Economist says hard times still ahead listen08/13/08 Mitch E. Perry
WMNF Drive-Time News Friday
Sales at U.S. retailers dropped in July for the first time in five months as record gasoline prices and tighter credit reduced automobile purchases.
Labor figures showed that import prices rose 1.7 percent in July from the previous month, more than economists had projected, after a 2.9 percent increase in June. That led one economist to tell Bloomberg media that the U.S. is now in the "midst of a long-term trend in inflation."
Joe Bruseulas from Merk Investments in Palo Alto says, "We can't sugarcoat this. It's not a good thing."
Bloomberg also reports that spending growth in the year that ended in June was the slowest since the 12 months through December 1991.
One positive aspect of high oil prices is that people are driving less, and using public transportation more. The U.S. Transportation Department reports that Americans drove nearly 10 billion fewer miles in May of this year than in 2007.
Mark Zandi is an economist with moodys.com, and author of the new book, Financial Shock: A 360 Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crises. In the first of a two-part interview, he says Americans behavior may be permanently changed because of the current concerns over high oil prices.
Weâ€™ll air the second part of this interview later this week.