Inflation rate the highest seen in 26 years. (Welcome to the New Economy)

[Selatius]

WASHINGTON - Wholesale inflation last year shot up by the largest amount in 26 years while retailers suffered their worst December shopping season in five years as mounting economic woes caused consumers to put away their wallets.

The Labor Department reported that wholesale inflation was up 6.3 percent for all of 2007, reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.

Meanwhile, retail sales fell by 0.4 percent in December, the worst showing in six months, the Commerce Department reported. Consumer confidence has plunged, reflecting the worsening housing slump and a lingering credit crisis.

In a third report, the government said that inventories held by businesses rose by 0.4 percent in November, reflecting big increases in stockpiles held by manufacturers and wholesalers. The 0.4 percent rise matched a similar increase in September and was in line with expectations. Inventories had risen by a much smaller 0.1 percent in October.

http://news.yahoo.com/s/ap/20080115/ap_on_bi_go_ec_fi/economy

When you have inflation during an economic downturn or recession, you call that stagflation, boys and girls. They define an economic recession as two or more consecutive quarters of negative growth. For a lot of people, that holds little real-world value. If the economy isn't producing jobs fast enough and you're looking for a job, you're more likely to be unemployed, when you need food on the table right now.

[shraby]

1. This really really hurts people on fixed incomes.

[Lone_Star_Dem]

2. It does

But then it really hurts a lot of others too.

People in the service industry will be seeing slowdowns as will those who work in sales. They're be earning less and what they are earning will have less spending power.

Sadly, a lot of people are going to be hurt by this before it's over.

[blondeatlast]

3. December was VERY bad for retailers, so expect layoffs.

Rerail affects many others, too--manufacturing, restaurants, etc.

Very bad news coupled with the crisis in the mortgage and construction industries. :(

[Lone_Star_Dem]

4. And this isn't close to the peak it will reach

With more rate cuts in the near future by the Feds coupled with massive instability in the ME, I find myself wondering how much longer many people are going to be able to buy food and fuel.