Tuesday, September 16, 2008

Despite Falling Oil Prices, Inflation Remains

Now that oil prices are tumbling, will consumers see prices fall on other goods? It would seem logical that higher prices related to energy prices would drop when energy prices do. But unfortunately, for many goods and services, that may not be the case.

The bad news is that higher prices may be here to stay. Gas and energy prices, which rose to new highs were responsible for the increase in everything from the price of eggs to meat prices, and those prices may not come down if profits don't return to their previous level.

Many companies raised prices but still saw profit margins decrease. In many cases, companies didn't raise prices until it was do or die on the profit line. Therefore, even when oil prices drop, the new, higher prices on goods may remain.

Friday, September 12, 2008

Salaries Not Keeping Pace with Inflation

Americans' salaries are not keeping up with inflation according to this article at Consumer Affairs.com. As the cost of living rises at a faster pace than the average American worker's salary, he experiences the actual effects of a loss of income.

Pay raises of 3.8 per cent are simply not going to keep pace with the 5.5 percent rise in consumer prices and tight budgets have forced companies to freeze wages in some cases.

But getting a raise is not impossible, if you are worth it to the company. Employers can't afford to raise wages for all employees, but often will reward top employees they can't afford to lose.

The bottom line? If you want a raise, you are going to have to work for it.

Monday, September 8, 2008

Feds Seize Mortgage Companies

The big news of course is the Federal government's takeover of mortgage giants Fannie Mae and Freddie Mac. The two companies are the largest providers of money for home mortgages in the US.

The US Treasury has pledged up to $200 billion to help offset losses suffered as a result of bad mortgages. The operation of the companies will be handled for now by the FHA.

It is hoped that the move will help to stabilize the housing market which has been in decline over that last several years. Secretary of the Treasury, Henry Paulson, said that a simple equity investment in the companies was deemed to not be enough to rescue them or stabilize the market. Paulson said the risk of doing nothing was worse than the burden of the responsibility for billions of dollars in loans made by private lenders.