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The yearly growth rate of the US consumer price index stood at 1.9% in August against 1.7% in July, while the growth rate of the price index less food and energy stood at 1.7% in August against a similar figure in July and 2.3% in August last year. Given that the Fed’s target for the core CPI i.e. the CPI less food and energy is 2%, this has

In August the US unemployment rate closed at 4.4% against 4.3% in the month before. The relatively low unemployment rate seen by some commentators as implying that the US is almost at the so-called natural rate, which believed to be at around 4.5%. It is held that once the unemployment rate falls below an “optimal” rate —called the

The idea of price stability originates from the view that volatile changes in the price level prevent individuals from clearly seeing market signals as conveyed by changes in the relative prices of goods and services. For instance, because of an increase in the demand for apples, the prices of apples increase relatively to the prices of potatoes.

To gain insight into the state of an economy, most financial experts and commentators rely on a statistic called the Gross Domestic Product (GDP). The GDP framework looks at the value of final goods and services produced during a particular time interval, usually a quarter or a year. This statistic is constructed in accordance with the view that

For most experts the central bank determines short-term interest rates by setting the target to the benchmark policy rate such as the federal funds rate in the US. Many economists are of the view that through the manipulation of short-term interest rates, the central bank by means of expectations regarding future interest rate policy can also

A softer increase in the personal consumption price index (PCEPI) adjusted for food and energy has likely prompted Fed policy makers to hint about a cut in the policy interest rate in the months ahead. The yearly growth of the PCEPI adjusted for food and energy, or the core PCEPI stood at 1.6% in April against 1.9% in April last year — strongly

After closing at 735 in February 2009 the S&P500 has been following a relentless up-trend closing at the end of June this year at 2941.76 – an increase of 300% since February 2009. The increase in the US stock market this year appears to defy the visible softening in the momentum of various economic data. For instance, there has been a

It is widely held that financial asset prices fully reflect all available and relevant information, and that adjustments to new information is virtually instantaneous. This way of thinking which is known as the Efficient Market Hypothesis (EMH) is closely linked with the modern portfolio theory (MPT), which postulates that market participants are

Some commentators regard cost cutting by companies in order to secure profits as a major threat to the economy. They hold that if everyone tries to cut costs and save more, demand for goods and services from retrenched workers will fall, which in turn will hurt corporate revenues and thus profits. This allegedly sets in motion new layoffs and

In most cultures, profit is seen as the outcome of exploitation of some individuals by some other individuals. Hence, anyone who is seen as striving to make profits is regarded as bad news and the enemy of society and must be stopped in time from inflicting damage. Profit however, has nothing to do with exploitation — it is about the most