Inflation was low because oil prices surged

Discussion in 'Economics' started by ASusilovic, Oct 31, 2007.

  1. As odd as it sounds, the government reported that inflation was at a four-decade low in the third quarter, primarily because import oil prices rose so much.
    If you don't understand that, welcome to the confusing world of national income accounting, where up sometimes is down, and where sometimes one plus one can equal zero.
    The simple explantion:
    Because of the way the government counts and reports the numbers, real-life inflation was understated and growth was overstated.
    The economy didn't really grow 3.9%, and inflation really wasn't 0.8%. The numbers aren't as good as they look.{F29A8D00-50E5-44D6-9981-0E54430C3A96}
  2. Akavall


    Interesting, normally increase in oil prices would cause cost push inflation, but this time...

    "Most of the time, the government's formula doesn't produce any weird numbers, because the mathematical quirks all cancel each other out. But in the just concluded third quarter, it did produce quirky numbers that don't accurately reflect reality, even though they are correct from an accounting point of view."
  3. inflate or die