U.S. PPI +3.2%, Largest Increase since 1973

First, I'd be a hypocrite if I lent credence to this inflation figure by this faulty government report when it is higher than expected, just like I dog it when it is lower than expected. As we saw yesterday, import prices are up >11% year over year [Real Inflation Showing in Reports Not called PPI/CPI], so these CPI/PPI figures are still bunk. But since apparently the Fed freedom fighters at central command use these CPI/PPI figures maybe it will jolt them to reality that inflation pressures are real. Not that it matters, because as I keep saying, I think *this time* inflation is different - its not a US specific situation - its a worldwide issue due to global shortages. So the Fed won't be able to fight it like it did in the past. Hence to avoid stagflation (stagnant growth with high inflation) once must get the growth engine of America going. But with the credit crisis and housing crisus, that sir, will be a miracle to pull off ... at least anytime soon.

• Wholesale prices rose 3.2% in November, the largest growth since August 1973, as the rise in energy goods prices hit a record high, the Labor Department reported Thursday.
• Wholesale energy prices rose 14.1% in November, beating the prior record growth of 13.4% in January 1990. Gasoline price growth also hit a record -- reaching 34.8% -- up from the prior record of 28.8% in April 1999.
• "Ugghh," said John Ryding, chief U.S. economist for Bear Stearns, in reaction to the producer price index results. "This is a horrible inflation report of the kind that hasn't been seen in 21/2 decades." "Our reading is that both import prices and producer prices point to significant inflation problems ahead," he said.
• Meanwhile, the core producer price index, which excludes food and energy costs, rose 0.4%. Economists had expected November's producer price index to grow 1.8% and for the core to grow 0.2%.
• Producer prices are up 7.2% in the past year -- the largest growth since 7.5% in October 1981. Core prices are up 2.0% in the past year.

Well first, I am sounding less and less like an outlier - I was making these same calls in the summer (coming recession or "major slowdown", persistent inflation), but was a quiet voice in the ocean. Now things are starting to come to the surface to show this to be the coming reality. In this case, however, I am not very happy about being correct because it bodes very poorly for all of us.