CPI goes up, half a million people in a month lose their jobs.

By Alex Mai at 15 July, 2009, 10:50 am

“The government says consumer prices shot up in June by the largest amount in 11 months, reflecting the biggest jump in gasoline prices in nearly five years”

Price of everything (utility, oil, foods) is going up and you have no income. Certainly a picture flash into your mind.

How can you raise price when people actually consume less? And companies are cutting positions, hours and salary. Capacity utilization is at 68%, “the lowest level since records began in 1967.”

That says it all.

CPI gone up means companies are making more money?

No, CPI is a measurement adjusting inflation yoy. Increasing CPI actually indicated more money supply flow into economy and less consuming goods produced by the producers.

So how can companies report profit in this quarter?

Most of companies report profit because they opening operations elsewhere outside the US and profit from selling stuff in Asia just like Intel. Look at the Intel report:

“SAN FRANCISCO (Reuters) - Intel Corp’s quarterly results and outlook blew past Wall Street forecasts on better-than-expected consumer demand for PCs, especially in Asia, setting an auspicious tone for the technology sector.”

The demand curve is shifting from European and America to Asia, so it is not so hard to see more jobs will create in Asia, especially in China. GM previously invest billion dollar in China for future operation. More job will disappear in U.S.

If government don’t raise the basic wage rate, people will suffer more. Wages have to catch up the inflation which is happening in foods, oil, and utility.

July 15 (Bloomberg) — Confidence in the world economy dropped for the first time in four months in July as government stimulus efforts showed little sign of reducing unemployment, a Bloomberg survey of users on six continents showed.

The Bloomberg Professional Global Confidence Index declined to 39.13 in July from 43.57 in June. A reading below 50 means pessimists outnumber optimists. A measure of U.S. participants’ confidence in the world’s largest economy fell to 29.5 from 36.7, the survey showed.

The MSCI World Index is down close to 2 percent since the U.S. Labor Department on July 2 reported higher-than-expected job losses and an unemployment rate approaching 10 percent. Treasury Secretary Timothy Geithner said yesterday the world will probably suffer “more than the usual” setbacks in exiting the worst slowdown since the Great Depression.

“No one can wave a magic wand,” said David Semmens, an economist at Standard Chartered Bank in New York and a regular survey participant. “We aren’t pulling out of the recession in the same way as in past recessions. The economic outlook isn’t improving as strongly as people would have hoped.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aLCQJ0BV2Tx0