Quoted – Lower energy prices leads to cheaper cost of living; inflation still in check

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The cost of living fell slightly in April, led by lower energy prices, a sign that inflation is still in check. But prices rose in the Midwest

The U.S. Bureau of Labor Statistics reported Wednesday a 0.1 percent decrease in the Consumer Price Index on a seasonally adjusted basis. The index for energy dropped 1.4 percent while food prices were essentially flat, up 0.2 percent. The core index remained stable.

“As long as unemployment continues to be stubborn, I think the Fed is going to stay on the sidelines for a while,” said Wai, who predicts flat interest rates for the year.

http://news.medill.northwestern.edu/chicago/news.aspx?id=164844

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Quoted – Consumer confidence index reaches high, signaling economic recovery

Consumer confidence has reached its highest level since September 2008, another sign that the economic recovery is underway.

The Conference Board Inc.’s Consumer Confidence Index rose  5.6 points in April to 57.9 from 52.3 in March. The survey uses 1985 as a base year of 100.

It’s good news for everyone from homebuilders to store owners because higher confidence should result in more sales and consumer spending accounts for about 70 percent of gross domestic product.

The persons polled who said business conditions are “good” rose to 9.1 percent from 8.5 percent a month  earlier, while those who said business conditions are “bad” declined only slightly to 40.2 percent from 42.1 percent.

The economy has been helped by tax relief legislation, said Scott Testa, an economics professor of Cabrini College in Philadelphia. “This is the first time home-buyers assistance from the federal government has driven the economy.”

Psychologically, people feel the economy is at the tail end of this recession, Testa said. “We’ve seen other numbers in check such as inflation and the sentiment is certainly more positive than it was a year and a half ago. People are less afraid of losing their jobs,” he said.

Consumers’ outlook improved from March. Those anticipating improved business conditions over the next six months increased to 19.8 percent from 18.0 percent.

The rising Consumer Confidence Index runs counter to a preliminary report on consumer sentiment released by the University of Michigan, based on a survey conducted in  mid-April, showing that sentiment declined from March to April.

While the two surveys ask similar questions, the sentiment survey is conducted via phone, while the confidence survey is conducted with written questionnaires given to more people. The full consumer sentiment report will be released Friday.

“There may not be a very statistically significant difference between last month and this month, there’s a lot of noise from month to month,” Barsky said.

The survey also suggests that while consumers are more optimistic about the job outlook, the proportion of consumers expecting an increase in incomes declined to 10.3 from 10.8 percent.

“I don’t know anyone who has received a pay increase,” Compall said.

People are still nervous, Testa said. “The big lagging indicator in any economy is usually the unemployment rate and it still hasn’t moved that much. Those indicators make people generally hesitant in some ways.”

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Quoted – Consumer pay a little more in March, inflation not yet problem

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Consumer pay a little more in March, inflation not yet problem

Prices paid by consumers in March rose slightly, a sign that inflation has not yet become a serious problem for the U.S. economy.

The Consumer Price Index rose 0.1 percent on a seasonally adjusted basis last month, according to a Wednesday report by the U.S. Bureau of Labor Statistics.

“I think the Fed should keep interest rates low,” said Scott Testa, professor of business administration at Cabrini College. “I think to raise interest rates now would be a little premature.”

However, others think the Fed’s current policy on interest rates will be unsustainable in the future.

http://news.medill.northwestern.edu/chicago/news.aspx?id=162995

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Quoted – Tech consulting firm does well by feeding well

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Tech consulting firm does well by feeding well

Table XI LLC is a place found only by already knowing where it is.

Nestled away in the West Loop, the consulting and software development firm’s street entrance is an unmarked doorway between a restaurant and a home furnishing boutique. Inside, one climbs two flights of stairs, makes a U-turn, and climbs a final flight of stairs before happening upon the actual office, which resembles a home, complete with a cozy, couched living room and a full kitchen.

“Usually, in an economic upswing the consulting companies’ revenue will start to spike before the employment rate goes up,” said Scott Testa, economics professor at Cabrini College in Philadelphia.

As a consulting company, Table XI is geared to solve problems for clients, but it solved two of its own problems in inspired ways: serving in-house lunches and paying a bounty on time sheets.

http://news.medill.northwestern.edu/chicago/news.aspx?id=159004

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Quoted – Rising energy prices lead to slight bump in January consumer prices

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Rising energy prices lead to slight bump in January consumer prices

“I think what you’re seeing is a natural, gradual number, nothing dramatic and nothing very surprising. It was right around what most people expected,” said Scott Testa, an economics professor at Cabrini College in Philadelphia.

As the economy climbs out of a recession and short-term interest rates remain at historic lows, much attention is being paid to indicators of inflation.

Testa said the CPI “shows that the typical consumer was not being squeezed. Seventy percent of the economy is based on consumer spending, so numbers like this, that would give consumers an advantage for spending, I think are encouraging.”

Friday’s CPI increase was minimal as compared to the 1.4 percent jump in the Producer Price Index, another inflation measure focused on prices at the wholesale level. According to Testa, the divergence isn’t very significant.

“I’d be more concerned if both numbers are dramatically up. I take it with a grain of salt when looking at one specific set of numbers over a short period of time.”

http://news.medill.northwestern.edu/chicago/news.aspx?id=157639

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