Tags: cheeseburger | index | inflation | Convergex

Bacon Cheeseburger Index Shows 7.7 Percent Inflation

By    |   Thursday, 02 April 2015 06:20 AM

Depressed by falling oil prices, inflation, as measured by the consumer price index, was zero for the 12 months through February. And inflation as measured by the Fed's favored gauge, the personal consumption expenditures price index, registered just 0.3 percent in that period.

But the Bacon Cheeseburger Index, calculated by Convergex brokerage firm, tells a different story. It has jumped 7.7 percent over the last year. As you've probably surmised, this index is based on the price of bacon cheeseburgers.

A 17 percent surge in ground beef prices represented the biggest contributor to the index' move.
Among other components, cheese prices rose 7.3 percent, white bread 3.4 percent and bacon 0.2 percent, CNBC www.cnbc.com/id/102550090 reported.

"Yes, we know the Fed can't make more cows or milk or pigs," said Nick Colas, chief market strategist at Convergex. "But consumer attitudes regarding inflation are anchored in their shopping cart, as anyone who lived through the 1970s will tell you."

Speaking of the Fed, Steve Beaman, chairman the Society to Advance Financial Education, told Newsmax TV that the central bank deserves more credit for our economic recovery from the Great Recession of 2007-09 than President Obama does.

"The vast majority of the credit for our recovery has to go to the Federal Reserve, external of the government," Beaman said on the network's "MidPoint."

"After the financial collapse of 2008 and '09, [former Fed Chairman] Ben Bernanke in a very controversial move did the opposite of what they did in 1929. He opened the floodgates for money."

The Fed has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008 and has pushed its balance sheet to $4.5 trillion through quantitative easing.

"That has been the core reason we've had economic growth," Beaman noted. The economy has expanded about 2.2 percent a year since the rebound began in June 2009.

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Depressed by falling oil prices, inflation, as measured by the consumer price index, was zero for the 12 months through February. And inflation as measured by the Fed's favored gauge, the personal consumption expenditures price index, registered just 0.3 percent in that period.
cheeseburger, index, inflation, Convergex
316
2015-20-02
Thursday, 02 April 2015 06:20 AM
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