Replies to post #79700 on ajtj99's Market Pulse

[n83]

slv80..agree..talking to real folks (not economists, etc made for tv or otherwise or some bs chart showing oil price in real dollars) over the past 2 yrs has shown how much more things are difficult..and hurting..most..MOST folks do NOT care about the equity market anymore (save for some goons tuning to Cramer type shows and placing ahrs orders immediately on the mention of some 4 letter stock symbol)

[marwick]

You folks keep making my point. OK, so you spend $100 a month more now for fuel than you did in 2001. That means you're spending $100 less per month at Walmart or the Cheesecake factory.

So Walmart and Cheesecake Factory can't raise prices, because there is more inventory on the shelves. So, they cut prices or have weekly specials and coupons to lure folks in. They simply don't have pricing power. They're profit margins shrink.

If folks are spending more on fuel and less at the stores, stores put stuff on sale.

Again, the numbers don't lie. Including energy the CPI is 3.5%. The core rate is 2.1%.

You also make my point about inflation with your comment about wages. If wages were rising like crazy (as in the late 90's), we'd have to worry about inflation because consumers would be shopping more with all those extra dollars. When consumers are lining up to buy stuff at Walmart and the Cheesecake Factory, those companies have pricing power. They can raise prices because of all the demand. Instead, wages have fallen behind inflation AND consumers are sending more to OPEC. Demand slackens, because folks have less money to spend at stores.

Also, companies haven't had to raise prices because they've been able to make cost savings via globalization. They haven't had to raise wages for the domestic (US) resources.