there is an increase of people who want to increase minimum wage which will not help this problem. I believe that an increase in the minimum wage will increase prices for any good or service, this will not fix the problem of inflation but make it worse. Also the majority of people that are making minimum wage are students that are going to school to get a better job in their future and will not be making the minimum wage for ever. However there are some people that will only make minimum wage due to dropping out of school so increasing the minimum wage it would give an incentive for students to drop out of school since they will be making a higher wage. In all I believe that the minimum wage should stay the same so that inflation doesn't sore and students don't have an incentive to drop out of school.

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  9. Very Interesting! Personally, I think having the minimum wage rise is an extremely liberal view and not a good one. I think that if the minimum wage rises than every other expense will be more expensive. People think that if the wage rises they could afford the more expensive things, but that's not true. If the wage rises and then everything else does, we'll be in the exact same spot we are in now.

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  10. With inflation becoming an increasing issue in this country, some believe that increasing the minimum wage would be a solution to the problem. I however disagree with this assumption. If the country were to increase the minimum wage it would then eventually led to an increase in prices of good and services. The main group of the population making minimum wage are teenagers which later in life will most likely go onto a career where they will be making above minimum wage, usually a single person won't stay at a job their entire life just to be making minimum wage. I believe that the minimum wage should remain the same as it is right now so we can hopefully begin to reduce the inflation rate.

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  11. This is an interesting topic to talk about considering inflation is an important concept to look at. When taking a look at the different reasons for why inflation might increase or decrease you bring up a good point. Due to the fact of the harsher winter many consumers had to increase the heat in their homes while also increase their stockpile of food. This then ended up increasing the spending by .1% while consumer spending was a ⅔ ratio. Considering this has been 10 years before the hike it's definitely something to look to which could possibly cause problems down the road. Overall good job talking about the increase in the inflation rate.

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  12. Very Interesting! Personally, I think having the minimum wage rise is an extremely interesting view and that i would cause large changes in the economy. I think that if the minimum wage rises than every other expense will be more expensive. People think that if the wage rises they could afford the more expensive things, but that's not true due to inflation and and constant standard of wealth. If the wage rises and then everything else does, we'll be in the exact same spot we are in now. This wouldn't change the amount of those in poverty but would make the poverty income higher but also raising overall price level and depreciating our currency.

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  13. I think that the topic of raising the minimum wage is always interesting because there are many consequences to a raise. The expense of living would increase because the people with the lowest amount of income would be able to purchase more. This would not solve any problems of poverty because the prices would rise with the income. Although many people think of increasing the minimum wage is a good thing I would disagree. I think the disadvantages outweigh the advantages and the standard of living would decrease. In order to decrease poverty we should make education more affordable so more people are qualified for careers.

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  14. This post was very interesting to read about. I did not realize that this was currently happening, nor did I realize that the inflation rates were significantly higher than past years. Although it is only at 1.4%, it is still so much higher than the past years, so I wonder what the economy will do to fix this. Inflation is not a good thing, as this could change the way things are priced, so in order to make your post better I think you could have added possible ways that the government is going to try to decrease the inflation rates. All in all, I was very intrigued by this post and I love that you connected the graph into your writing.

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  15. It was interesting to be able to read about the exact rates of inflation and its effect on the economy. The US has been experiencing inflation basically forever, and it is not a negative thing unless there would be a sharp increase or decrease. Personally, I do not think minimum wage should be raised, because as you mention it has a greater outcome on the economy than people realize.

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  16. Inflation is obviously an issue in this country. Another huge issue in America is the increase in demand for a higher minimum wage. However, if they were to increase minimum wage, I personally believe that will cause inflation to be an even worse problem. Because majority of people that are making minimum wage are students, who will eventually be earning a salary in their future, they should not be worried about minimum wage at this point. For those who are only making minimum wage as their main source of income, that can serve as motivation for them to get an advanced education so they can get a better job and make a better salary. This, as well, could improve the economy.

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  17. It is super interesting to know more and read about the depth of the rates of our inflation in our country. I think it is interesting to see how people are trying to increase the minimum wage in our country to $15.00. I believe this will be a horrible idea leading to a greater inflation rate. Once the average worker is making over double what they were before, the price of goods and services will increase as well.

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  18. It is super interesting to know more and read about the depth of the rates of our inflation in our country. I think it is interesting to see how people are trying to increase the minimum wage in our country to $15.00. I believe this will be a horrible idea leading to a greater inflation rate. Once the average worker is making over double what they were before, the price of goods and services will increase as well.

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  19. Although I am not in the majority, I have to disagree with some of the interpretations of the data. A lot of people believe that raising wages would increase the inflation rate, which is undeniably true. However, many people don't understand that the market is not solely based on wages. The goal of increasing the minimum wage is also going to be supported with other programs and systems of spreading the wealth, rather than just increasing the supply of money.

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