Don’s CPI
Don, my car guy, has a pretty good pulse on the economy.
First of all, he fixes cars—and that’s as basic a consumer spending item as it gets. Second, he employs people, so he knows what the labor market is doing. Third, he buys a lot of stuff—auto parts, certainly, but also utilities, office supplies, and new equipment.
So when I get my car fixed, I like to ask Don what he’s seeing.
Now, this may come as less of a shock to bond traders than before the last CPI number was released, and it may not matter to whatever low-level functionary in the statistical collection office of the Federal Reserve spends his day adjusting raw inflation data.
But what I will call “Don’s CPI”—the price of things Don buys for his business—has risen about 5% in the last year. And Don sees more to come.
So Don has raised his own prices 6%, in order to stay ahead of the curve. Last time I checked, that’s higher than any point on the yield curve.
Any resistance, I asked as I paid my bill? (My bill at Don’s—as I have said in the past—is always $700. No matter what gets done. It’s always $700.)
Don shook his head. “Business is booming.”
Jeff Matthews I Am Not Making This Up
© 2006 Jeff Matthews
The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.
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